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30–441 2006

HEARING ON IMPLEMENTATION OF THE 

UNITED STATES–OMAN FREE TRADE AGREEMENT 

HEARING 

BEFORE THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED NINTH CONGRESS 

SECOND SESSION 

APRIL 5, 2006 

Serial No. 109–59 

Printed for the use of the Committee on Ways and Means 

( 

ii 

COMMITTEE ON WAYS AND MEANS 

BILL THOMAS, California, Chairman 

E. CLAY SHAW, JR., Florida 

NANCY L. JOHNSON, Connecticut 

WALLY HERGER, California 

JIM MCCRERY, Louisiana 

DAVE CAMP, Michigan 

JIM RAMSTAD, Minnesota 

JIM NUSSLE, Iowa 

SAM JOHNSON, Texas 

PHIL ENGLISH, Pennsylvania 

J.D. HAYWORTH, Arizona 

JERRY WELLER, Illinois 

KENNY C. HULSHOF, Missouri 

RON LEWIS, Kentucky 

MARK FOLEY, Florida 

KEVIN BRADY, Texas 

THOMAS M. REYNOLDS, New York 

PAUL RYAN, Wisconsin 

ERIC CANTOR, Virginia 

JOHN LINDER, Georgia 

BOB BEAUPREZ, Colorado 

MELISSA A. HART, Pennsylvania 

CHRIS CHOCOLA, Indiana 

DEVIN NUNES, California 

CHARLES B. RANGEL, New York 

FORTNEY PETE STARK, California 

SANDER M. LEVIN, Michigan 

BENJAMIN L. CARDIN, Maryland 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

MICHAEL R. MCNULTY, New York 

WILLIAM J. JEFFERSON, Louisiana 

JOHN S. TANNER, Tennessee 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

EARL POMEROY, North Dakota 

STEPHANIE TUBBS JONES, Ohio 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

RAHM EMANUEL, Illinois 

ALLISON H. GILES, Chief of Staff 

JANICE MAYS, Minority Chief Counsel 

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records 

of the Committee on Ways and Means are also published in electronic form. The printed 

hearing record remains the official version. Because electronic submissions are used to 

prepare both printed and electronic versions of the hearing record, the process of converting 

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process 

is further refined. 

iii 

C O N T E N T S 

Page 

Advisory announcing the hearing ........................................................................... 2 

WITNESSES 

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

Trade Representative ........................................................................................... 10 

The Ballard Group LLC, Hon. Frances D. Cook ................................................... 34 

Turner Construction—International LLC, Nicholas E. Billotti ........................... 39 

Muscat American Business Council, and DynCorp International, Michael P. 

Weitzel .................................................................................................................. 42 

American Federation of Labor–Congress of Industrial Organizations, Richard 

L. Trumka ............................................................................................................. 45 

Dow Chemical Company, Roger R. Schwartz ........................................................ 52 

SUBMISSIONS FOR THE RECORD 

Hamod, David, National U.S.–Arab Chamber of Commerce, statement ............ 65 

Keating, Frank, American Council of Life Insurers, statement .......................... 69 

Ranchers-Cattlemen Action Legal Fund, statement ............................................. 70 

United States Chamber of Commerce, statement ................................................. 72 

(1) 

HEARING ON IMPLEMENTATION 

OF THE UNITED STATES–OMAN 

FREE TRADE AGREEMENT 

WEDNESDAY, APRIL 5, 2006 

U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, Washington, DC. 

The Committee met, pursuant to call, at 10:40 a.m., in room 

1100, Longworth House Office Building, Hon. William M. Thomas 

(Chairman of the Committee) presiding. 

[The advisory announcing the hearing follows:] 

2 

ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–1721 

March 29, 2006 

FC–20 

Thomas Announces Hearing on Implementation 

of the United States–Oman Free Trade Agreement 

Congressman Bill Thomas (R–CA), Chairman of the Committee on Ways and 

Means, today announced that the Committee will hold a hearing on the implementation of the U.S.–Oman Free Trade Agreement (FTA). The hearing will take place 

on Wednesday, April 5, 2006, in the main Committee hearing room, 1100 

Longworth House Office Building, beginning at 10:30 a.m. 

Oral testimony at this hearing will be from both invited and public witnesses. Invited witnesses will include Ambassador Susan Schwab, Deputy U.S. Trade Representative. Any individual or organization not scheduled for an oral appearance 

may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing. 

BACKGROUND: 

On March 12, 2005, formal negotiations were launched to enter into an FTA between Oman and the United States. These negotiations concluded on October 3, 

2005, and on January 19, 2006, U.S. Trade Representative Rob Portman signed the 

U.S.–Oman FTA. 

Oman has been a strong ally of the United States, contributing significantly to 

U.S. combat operations in Iraq and hosting thousands of U.S. military personnel 

during Operation Enduring Freedom in Afghanistan. In addition, Oman has played 

a leading role in the Persian Gulf area in opening trade with Israel and does not 

implement any aspect of the Arab League Boycott of Israel. Under the leadership 

of Sultan Qaboos, Oman has enacted a wide range of economic and political reforms, 

including promoting women to key roles such as Ministers and as the Ambassador 

to the United States. 

A U.S.–Oman FTA would be the fourth U.S. agreement with an Arab country, following the U.S.–Jordan FTA signed in 2000, the U.S.–Morocco FTA signed in 2004, 

and the U.S.–Bahrain FTA signed in 2006. The U.S.–Oman FTA is an integral part 

of the Administration’s strategy to create a Middle East FTA by 2013. The market 

access commitments in the U.S.–Oman FTA would immediately eliminate duties of 

all current bilateral trade in consumer and industrial products. Under the agreement, Oman would also provide immediate duty-free access for U.S. agricultural 

products in 87 percent of its agricultural tariff lines, and both nations would eliminate tariffs on any remaining products within 10 years. The agreement also provides strong protections for intellectual property and one of the highest levels of access for U.S. services industries in any FTA to date. 

United States–Oman two-way goods trade was $1.1 billion in 2005. The United 

States exported $593 million in goods to Oman, with major exports including aircraft, vehicles, machinery, electrical machinery, and optical and medical equipment. 

In announcing the hearing, Chairman Thomas stated, ‘‘This FTA builds on our 

strategic efforts cited by the 9/11 Commission Report to promote free and open economic and political systems in the Middle East and is another key part of our goal 

of establishing a Middle East Free Trade Area. Oman has been a strong partner 

of the United States and through this agreement has made some of the strongest 

market access commitments in any FTA to date. In addition, Oman has made significant progress, just as Bahrain, in improving its labor standards. I look forward 

3 

to moving this agreement quickly and expanding economic opportunity in the Middle East.’’ 

FOCUS OF THE HEARING: 

The hearing will examine the U.S.–Oman FTA and the benefits that the agreement will bring to American businesses, farmers, workers, consumers, and the U.S. 

economy, as well as to the U.S. strategic relationship in the region. 

DETAILS FOR SUBMISSIONS OF REQUESTS TO BE HEARD: 

Requests to be heard at the hearing must be made by telephone to Michael Morrow or Kevin Herms at (202) 225–1721 no later than 12:00 p.m. Friday, March 

31, 2006. The telephone request should be followed by a formal written request 

faxed to Allison Giles, Chief of Staff, Committee on Ways and Means, U.S. House 

of Representatives, 1102 Longworth House Office Building, Washington, D.C. 20515, 

at (202) 225–2610. The staff of the Committee will notify by telephone those scheduled to appear as soon as possible after the filing deadline. Any questions concerning a scheduled appearance should be directed to the Committee staff at (202) 

225–1721. 

In view of the limited time available to hear witnesses, the Committee 

may not be able to accommodate all requests to be heard. Those persons and 

organizations not scheduled for an oral appearance are encouraged to submit written statements for the record of the hearing in lieu of a personal appearance. All 

persons requesting to be heard, whether they are scheduled for oral testimony or 

not, will be notified as soon as possible after the filing deadline. 

Witnesses scheduled to present oral testimony are required to summarize briefly 

their written statements in no more than five minutes. THE FIVE-MINUTE 

RULE WILL BE STRICTLY ENFORCED. The full written statement of each 

witness will be included in the printed record, in accordance with House 

Rules. 

In order to assure the most productive use of the limited amount of time available 

to question witnesses, all witnesses scheduled to appear before the Committee are 

required to submit 300 copies, along with an IBM compatible 3.5-inch diskette in 

WordPerfect or MS Word format, of their prepared statement for review by Members 

prior to the hearing. Testimony should arrive at the full Committee office, 

1102 Longworth House Office Building, no later than close of business on 

Monday, April 3, 2006. The 300 copies can be delivered to the Committee staff in 

one of two ways: (1) Government agency employees can deliver their copies to 1102 

Longworth House Office Building in an open and searchable box, but must carry 

with them their respective government issued identification to show the U.S. Capitol 

Police, or (2) for non-government officials, the copies must be sent to the new Congressional Courier Acceptance Site at the location of 2nd and D Streets, N.E., at 

least 48 hours prior to the hearing date. Please ensure that you have the 

address of the Committee, 1102 Longworth House Office Building, on your 

package, and contact the staff of the Committee at (202) 225–1721 of its impending arrival. Due to new House mailing procedures, please avoid using mail 

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arrives at this facility, it will be opened, screened, and then delivered to the Committee office, within one of the following two time frames: (1) expected or confirmed 

deliveries will be delivered in approximately 2 to 3 hours, and (2) unexpected items, 

or items not approved by the Committee office, will be delivered the morning of the 

next business day. The U.S. Capitol Police will refuse all non-governmental courier 

deliveries to all House Office Buildings. 

WRITTEN STATEMENTS IN LIEU OF PERSONAL APPEARANCE: 

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

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

http://waysandmeans.house.gov, select ‘‘109th Congress’’ from the menu entitled, 

‘‘Hearing Archives’’ (http://waysandmeans.house.gov/Hearings.asp?congress=17). Select the hearing for which you would like to submit, and click on the link entitled, 

4 

‘‘Click here to provide a submission for the record.’’ Once you have followed the online instructions, completing all informational forms and clicking ‘‘submit’’ on the 

final page, an email will be sent to the address which you supply confirming your 

interest in providing a submission for the record. You MUST REPLY to the email 

and ATTACH your submission as a Word or WordPerfect document, in compliance 

with the formatting requirements listed below, by close of business Wednesday, 

April 19, 2006. Finally, please note that due to the change in House mail policy, 

the U.S. Capitol Police will refuse sealed-package deliveries to all House Office 

Buildings. Those filing written statements who wish to have their statements distributed to the press and interested public at the hearing can follow the same procedure listed above for those who are testifying and making an oral presentation. For 

questions, or if you encounter technical problems, please call (202) 225–1721. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. 

The Committee will not alter the content of your submission, but we reserve the right to format 

it according to our guidelines. Any submission provided to the Committee by a witness, any supplementary materials submitted for the printed record, and any written comments in response 

to a request for written comments must conform to the guidelines listed below. Any submission 

or supplementary item not in compliance with these guidelines will not be printed, but will be 

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

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

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

hearing record. 

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

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

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

by the Committee. 

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

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

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

Note: All Committee advisories and news releases are available on the World 

Wide Web at http://waysandmeans.house.gov. 

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

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

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

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

f 

Chairman THOMAS. Today, the Committee will discuss the implementation of the U.S.–Oman Free Trade Agreement (FTA). This 

FTA, continues the strong precedent set by the United States–Bahrain FTA in terms of our trade relations with the Persian Gulf regions. 

This Agreement will make 100 percent of U.S. imports and exports in consumer industrial goods duty free on the day the Agreement enters into force. It provides duty-free treatment to 87 percent of our agricultural products from day one, understanding that 

the two-way trade between the United States and Oman is less 

than $800 million in the most recent statistical year, 2004. The 

International Trade Commission (ITC) agrees that although it is 

small, it is positive. Like the FTA with Bahrain, clearly, this 

Agreement has significance beyond its immediate markets. 

The one thing that I will not recount in particulars, as I am 

going to recognize the gentleman from Florida, is the long, strong 

5 

friendship the U.S. has shared with Oman, signing their first treaty in 1833. I also would like to make note that there are letters 

that we have received from Oman that I would like to make a part 

of the record, in which the Ministry of Commerce and Industry has 

described specific steps the Omanis intend to take, including specific dates for action in regard to labor standards. That, I think, 

provides a measuring stick, one, which they will live up to, but two, 

should give additional comfort, looking forward, to what Oman will 

look like when the agreement enters into force. 

[The letters follow:] 

Embassy of 

The Sultanate of Oman Washington, D.C. 

March 3, 2006 

The Honorable William M. Thomas 

Chairman, House Ways and Means Committee 

2208 Rayburn House Office Building 

Washington, DC 20515–2105 

Dear Chairman Thomas: 

This will provide a reply to your request regarding Oman’s ability to adapt its 

labor rights regime in a manner similar to that which the Kingdom of Bahrain had 

committed in seeking Congressional approval of the U.S.–Bahrain Free Trade 

Agreement. 

We have reviewed the correspondence between the Kingdom of Bahrain and Ambassador Portman regarding issues and commitments of the Kingdom with respect 

to its labor right. regime. I have discussed these issues with the Minister of Industry and Commerce, H.E. Maqbool Ali Sultan, who has also conferred with the Minister of Manpower, H.E. Juma Al Juma. The Sultanate of Oman will: 

1. Clarify its law that more than one Representative Committee may be formed 

in order to represent workers in their relations with a single enterprise. 

2. Oman shall consult with the International Labor Organization and shall clarify 

that Representative Committees may belong to more than one federation. 

3. The Ministry of Manpower will review remedies available to workers for unlawful termination of a worker for participating in a strike. In the event a legal preference for remedies is advisable and in compliance with I.L.O. standards, Oman will 

consider requiring reinstatement as the preferred remedy in such cases. 

4. Oman shall continue to participate in consultations with the International 

Labor Organization to address and improve Oman’s evolving labor rights regime, including further clarification of collective bargaining rules. 

5. Oman will take steps to reduce government involvement in Representative 

Committee operations in order to conform to I.L.O. Convention 87. 

Our review of the Bahrain commitments indicate that other representations made 

by Bahrain are not readily comparable with Oman’s laws and practices. Nevertheless, if you believe otherwise, we will be pleased to further discuss these issues with 

you. 

CC: Angela Ellard; Majority Staff Director, Trade Subcommittee, House Ways and 

Means Committee 


30441A.001 30441A.002
6 

Sultanate of Oman 

Ministry of Commerce and Industry 

Muscat 

Date: 26 March 2006 

The Honorable William Thomas 

Chairman, Ways and Means Committee 

United Stats House of Representatives 

2208 Rayburn HOB 

Washington, DC 20515 

Dear Chairman Thomas, 

I sincerely appreciate the opportunity to work with you on the passage of the 

U.S.–Oman Free Trade Agreement and I welcome you interest in our labor laws. 

Over the last few years Oman has made significant progress in reforming our laws 

to comply with the International Labor Organization (‘‘ILO’’) core labor standards. 

We are currently consulting with the ILO to further modernize our law and practices, taking into account the ILO standards. Therefore, Oman makes the following 

commitments: 

1. Oman is hosting an ILO delegation in April of this year in order to determine 

how to incorporate ILO Convention 98 into our labor laws. Oman will then seek the 

views of the Council of Oman, the Council of Ministers, the Chamber of Commerce 

& Industry, representative committees and other interested parties (hereinafter, 

‘‘Interested Parties’’). Thus, Oman will be able to issue a Ministerial Decision, after 

consultation with Interested Parties, no later than October 31, 2006 that incorporates the standards of ILO Convention 98 into Omani labor laws. 

2. The Ministerial Decision referenced in number 1 above will clarify that Article 

(106) of the Omani Labour Law allows workers, at their option, to be reinstated for 

any termination that resulted from lawful union activity. 

3. After consultation with Interested Parties, Oman will issue a Royal Decree 

amending Royal Decree 35/2003 (the Omani Labor Law) by no later than October 

31, 2006 that states that more than one representative Committee may be formed 

in order to represent workers in their relations with a single enterprise. 

4. After consultation with Interested Parties, Oman will issue a Royal Decree 

amending Royal decree 35/2003, as noted in point 3 above to amend Articles (108– 

110) of the Labour Law reflect that each representative Committee may belong to 

the Main Representative Committee and that other main representative bodies may 

be formed. This action will be taken no later than October 31, 2006. 

5. After consultations with Interested Parties, Oman will issue a Ministerial Decision by no later than October 31, 2006 ensuring that penalties for anti-union discrimination are adequate to deter acts of discrimination. 

6. After consultations with the ILO and with Interested Parties, Oman will issue 

a Ministerial Decision by no later than October 31, 2006 that will ensure that technical standards for strikes do not exceed the standards of the ILO. 

7. As provided by the Basic Law of Oman, Oman does seek the views of Interested 

Parties, before making any changes in the legislation and will commit to continue 

this practice in the future. 

8. After consultations with Interested Parties, Oman will amend Ministerial Decisions 135/2004 & 136/2004 by no later than October 31, 2006 in order to remove 

all government involvement in representative Committees’ activities. 

Yours sincerely, 

Maqbool Ali Sultan 

Minister of Commerce & Industry 

f 

Chairman THOMAS. For the remainder of the time, I recognize 

the gentleman from Florida, the Chairman of the Subcommittee on 

Trade, Mr. Shaw. 

Mr. SHAW. Thank you, Mr. Chairman. I would like to express 

my pleasure that we are discussing the implementation of the 

U.S.–Oman FTA. Today we move forward on a FTA that I hope, 

in the end, will result in strong support similar to what we saw 

with the U.S.–Bahrain FTA, which received 327 yea votes in the 

7 

House of Representatives. It is true that the size of Oman’s economy is small relative to the U.S. economy. In fact, according to the 

Congressional Research Service, total U.S.–Oman trade was $1.1 

billion in 2005, accounting for only 4/100ths of 1 percent of all U.S. 

trade. Despite this small level of trade, there are some real benefits 

in this agreement for American producers. 

As mentioned earlier, the Agreement will provide immediately 

duty-free access to 87 percent of all agricultural tariff lines. My 

home State of Florida will receive duty-free treatment of many citrus products, and I am very pleased to see that Mr. Billotti, in his 

written testimony, noted that his construction work in Oman is 

generating new opportunities for Florida companies. However, beyond the benefits to American companies and workers, the people 

of both countries will benefit from the continued development and 

deepening of the good relationship between us. It is certainly in our 

best interest to foster strong economic growth in the economy of 

our allies, and there is little question that Oman has been a solid 

ally of ours for some time, as spoken by the Chairman. 

Particularly, I would like to applaud Oman and its leadership in 

dismantling the Arab League boycott of Israel. Additionally, Oman 

has no law which establishes or enforces primary, secondary or tertiary boycotts, and it does not apply the boycotts in practice. On 

September 28th, 2005, Oman’s Minister of Commerce and Industry, 

Mr. Maqbul, wrote to Ambassador Portman to reiterate that Oman 

does not apply any aspect of the boycott. I would like to ask unanimous consent to include this letter in the record. 

Chairman THOMAS. Without objection. 

[The information follows:] 

28 September 2005 

The Honorable Robert Portman, 

U.S. Trade Representative 

600 17th Street, NW 

Washington DC 20508, 

United States of America 

Dear Ambassador Portman, 

Please accept my congratulations on your recent appointment to serve as the U.S. 

Trade Representative. 

It has come to my attention that questions have arisen regarding Oman’s participation in the Arab Boycott of Israel. I would like to assure you that Oman does not 

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

laws to that effect. Oman has no restriction whatsoever on U.S. companies trading 

with Oman or doing business with Oman, regardless of its ownership or relations 

with Israeli companies, and the government is taking steps to ensure that all Ministries are aware of the situation and remove any boycott language that may unintentionally remain in their contracts. 

As a Member of the World Trade Organization (WTO), Oman did not invoke the 

non-application provisions of the WTO Agreement toward any other Member, and 

therefore has all WTO rights and obligations with respect to all Members. 

Your sincerely, 

Maqbool Bin Ali Sultan 

Minister of Commerce and Industry 

f 

Mr. SHAW. The incredible change that can be fostered through 

trade relations can bee seen in the Qualified Industrial Zone (QIZ), 

a program in Egypt, which provides trade benefits to Egyptian 

8 

companies that use Israeli content. Skeptics said that launching 

QIZs in Egypt would lead to protests against working with Israel. 

They were right that QIZs led to protests, but it couldn’t have been 

more wrong about the reason. Egyptian workers protested because 

more of them wanted the ability to work in these jobs; jobs that 

helped ties between Israel and the Arab world. All over, Oman has 

been in the forefront of the Persian Gulf Region in developing 

strong ties with Israel. 

After the signing of the Egyptian-Israeli Peace Treaty in 1979, 

Oman was one of the few Arab countries that did not break off relations with Egypt. It was also one of the few countries in the region to host an Israeli Prime Minister, when Prime Minister Rabin 

visited Oman in 1994. If we are to have any success in convincing 

countries to end the boycott, then we must stand ready to build relationships with those countries that do. With this his FTA, the 

U.S. can again show countries the economic benefits that are available to them if they reject this boycott. Mr. Chairman, I thank you 

for this time. I have run over, I appreciate it and yield back. 

Chairman THOMAS. Thank the gentleman. The Chair would 

recognize the Ranking Member, the gentleman from New York, for 

any comments he may wish to make at this time. 

Mr. RANGEL. Thank you so much. Welcome to the Committee. 

I will be yielding to the Ranking Member of the Subcommittee on 

Trade, but I am glad to see that the Chairman raised some questions or at least indicated that he had received some answers as 

it relates to basic International Labor Standards (ILS), and I see 

that you have referred constantly to labor standards consistent 

with internationally recognized principles. I assume you feel that 

one of the things that have torn this Committee apart on trade has 

been the interpretations of these standards. At some point I would 

like to know whether you have reached out to the Members of this 

Committee to try to get some agreements as to what the United 

States Trade Representative (USTR) thinks these standards should 

be, and how much time we have to deal with these questions. I 

really believe that more of these trade agreements should be bipartisan, and where efforts have been made to reach out, we have had 

tremendous success. I would like to yield to Mr. Cardin, who may 

be able to share whether or not the USTR has been working directly with him. 

Mr. CARDIN. Let me thank Mr. Rangel for yielding. 

First, let me just concur with the comments made about Oman 

being a longstanding friend and ally of the U.S., for all of the reasons that have been stated, and I hope we can conclude a FTA. 

However, I must raise an important concern that prevents me from 

endorsing the Agreement at this time. The structure of the Oman 

FTA, like those of other recent trade agreements, provides that the 

country must only enforce their own laws when it comes to basic 

labor standards. This is the only enforceable provision in the chapter on labor, and there is no requirement that the countries bring 

their laws into compliance with internationally recognized standards. When ‘‘enforce your own laws’’ is the model we use in our 

trade agreements, it is important that a country’s labor laws meet 

basic international standards. Unfortunately, at this time, Oman’s 

labor laws do not meet these standards. 

9 

Last month, Oman committed to issue several ministerial and 

royal decrees by October 31, 2006, to address certain areas where 

its laws fall short of basic international labor standards. Mr. Chairman, I believe Oman’s commitments are an important step in the 

right direction. However, there is more work that needs to be done 

if we are able to get the type of bipartisan support that the U.S.– 

Bahrain FTA had. As you recall, the key to broad congressional 

support for the U.S.–Bahrain FTA was a detailed agreement 

reached between the U.S. Government and the government of Bahrain regarding labor laws. This Agreement had four key parts. 

First, Bahrain was able to demonstrate that its existing labor laws, 

as applied, were consistent with basic international standards. 

Oman has not yet satisfied this requirement, as Oman has not 

committed to apply its laws immediately in an International Labor 

Organization (ILO) consistent manner in the areas where its laws, 

as written, do not currently meet international standards. 

Second, Bahrain made a commitment to make formal changes to 

all of its laws that were not fully ILO compliant. Oman is committed to issuing ministerial decisions to address seven areas in 

which the country’s laws currently, do not comply with ILO standards. However, it is unclear whether these ministerial decrees override previously enacted contradictory provisions and Oman’s labor 

laws. In addition, Oman has not committed to making changes to 

address three other areas in the law that are not fully ILO compliant. 

Third, Bahrain made a commitment to introduce the formal 

changes to its laws immediately, committing that certain changes 

would be submitted to the Parliament before the House voted on 

the FTA, and certain other changes would be submitted within 3 

weeks of the House vote. Oman has not committed to take immediate action to address these areas in which laws fall short of basic 

ILO standards. Instead, Oman has committed to issue certain ministerial and royal decrees by October 31, 2006. 

Fourth, prior to the Committee on Ways and Means markup of 

the U.S.–Bahrain FTA, U.S. Ambassador Portman sent a letter to 

the government of Bahrain, reflecting a joint agreement between 

the two countries that Bahrain’s commitment to continuing applying its laws in an ILO consistent manner, and to formally change 

its laws to comply fully with ILO standards, would be considered 

as, ‘‘matters arising under the agreement,’’ and subject to consultations. No such commitment has been made with respect to the enforcement of commitments made thus far by Oman. Mr. Chairman, 

I think we are on the right path, but there are several additional 

steps that must be taken before this Agreement can gain the broad 

bipartisan support. Let me just make my final comment to point 

that Oman currently benefits from the U.S. Generalized System of 

Preferences (GSP), and of course, as part of that, they must be 

moving toward ILO standards. I think it is important that the final 

agreements that are reached meet the standards of the Bahrain 

FTA, and we are not there yet. I hope we can get there, and I will 

look forward to working with the Committee. 

Chairman THOMAS. I thank the gentleman for his comments. 

Just to clarify, the letters that the Chairman requested to put in 

the record, were letters to the Chairman from the Omanis, and the 

10 

Omanis responded back to the Chairman. The Chairman’s idea for 

a letter directly was based upon our friends on the minority side’s 

similar actions with Morocco and Bahrain. I think it is a good idea. 

Although they were not shared with the majority prior to having 

them sent, our concern was the content of the letters, I am hopeful 

that the minority’s reaction to the Chairman’s letter would not be 

based upon the manner, as I indicated, but on the contents, and 

I believe the gentleman from Maryland’s comments were focused 

on the contents of the letter, and I appreciate that. 

Mr. CARDIN. We are not concerned about how we get the commitment, so we are very much working—and as I said, I think the 

letter exchange between you and the Omanis was a positive step, 

so we look forward to—— 

Chairman THOMAS. As the Chair thought, the letters from the 

minority to Morocco and Bahrain—I just heard some comments 

about that and I wanted to clarify the record—our job was to try 

to get it right, and that would be something substantive that we 

could focus on. 

Mr. RANGEL. Mr. Chairman, would you yield? 

Chairman THOMAS. Gentleman from New York. 

Mr. RANGEL. Could you share with a copy of the Chairman’s 

letter? 

Chairman THOMAS. Yes. It is in the record and it will be available to everyone. 

Mr. RANGEL. That would help too. 

Chairman THOMAS. As would the Morocco and the Bahrain letters would have as well. Now it is my pleasure to have before the 

Committee, the Honorable Susan Schwab, who is the Deputy 

USTR, and thank you very much. You may address the Committee 

in the time you have in any way you see fit. Any written testimony 

will be made a part of the record. 

STATEMENT OF THE HONORABLE SUSAN C. SCHWAB, DEPUTY 

UNITED STATES TRADE REPRESENTATIVE, OFFICE OF THE 

UNITED STATES TRADE REPRESENTATIVE 

Ms. SCHWAB. Thank you, Mr. Chairman. I will be submitting 

written testimony for the record. Mr. Chairman, Chairman Shaw, 

Congressman Rangel, Members of the Committee, let me begin by 

thanking you and other Members on the Committee who have 

worked in such close partnership with us on our FTAs. I am also 

grateful to the cochairs of the Middle East Economic Partnership 

Caucus, Congressmen Ryan, Meeks, Jefferson, English, Chandler 

and Issa, who have been extremely supportive of this agreement. 

I appreciate the opportunity to discuss the U.S.–Oman FTA with 

you today. This and other FTAs that the Committee has considered 

are important elements of U.S. policy in the Middle East, with potential benefits that extend well beyond their immediate trade implications. 

With this Agreement, Oman has made legally binding commitments to liberalize trade with the U.S. The FTA will provide new 

market access opportunities for U.S. manufacturers, farmers and 

service providers. It will also create an economic environment conducive to additional economic opportunities for the people of Oman. 

11 

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

promote the benefits of pursuing market opening policies in other 

countries in the region. Embracing trade will benefit the people of 

the Middle East as they strengthen their ties with countries outside the region and with each other. 

The Administration’s trade agenda is a fundamental part, therefore, of the President’s vision of developing economic growth and 

democracy in the Middle East. In May 2003, the President announced a plan of graduated steps for Middle Eastern countries to 

increase trade and investment with the U.S. and others in the 

world economy, and to create a U.S.–Middle East Free Trade Area 

(MEFTA), by 2013. Oman is the fifth Middle Eastern country to 

have negotiated an FTA with the U.S., building on our existing 

agreements with Israel, Jordan, Morocco and Bahrain. We are also 

negotiating an FTA with the United Arab Emirates, and have 

Trade and Investment Frameworks Agreements (TIFA), with most 

other countries in the region. These are important steps in implementing the President’s initiative. 

The 9/11 Commission urged the U.S. to expand trade in 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 future.’’ The President 

and USTR take this recommendation very seriously, and the Oman 

FTA is an important milestone in our progress. 

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, 

as was indicated by the Chairman and Subcommittee Chairman 

Shaw. Oman will also provide immediate duty-free access for 87 

percent of the lines of U.S. exports of agricultural products with 

major potential benefits to American exporters. Services regimes 

will also be liberalized, including banking and securities, insurance, telecommunications, express delivery, distribution, health 

care, construction, architecture and engineering. 

We are also very pleased with the legal and regulatory environment changes that will be going on in Oman as a result of this 

Agreement that will assist foreign investors who want to see a 21st 

century commercial environment in which to invest. The labor 

laws, labor law reforms, intellectual property rights reforms, all are 

important parts of this Agreement, as are provisions in the FTA related to transparency, public notification and anti-bribery provisions. The FTA’s labor and environment provisions fully meet the 

negotiating objectives set out in the Trade Act of 2002 (P.L.107– 

210) and these provisions are included in the core text of the 

Agreement. The Agreement requires that each party not fail to effectively enforce its labor and environmental laws. Moreover, each 

country commits to ensure that its policies provide for and encourage high levels of environmental protection, to strive to ensure that 

its labor laws provide for labor standards consistent with internationally recognized principles, and we can talk more about that 

later, and strive not to weaken or reduce labor or environmental 

laws to attract trade and investment. 

12 

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

the creation of worker representative Committees for the first time. 

It also removed its 1973 enacted prohibition on strikes. The Agreement enjoys widespread support from our private sector advisory 

Committees. I look forward to answering any questions you might 

have about this important agreement. 

[The prepared statement of Susan Schwab follows:] 

Statement of The Honorable Susan Schwab, Deputy U.S. Trade 

Representative, Office of the U.S. Trade Representative 

INTRODUCTION 

Mr. Chairman, Congressman Rangel, and Members of the Committee: 

I would like to thank Chairman Thomas, Congressman Rangel, and others on the 

Committee who work in such close partnership with us on our free trade agreements. I am also grateful to the co-chairs of the Middle East Economic Partnership 

Caucus—Congressmen Ryan, Meeks, Jefferson, English, Chandler and Issa—who 

have been extremely supportive of this agreement. 

I appreciate the opportunity to discuss the United States–Oman Free Trade 

Agreement (FTA) with you. 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, and service providers. It will also be an important force in 

encouraging increased direct foreign investment in Oman and in creating an economic environment conducive to additional employment opportunities for the people 

of Oman. 

Beyond substantial trade liberalization, the FTA will help support ongoing economic, political and social reforms in Oman, and promote the benefits of pursuing 

market liberalizing policies in other countries in the region. Embracing trade will 

benefit the people of the Middle East as they strengthen ties with countries outside 

the region and with each other. The more nations trade with one another, the better 

the chances for ending political instability and economic stagnation. 

The Administration’s trade agenda is a fundamental part of the President’s vision 

of developing economic growth and democracy in the Middle East—a region of almost 350 million people and a $70 billion trading relationship with the United 

States. 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 United States–Middle East Free Trade Area 

(MEFTA) by 2013. This trade agenda is one element of a comprehensive approach 

to address the economic, social and political challenges facing the region and U.S. 

interests in the area. 

Our strategy toward countries in the region—to engage them at their individual 

levels of progress, to provide them access to the U.S. market based on mutual benefit, and to require that they adopt high standards for trade and investment—is 

working. Oman is the fifth country in North Africa and the Middle East to have 

negotiated an FTA with the United States, building on our existing agreements with 

Israel, Jordan, Morocco and Bahrain. We are also negotiating an FTA with the 

United Arab Emirates and have Trade and Investment Framework Agreements 

(TIFA) with most of the other countries in this region, which provide opportunities 

to enhance our bilateral trade and investment relationships. These are important 

steps on the path to implementing the President’s MEFTA initiative. 

The 9/11 Commission urged the United States to 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 future.’’ The President and USTR take this recommendation very seriously. 

Working in close partnership with Congress has been critical to our successes to 

date. The Trade Act of 2002 put in place procedures that make it possible to negotiate and implement the types of agreements that not only address the pressing 

need for engagement with regions such as the Middle East, but also bring real benefits to American workers and the U.S. economy. 

THE AGREEMENT 

The United States–Oman FTA will eliminate tariffs and non-tariff barriers and 

expand trade between the two countries, generating new opportunities for U.S. 

workers, consumers, farmers, manufacturers and service providers. 

13 

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 dutyfree access for 87 percent of U.S. exports of agricultural products. This will mean 

new opportunities for U.S. companies that produce machinery, automobiles, optical 

and medical instruments. And it will mean new opportunities for U.S. producers of 

vegetable oils, sugars and sweeteners for beverages. 

Under the FTA, Oman will provide substantial market access across its entire 

services regime, providing new opportunities for U.S. companies involved in banking 

and securities, insurance, telecommunication, 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 want to see in 21st century commerce. Under the Agreement, Oman will provide effective enforcement of labor and 

intellectual property laws. This will help make Oman a more attractive place for 

investors and create new opportunities for the Omani people. 

The Agreement’s rules of origin provisions on regional cumulation allow FTA partners in the region to combine inputs into products and qualify for preferential tariff 

treatment. This feature will facilitate connecting our bilateral agreements as we 

move toward a more integrated, region-wide agreement. It will also encourage trade 

among countries in the region, an important yet currently missing ingredient for the 

region’s development. 

The Agreement also includes important transparency, public notification, and 

anti-bribery provisions. Application of these provisions will also help to improve the 

business and investment environment in Oman by providing more certainty and 

predictability for firms and individuals operating and investing there and promoting 

the rule of law. 

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. The Agreement requires that each Party not fail to effectively enforce its labor and environmental laws. If they consistently fail to enforce those laws 

in a manner that affects our trade, then they face the prospect of monetary penalties that will be directed to solve the problem, or potentially face the loss of preferential trade benefits. Moreover, each country commits to ensure that its laws and 

policies provide for and encourage high levels of environmental protection, to strive 

to ensure that its labor laws provide for labor standards consistent with internationally recognized labor principles, and to strive not weaken or reduce labor and environmental laws to attract trade and investment. Also notable are provisions calling 

for panel expertise in the event of labor or environmental disputes, as well as a 

mechanism that would allow for monetary assessments to be used to assist a country in addressing a labor or environmental violation. The Agreement also establishes 

processes for further cooperation on labor and environmental issues. 

Oman passed a new labor law in 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. 

The Agreement enjoys widespread support from our trade advisory committees. 

The most senior committee, the Advisory Committee for Trade Policy and Negotiations (ACTPN), ‘‘unanimously endorses the United States–Oman Free Trade Agreement,’’ and found the agreement ‘‘is in the best economic interest of the United 

States.’’ In addition, the ACTPN views the agreement as ‘‘an additional step toward 

the goal of a Middle East Free Trade Area,’’ and noted that the agreement ‘‘will improve and strengthen overall U.S. relations with the countries in the Middle East.’’ 

Committees representing sectors such as consumer goods, services, information technology, intellectual property, and agriculture also expressed broad support for the 

Oman FTA. 

We recognize that the Labor Advisory Committee has concerns about all FTAs 

that the United States has concluded to date, and that such concerns relate as well 

to the Committee’s assessment of this agreement. We are convinced that the disciplines and consultative mechanism in the FTA will play a major role in further 

improving the labor situation in Oman. 

CONCLUSION 

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

14 

cement our long-standing friendship and growing commercial ties and create new 

economic opportunities for both of our countries. 

This Agreement also helps the advancement of economic and political freedom in 

the region and is an essential building block for the Administration’s goal of assisting the countries in the Middle East to build more market-oriented, liberalized economic regimes. 

With your guidance and support, we will continue to pursue the President’s 

MEFTA initiative. 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 be pleased to respond to questions or comments from Members of the 

Committee. 

f 

Chairman THOMAS. Thank you, Ambassador. Any Member wish 

to inquire of the Ambassador? The gentleman from New York. 

Mr. RANGEL. Thank you, Mr. Chairman. Let me thank the 

Chairman, as well as you, for referring to the labor standards that 

we would find acceptable, and especially for inclusion in a very 

general way in your statement before us today. You indicate that 

you are striving to ensure its labor laws provide for labor standards 

consistent with internationally recognized labor principles, and 

then you relate that Oman is working with the ILO on these efforts. Can we assume that the USTR office is suggesting that the 

ILO standards be one in which the U.S. and the government of 

Oman can agree to? 

Ms. SCHWAB. Congressman Rangel, I highlighted the labor provisions in my opening statements because it occurred to me that 

that might be a topic of some discussion today at the hearing. 

These labor provisions are a very important part of these agreements, and as you know, we have approached these on a case-bycase basis based on the state of labor laws and reforms in any 

given country. 

To talk specifically about ILO core labor standards, as you know, 

there are four core labor standards, we address four core standards 

within these agreements. If you are talking about the specific dotting of ‘‘i’s’’ and crossing ‘‘t’s’’ of the ILO treaties, it is important 

to note that the U.S., for example, has ratified two of the eight 

treaties that correspond to the four standards. It is uneven in 

terms of the countries that have ratified others. For example, you 

will find that Sri Lanka and Belarus have ratified all eight. Sudan 

and Bangladesh have ratified seven. 

Mr. RANGEL. I guess I didn’t word my question correctly. You 

know, with intellectual and so many other issues, there is an 

American standard that we request, and I am pleased to see that 

the Chairman has asked the government of Oman as to what they 

intend to do to protect the workers. If we are going to do this on 

a country-by-country basis and not have an American standard, 

whether we abide by the standard or not, if the country is saying 

it wants to, you don’t have an objection to these countries having 

a higher standard in terms of agreeing to ILO provisions just because we don’t abide by or haven’t signed? There is no objection to 

their unilaterally agreeing, is there, with USTR? 

Ms. SCHWAB. Well, and in fact, in part, as a result of these 

FTAs, our FTA partners in many cases have really advanced their 

commitment to and their changes in their labor laws to reflect core 

15 

ILO standards. For example, in the case of Oman, the case we are 

talking about here, Oman passed a major labor law reform. 

Mr. RANGEL. I am not saying there hasn’t been improvement. 

What I am trying to do, since we—I am trying to find out whether 

we can get more bipartisan support. You refer to that in your statement. You know what the major objections have been in each and 

every trade agreement that has come before this Committee. It has 

been unclear to me, unless you have discussed it with the staff of 

the Democrats, as to what USTR believes is acceptable as it relates 

to getting countries not to enforce their own laws—they may not 

have their own rules—and not just to deal with improvement, because I am emotionally impressed with many of the developing 

countries’ improvement. To have a standard that Republicans and 

Democrats can say ‘‘this is what America stands for.’’ This is what 

we believe workers, minimum standards for workers no matter 

what country it is. I just can’t break through the language in which 

the USTR is willing to accept that could be a standard, so that you 

don’t have to deal with the partisanship that exists on the Committee because of a serious difference of opinion as it relates to the 

labor standards. 

I am just saying, is there any reason why you can’t go further 

and say, ‘‘These are basic standards?‘‘ You can call them ILO, you 

can call them USA. You can say, ‘‘This is what we expect.’’ Is there 

any way that you can give us guidance besides country-by-country 

as to what is it the U.S. of America demands of a country as it 

treats its workers, as it relates to right to assembly, to organize 

and to bargain? 

Ms. SCHWAB. I think there are fewer differences than your 

question implies. 

Mr. RANGEL. Does your office have basic standards that, instead of us having to deal with country-by-country, does your office 

have standards that we can talk with and know that when it gets 

to this Committee, that that is already incorporated in an agreement, and we can then discuss other issues. Why do we always 

have to get weighed down with this issue as to why there is no 

basic standard that we have? 

Chairman THOMAS. The gentleman’s time has expired. Let me 

pursue a line of questioning that might illuminate for the gentleman from New York, some of the reasons why procedure may be 

carried on the way it is. If in fact you have—and the gentleman 

ran through some of the typical labor concerns, assembly, organize, 

bargain—clear ILO points, and that if we were to use the ILO 

standards, and that there had to be explicit agreement with the 

specific ILO standards, and the U.S. wanted to have a FTA with 

itself, would we meet those standards in terms of the specificity of 

the International Labor Organization’s specific, explicit written requirements? 

Ms. SCHWAB. The core ILO standards are broadly articulated, 

as you know. Refer to free association, the right to organize—— 

Chairman THOMAS. In other words, you would have to look at 

what is going on, the specifics of what a country is doing more than 

a list of objective criteria, which if they say, ‘‘Yes, I am for eight, 

I am for seven, I am for six,’’ and if you are for five or more you 

are okay. The idea of trying to create an absolute objective checkVerDate Aug 31 2005 04:25 Dec 21, 2006 Jkt 030441 PO 00000 Frm 00019 Fmt 6633 Sfmt 6602 E:\HR\OC\30441.XXX 30441
16 

list is not a way to deal with—in the Chair’s opinion, and I assume 

in USTR’s opinion, with reality. For example, we have heard Bahrain. Bahrain is being held up as an example of what we would 

like. Well, frankly, all Bahrain promised to do was to introduce certain measures. Now, why would introducing certain measures be a 

more comforting criteria than Oman’s specificity of October 31, 

2006, something will happen? 

Well, the reason is you have to look at the governmental structure. Bahrain is a monarchy, but they have a parliament. They 

can’t tell you on October 31st something is going to happen. All 

they can do is promise to introduce it, and we hope the process 

works the way we hope it will work, and that the result will be 

what we want. Why in the world could Oman say, ‘‘Hey, October 

31st, it’s done,’’ because Oman is a sultanate that has a consulting 

group, and they will be consulted with, but the Omani Minister has 

the ability to write in a letter that October 31, 2006 it will happen. 

As far as I am concerned, if I get those two commitments, I have 

a higher comfort level with the Omanis’ commitment because of its 

certainty. If we are going to get into an examination of the governmental structure, and we are excited because Bahrain is going to 

introduce something into a parliament, we all feel comfortable because of our commitment to a more democratic structure, although 

we all certainly know that a commitment to that process means no 

guarantee on result. Whereas, with the Omanis, they have guaranteed a result. 

I think the reason you don’t have a simple, easy, 100 percent 

agreed-upon checklist is that everybody deals with it in different 

ways. What we are looking for is a fundamental core commitment, 

because then it makes all kinds of sense, that if you can see that 

they have done what we consider basic, we can require them to 

match their own laws, and where they fail to do that, those laws 

being minimally adequate. I think where you really get a difference 

is not in all those machinations, it is in the fact that the requirement of what it is they should have in their law so that we can 

punish them if they don’t match up to it, is far beyond what anyone would consider reasonable or appropriate. The goal would be 

to move in a significant way, the world labor movement forward, 

but not necessarily benefit a particular country in terms of its attempts. 

I cannot tell you how eloquent the President of Peru was, in 

which he said, ‘‘Please look at my formal labor structure. The one 

the government can control—judge us on that. If you are going to 

judge us on the informal labor structure, then look at my history, 

one of 16 children, had to go shine shoes at 6 years of age, try to 

drag themselves out of abject poverty, and are they going to follow 

some international labor standard as they are trying to scratch out 

an existence. Don’t judge me by that,’’ he asked, and, frankly, I 

agree with him. 

Our job is to look at where they are, where they commit to be, 

and our comfort level, that in fact, is going to happen, so that when 

these agreements go into effect, we will hold them to their standards because their standards are minimally acceptable. The gentleman from Florida. 

17 

Mr. SHAW. Thank you, Mr. Chairman. Very, very briefly, I want 

to talk more about the politics of the Middle East and the effect 

that this agreement, the acceptance or rejection would have on it. 

One of the best ways to combat terrorism from that part of the 

world is to build bridges into that part of the world. I will use an 

old expression, you destroy your enemies by making them into your 

friends, and there are some good people in that part of the world, 

and unfortunately, the few bad people over there are extremists 

and are creating terrible, terrible problems on a worldwide basis. 

What effect would the acceptance or rejection of this particular 

agreement have upon those bridges that we are trying to build? 

Secondly, how would it affect the Commission recommendations 

of 9/11 if we had a slim majority or a large majority passing this 

bill? I believe that in the end we will come together as Democrats 

and Republicans and iron out the few problems that we have, but 

I think we do at this point, at this hearing, need to look into the 

upside and the downside of the action of Congress. 

Ms. SCHWAB. Congressman, you raise a very important point. 

I mentioned the President’s MEFTA initiative, and we are well on 

our way. This is the fifth FTA that would be a piece of that puzzle. 

One of the things that perhaps a lot of us don’t realize is the extent 

to which these kinds of FTAs are very high profile in the countries 

involved, the countries where we are negotiating. This is a major 

issue in Oman, for example. 

Therefore, a dramatic embracing of this FTA by this Committee, 

by the U.S. Congress, would be a very welcome development and 

a strong positive signal that the U.S. would be sending to the people of Oman about the importance that we place—and not just the 

people of Oman, by the way, but also on others in the region is implied by your question—about the importance that we place on the 

region, and the implications of the FTA are not just economic implications. Again, as you noted, they have political implications and 

social implications going forward. 

The rejection of this agreement by the Congress would be an extremely negative development, and obviously, the larger the margin, the stronger the positive message being sent. With economic 

liberalization, we see political liberalization. The President spoke of 

this in the State of the Union address. We are striving for a world 

that is moving away from economic isolationism. Thank you. 

Mr. SHAW. Thank you. I yield back, Mr. Chairman. 

Chairman THOMAS. The gentleman from Michigan. 

Mr. LEVIN. Thank you, Mr. Chairman. I was going to ask you 

a question about intellectual property and pharmaceuticals, why 

this agreement goes beyond the CAFTA language. I want to respond to the Chairman. The question is not conventions. We all 

have signed the declaration. The declaration commits each country 

to carry out the labor standards, the five international standards. 

To make that commitment real, it has to be in their laws and practices. Raising the convention issue, I think is really a diversion. 

Likewise, the notion that Mr. Thomas has raised that if it is 

spelled out in exact detail, essentially the U.S. might be caught 

within it. No one is talking about writing the National Labor Relations Act 1935 (Ch. 372, 49 Stat 449), into an agreement. It is the 

basic standards in implementing them. I remind the Chairman and 

18 

everybody else, in order for it to be actionable, it has to be a violation that would directly affect trade relations between the countries. Putting labor standards into trade agreements is not an open 

invitation to getting at the labor laws of one country or another. 

The matters have to affect trade and affect them directly. 

I want to get back to this issue relating this country, Oman, but 

quickly. The Chairman talks about Peru. The problem with Peru’s 

labor laws are not that they don’t apply to the informal sector, that 

is one problem, but they are woefully inadequate in terms of ILO 

standards in terms of the formal sector, and that is a major problem that we will be talking about. In terms of Bahrain, the Chairman says look at the difference. In this case you have a system of 

government where the leader can decree by himself, and so then 

the question arises, why wait until October or November? Why not 

make sure that before the agreement is carried out, the trade 

agreement is agreed to, that the laws are in place? If it can be done 

just like this, what we say is, let them do it as is necessary in other 

provisions of trade agreements. 

Chairman THOMAS. If the gentleman will yield briefly on my 

time on that point? 

Mr. LEVIN. Yes. 

Chairman THOMAS. I said the government of Oman is different. 

It is a consultative government. They do have a formal consultative 

process. If the gentleman is asking us for the government of Oman 

to violate its formal consultative process so that you can have in 

place what you want when you want it, that would be done immediately. All I said was, they could give you the final outcome because it is consultative. The process does take time. It does involve 

actual consultations. That is why it is not done immediately. 

If the gentleman is requesting that the government of Oman not 

do what it normally does when it makes changes, that is, of course, 

a request we can make of them, and I will join with you in asking 

them not to follow the procedure they use in their country to make 

changes, if that is the request you want to make. 

Mr. LEVIN. I am glad that was on your time. 

Chairman THOMAS. It is on my time. 

Mr. LEVIN. It is not my request. 

Chairman THOMAS. Well, okay, then. I won’t—— 

Mr. LEVIN. I am not suggesting that they violate their laws or 

their processes. They have the ability to act and to act promptly, 

and not to essentially have us act on an agreement with promises. 

I simply suggest—and I guess I will go back if there is time and 

ask our Ambassador—I will go through the various core labor 

standards, and ask if by any stretch of the imagination, today, they 

are met. The answer is, in terms of the core labor standards, they 

are not met. They are not met. They are far from it. Interference 

in the right of workers to associate. Employers can participate in 

meetings of employees. If you are not speaking Arabic, you are not 

allowed to participate in the process. 

The ILO makes clear that there are violations across the board 

today, and what is being suggested here is that the government 

says it will do, and so, we are supposed to move ahead on a statement as to what a government will do, and those are vague. We 

don’t do that, Mr. Chairman, as to any other provision of a trade 

19 

agreement. We don’t do that. We don’t take a statement of intention. What we do is insist on the embodiment of what we have 

agreed in the laws and actions of a country. 

I fully understand, and I finish with this; the importance of 

Oman, but for our representative to say here with a straight face 

that this country is abiding by its obligations under the declaration 

is simply pretending something that is not true. It is not true. Why 

do we not sit down, Mr. Chairman, and work on this together? 

With Morocco—I finish—we were active. We wanted—the more 

participation the better from the majority. I am glad there was a 

letter to you. I suggest we sit down on a bipartisan basis with the 

government of Oman and figure out how they are going to comply 

with their obligations, and to do it promptly within their processes, 

so that we have something in place when we move on this. That 

is all we are asking. 

Chairman THOMAS. The gentleman’s time has expired. 

The gentleman from California? 

Mr. HERGER. I request recognition. 

Chairman THOMAS. Does the gentleman yield to the Chair? 

Mr. HERGER. I yield. 

Chairman THOMAS. Thank the gentleman. The gentleman has 

laid out his criteria on what he wants with Oman in which we 

don’t do what he says that we are going to be doing here with a 

guaranteed date of enactment. I tell the gentleman, that is exactly 

what we are doing with Bahrain, except we do not have a conclusion in the agreement with Bahrain. We had a promise that they 

would introduce legislation. the gentleman’s own criteria is not carried out with the agreement with Bahrain. Yet, that has been held 

up as a model that we really, really like. One thing I do hope we 

have around here is at least consistency. 

I thank the gentleman, and—— 

Mr. HERGER. Thank you, Mr. Chairman. 

Three years ago the President proposed to establish a MEFTA 

area within 10 years, and in his words, to bring the Middle East 

into an expanding circle of opportunity. This is the message we are 

now carrying through the U.S.–Oman Free Trade Agreement. Certainly, there is forward movement in terms of the particular sectors 

we all typically watch, service, investment, Intellectual Property, or 

in my case, agriculture. For example, all the agriculture is covered 

by the agreement whether immediate or over time. The Technical 

Advisory Committee for Grains and Seeds fully endorsed the FTA 

reached with Oman, noting that the industry will benefit from the 

immediate tariff reductions, as well as by Oman’s movement toward the science-based Sanitary and Phytosanitary Measures 

Agreement (SPS) guideline, more transparency, and these procedures. 

Similarly, the Fruits and Vegetables Advisory Committee noted 

that the FTA will provide equity and reciprocity within the fruits 

and vegetable sector. Still, we are realistic about potential market 

access in Oman. With $12 million in total agriculture products exports to Oman in 2005 to a population of 3 million, there is obviously much more to this Agreement than market access in any particular sector. In this spirit and in the spirit of the MEFTA, Ambassador Schwab, how do you view this agreement as contributing 

20 

to our efforts against terrorism and how does free trade between 

the U.S. and Oman help support our other objectives, those of reform and political liberalization in the Middle East? 

Ms. SCHWAB. Thank you, Congressman. Thank you for that 

question. As I had indicated, Oman is part of the President’s 

MEFTA initiative, and you spoke about his commitment to have 

MEFTA by the year 2013. This is an important step leading to 

that. This is the fifth FTA that we have negotiated that we have 

concluded in the Middle East. Israel, Jordan, Morocco, Bahrain, 

and now Oman. We are in negotiations with the United Arab Emirates, for example. We have TIFAs with a variety of other countries 

in the region, and it is absolutely the case, and stressed by the 9/ 

11 Commission, about the important link between development and 

the openness of societies. This is an integral part of our effort to 

see reform in the Middle East, and, as the 9/11 Commission said, 

more opens societies and opportunities for people to improve the 

lives of their families, and to enhance prospects for their children’s 

future. This is a process that we take very seriously. 

Obviously, the economic implications are important, and we find 

when we negotiate FTAs, that those countries really are believers 

in open trade, and become very important allies for us, for example, in WTO negotiations. We are able to set standards that are 

higher than the standards that we are able to set in the WTO. 

Aside from the obvious trade-specific implications, there are very 

important geopolitical implications here, and I thank you for the 

question. 

Mr. HERGER. Madam Ambassador, again, I thank you and the 

Administration for this outstanding work, and I think it is so important that we do recognize not only is this of tremendous benefit 

to our economy, but it helps set the standard in our war on terrorism and on other FTAs. Again, I thank you for your work. 

Ms. SCHWAB. Thank you, Congressman. 

Mr. RYAN. [Presiding.] Mr. Cardin. 

Mr. CARDIN. Thank you, Mr. Chairman. 

It is a pleasure to have you before us again—it is the first time 

I believe. It is nice to have you before our Committee. Let me get 

back to the legal issues on ILO standards and try to get the 

USTR’s position on this. Do we know what the legal effect of ministerial decisions are as it relates to decrees that are inconsistent 

with the current laws in Oman? Do they supersede the laws permanently, or is it necessary also to change the laws? What are the 

legal effects of these ministerial decrees? 

Ms. SCHWAB. Our understanding—and this is, perhaps, one of 

the reasons that each country has a somewhat different formula in 

terms of how it conforms to its commitments. Each country has a 

different way of enshrining these particular commitments and in 

the case of Oman, as you noted, there is a commitment to do by 

decree a variety of elements that had been requested. The date of 

commitment, the date that they have agreed to have this done by 

decree, is the end of October. My understanding is the end of October—this was a question raised earlier—is in part because the 

Shura, which is the legislative body with which the extensive consultations take place is adjourned for much of the time between 

June and the end of September, so that is part of it. 

21 

In terms of what has the force of law and practice, my understanding is, these have the force of law. We do know that in 2003, 

the fundamental labor reform legislation or laws were passed in 

Oman. This is the basis of these changes. In terms of the practices—— 

Mr. CARDIN. Yes, I want to get to them as well, but also, the 

fact that they are not going to be in session during the summer 

months, it would seem to me we should be asking that this action 

be done before they go on summer recess. After all, I believe there 

may be some interest in Congress taking up this Agreement for approval before we return from our August recess. It would seem to 

me that we should be expecting the Omanis to act before they go 

into recess, rather than October. I just point that out. 

The other point, if you would address, deals with compliance. In 

Bahrain, the USTR was able to get a commitment that we could 

raise issues under the labor sections of the Agreement if they don’t 

comply with the exchange of letters on the changing of their laws 

and acting and practice in ILO standards. My question is, are we 

going to seek a similar type of ability to raise these issues under 

the FTA if Oman either does not change its practice or change its 

laws, or is not in compliance of ILO understandings that we have? 

Ms. SCHWAB. I think, Congressman Cardin, we are pleased 

with the commitments that the Omanis have made to the Chairman. These have been—— 

Mr. CARDIN. If they do not comply, what would be our options? 

If they don’t change the laws, what would be our options? 

Ms. SCHWAB. Under our agreement, under the FTA agreement, 

they are committed, they have committed to enforce their laws. 

Mr. CARDIN. I understand that, but if they do not change their 

laws in October, if after we were—suppose we were to ratify this 

in June, and the Omanis do not change their laws, what would be 

our options? 

Ms. SCHWAB. Let me suggest that when we negotiate these 

agreements, it is under the assumption that each side is going to 

implement the agreement. 

Mr. CARDIN. No, that is not correct. We have legally binding 

commitments to enforce the terms of the FTA, and we could be 

taken under dispute settlement if we don’t comply with our commitments to open market and remove obstacles. My question is, if 

they do not change their labor laws, what options do we have legally under the agreement? 

Ms. SCHWAB. Well, as you know, labor is not the—labor law 

issues are not the only issues in FTAs where there are side agreements and side letters. 

Mr. CARDIN. I know. Do we have any options for enforcement? 

I mean, enforce your own laws is in the agreement. They have a 

responsibility to enforce their own laws, but if they don’t change 

their laws by the side agreements that have been raised, do we 

have the right under the Agreement to raise the issues? 

Ms. SCHWAB. Congressman Cardin, let me suggest that empirical—the former academic in me comes out here. I apologize. The 

empirical evidence is that with every one of our FTAs, the countries that have made commitments associated with the FTA. For 

22 

example, in the case of Oman, they started making agreements and 

changes in their laws—— 

Mr. CARDIN. In Bahrain, we have that commitment to be able 

to bring it up under the agreement, and from the way that you are 

responding, you are not giving me any comfort that we have the 

ability to enforce the letter that our chairman has referred to and 

put in the record. 

Ms. SCHWAB. Congressman, up to this point that dialog, that 

exchange has taken place between the government of Oman, and 

the Ways and Means Committee. 

Mr. CARDIN. We look forward to USTR giving us the final exchanges of understanding with Oman, because it is going to be 

critically important for the support, broad support to get this agreement passed. 

Mr. RYAN. The time of the gentleman has expired. I would like 

to point out to the gentleman that under the FTA, both countries 

are entitled to change their own laws, even after the agreement is 

made, in either direction. 

Mr. LEVIN. Would the Chairman yield for 1 second? 

Mr. RYAN. Yes, go ahead. 

Mr. LEVIN. That is one of the problems, because under this 

agreement, even if the laws were in place, they could later weaken 

them, and we would have no recourse. What you point out is—— 

Mr. RYAN. If you want to take that course, we are never going 

to have any FTA. 

Mr. LEVIN. That is not true of any other provision. It is not true 

of tariff or anything else in this agreement. 

Mr. RYAN. The gentleman will suspend. Mr. Doggett. 

Mr. DOGGETT. Thank you very much. 

Do I understand that the provisions in this agreement concerning 

the environment are the same as we had in Bahrain, and the same 

as the trade representative’s office is seeing for Peru and Ecuador 

and Colombia and so forth? 

Ms. SCHWAB. Yes, Congressman. 

Mr. DOGGETT. Those provisions really don’t mandate that any 

country comply with multilateral environmental agreements that it 

might have signed, do they? 

Ms. SCHWAB. The environmental provisions of these agreements refer to the basic commitments that each side undertakes, 

the fact that each side will enforce their own laws. Iin many cases, 

these countries have undertaken international commitments, and 

many of these agreements, including this one, have consultative 

and technical assistant components. 

Mr. DOGGETT. There’s no penalty for totally disregarding an 

international environmental agreement that a country has agreed 

to, is there? 

Ms. SCHWAB. There are consultative mechanisms that exist 

within the agreement, and—— 

Mr. DOGGETT. You can consult at any time with these countries, can’t you? 

Ms. SCHWAB. Yes. Although when you are talking about consulting under trade agreements, there are stronger implications 

about what that means under trade agreements. In addition, obviVerDate Aug 31 2005 04:25 Dec 21, 2006 Jkt 030441 PO 00000 Frm 00026 Fmt 6633 Sfmt 6602 E:\HR\OC\30441.XXX 30441
23 

ously, there is a focus on the enforcement of laws and each country—— 

Mr. DOGGETT. Just centering in on that then, and knowing that 

what we are doing here is not just about Oman, it is also about 

the Galapagos Islands and other environmentally sensitive areas. 

All that you do is require that a country strive to ensure that it 

doesn’t weaken its laws, and it seems to me that striving to ensure 

is very different than insuring, that you can strive not to take dollars from Jack Abramoff, but you might still take them, or you can 

strive to provide adequate armor to our troops, but you might not 

make it. If a country fails to strive, the only remedy that is provided is that they pay a fine to themselves; isn’t that right? 

Ms. SCHWAB. Well, the fine is used to help remedy the problem, 

so a fine to themselves is in the way the fine is used. We have 

some influence over where that money goes, so that is quite different from the money going to—— Mr. DOGGETT. To the extent that it is a fine limited to $15 million, it is something you pay yourself to improve your environmental laws? 

Ms. SCHWAB. It is a fine that is used in consultation with us 

in this particular case, or vice versa, that is used to improve the 

environmental circumstance. Therefore, it is a remedy that is 

geared specifically to solving the kinds of problems that you have 

identified. 

Mr. DOGGETT. That is not if they weaken their laws, but if they 

fail to strive to ensure they don’t weaken them. 

Let me ask you about another subject that I think is also something that what we are doing in Oman applies everywhere, and 

that is the concern that the American Medical Association has 

raised to Ambassador Portman about the office seeking to reduce 

tariffs on tobacco and other trade restrictions on tobacco. This 

Agreement requires, this agreement with Oman, that their current 

duty, which is a high one on tobacco, be phased out for U.S. tobacco, which will result in decreasing the price of cigarettes. Decreasing the price, as even this Administration has recognized in 

its signing the world’s first public health treaty, the Framework 

Convention on Tobacco Control, will result in more use, addiction 

to smoking and more smoking. With big tobacco having run into at 

least a few barriers in addicting American children to tobacco and 

resulting in many ultimate deaths, doesn’t this tobacco decrease 

and resulting price cut just make it easier for big tobacco to kill 

children in other parts of the world? 

Ms. SCHWAB. Congressman, as you know, when we negotiate 

these FTAs, these are comprehensive agreements. They are comprehensive agreements where we want to see barriers eliminated 

on both sides. In this particular agreement, the slowest phasing of 

the tariff reductions are applied to alcohol, tobacco and pork, not 

surprisingly, given the cultural and religious implications. As to 

the ability of the government of Oman to address smoking in it society, that is up to the government of Oman, and whether it chooses to place excise taxes or others internally is quite a different matter than what tariff is charged at the border. 

Mr. DOGGETT. Finally, as it relates to the investor state provisions, you do provide a mechanism in this agreement for Oman to 

24 

use international arbitration to resolve any investment disputes 

that would extend to services such as any agreement over management of ports or any other kind of service that Oman might choose 

to engage in, or any future company that incorporated in Oman 

might choose to engage in. They would use international tribunals, 

not our courts; is that correct? 

Ms. SCHWAB. If you are referring to dispute resolution mechanisms, we have dispute resolution mechanisms articulated within 

the FTA. They differ in that in some cases there are WTO-related 

provisions, sometimes there are FTA-related provisions and in 

some cases, commercial arbitration. 

Mr. DOGGETT. If there were a dispute over a port management, 

we would go to the international—— 

Mr. RYAN. The time of the gentleman has long expired. Mr. Linder? No questions. Mr. Becerra? Excuse me. Ms. Tubbs Jones is 

next. 

Ms. TUBBS JONES. Mr. Chairman, Thank you very much. 

Madam Ambassador, how are you today? 

Ms. SCHWAB. Thank you, very well. 

Ms. TUBBS JONES. When my colleagues have been asking you 

questions, you seem to have a problem with answering yes or no, 

and I am just curious about if we could get a yes or no answer to 

some of the questions that have been asked. For example, if there 

is an agreement with regard to a letter as we have in this instance, 

where the persons or the country says they are going to implement 

a labor standard and they do not implement the labor standard, 

what is the recourse? 

Ms. SCHWAB. Congresswoman, I apologize if my answers have 

seemed long-winded. It may be attributable to the time that I have 

spend in academia. I will endeavor to provide shorter answers. Unfortunately, the questions that are being asked don’t lend themselves to yes and no answers. For example, in the case of the labor 

provisions of the FTA, in some cases a violation would result in 

consultations. In some cases a violation would result in kind of the 

fine that we were talking about. Really, it depends on—— 

Ms. TUBBS JONES. Understanding there is some violation— 

some implementation of some violation, but we could not go back 

and then say, ‘‘This Agreement is over with,’’ if there were a labor 

standard violation that was implemented? We couldn’t cut up the 

agreement under the WTO, and say, ‘‘See you later?‘‘ 

Ms. SCHWAB. You have asked a question that I don’t—you 

know, if I can get back to you in writing on that? I can not imagine 

an economic circumstance where we would toss any agreement that 

has been signed by the U.S., approved by the Congress of the U.S. 

through the passage of implementing legislation, and signed into 

law by the President. I can not think of a situation where it could 

unilaterally be tossed overboard on economic grounds. 

[The written response from Ambassador Schwab follows:] 

The agreement allows either party to withdraw from the agreement 6 months 

after having provided written notification to the other party. 

Ms. SCHWAB. On the other hand, if, for example, you are talking about an issue related to national security—let’s take a national security example. 

25 

Ms. TUBBS JONES. Yes. 

Ms. SCHWAB. If there were a national security problem with the 

implementation of some part of the Agreement, the FTA, and in 

fact, all of our WTO agreements, have an essential security out. In 

that case, we could step outside of a trade agreement for national 

security reasons. Any country can do that. Unfortunately, some of 

our trading partners have used that—sort of have abused that and 

used national security as an excuse for protectionism. In that particular instance—that is an example where there is a specific out. 

Ms. TUBBS JONES. Okay. For example, if Oman has inadequate 

protection against forced labor, inadequate protection against the 

worst forms of child labor, and inadequate protection of foreign 

workers from forced labor, and there is no way in which we could 

destroy an agreement if they don’t comply with those situations, 

which they don’t currently comply with, it really doesn’t make any 

sense that we should enter into this agreement at all if we don’t 

know that those three things cannot be taken care of. 

Ms. SCHWAB. I think, Congresswoman, any objective observer of 

what Oman has done in the labor arena in the last several years 

in anticipation of, and in connection with the FTA, would say that 

they have made dramatic improvements both in the law and in the 

practice of their treatment of workers. For example, when you talk 

about foreign workers, they are covered by the right to organize, 

the right of free association. They are covered by the collective bargaining provisions that are in the labor laws. 

Now, recognizing that 2003 was when this new law was enacted, 

clearly, Oman has a ways to go in the implementation arena. We 

know that they are consulting closely with the ILO, for example, 

to figure out how they could educate their workers—— 

Ms. TUBBS JONES. I understand, Mr. Chairman, I am out of 

time, but it is her long answers, not my long questions that are 

taking up my time. 

Ms. SCHWAB. Oh, I apologize. I was looking at the clock and I 

thought you still—— 

Ms. TUBBS JONES. I didn’t tap, he did. 

Mr. RYAN. I tapped. 

Ms. TUBBS JONES. Mr. Chairman. Will you allow her to finish 

the answer, Mr. Chairman? 

Mr. RYAN. Yes. 

Ms. SCHWAB. Just summing up very quickly, I think Oman has 

recognized that they have a ways to go in terms of the implementation. I think there are very clear steps that have been delineated 

in terms of commitments that they have made, in terms of their 

ability to implement those commitments, and absent the FTA and 

negotiations for the FTA, we would not have seen these kinds of 

improvements. 

Ms. TUBBS JONES. Therefore, even though they have a long 

way to go, you still recommend we implement such an agreement? 

Ms. SCHWAB. Absolutely, yes. 

Ms. TUBBS JONES. Thank you. 

Mr. RYAN. Thank the gentlelady. 

Let me take some time. I appreciate the gentlelady. I think what 

we haven’t discussed in this hearing is the big picture here, and 

I want to make basically three points, but first on the big picture. 

26 

This is an area where we have had some great bipartisan successes I think in trade agreements with the Middle East. This is 

part of a broader picture, and that broader picture is, through 

these trade agreements, we are able to successfully bring together 

our countries. We are able to successfully bring together the people 

of America with the people of the Middle East to foster greater understanding. With these trade agreements, we are also able to 

bring forward more openness and more freedom in these other societies, these closed societies. When we get these trade agreements, 

we strike a blow for women’s rights. We strike a blow for workers’ 

rights. We strike a blow for freedom and free enterprise, and we 

help put into place the institutions that bring more democracy and 

freedom, and so this is a good thing, and it is something that is 

a very fairly non-controversial part of our foreign policy. 

Mr. CARDIN. Would the gentleman yield on that point? 

Mr. RYAN. Sure. 

Mr. CARDIN. I appreciate that, because I agree with everything 

you said. I just would ask the USTR to be sensitive on the worker 

rights provision that you just—— 

Mr. RYAN. That is what I want to go to next. 

Mr. CARDIN. Just a response to your question with Ms. TUBBS 

Jones, the letter is not enforceable. What you negotiated in Bahrain, we can bring up for consultation under the Agreement. What 

Mr. Thomas got in exchange, there is no opportunity under the 

agreement. My only point was, and I appreciate you yielding, is, 

please, as you submit the final documents to us, give us something 

that will give us hope that these minimum worker rights are going 

to be adhered to after we have approved the agreement, because 

attention is very short lived. 

Mr. RYAN. Okay. Point taken. Point number two. Look where 

Oman is today. Oman is a phenomenal ally to the U.S. Oman has 

historic ties to our country. They have been a great ally in the war 

on terror. They have been a voice of moderation in the Arab world. 

One area that I think is probably most important is in the area of 

women’s rights. Oman has the first woman ambassador to the U.S. 

She is here with us today. They have women in elected office. They 

have appointed women to the Ministry and the Judiciary. In fact, 

Oman is the only country in the Gulf with women in all three 

branches of government. Women constitute nearly 30 percent of the 

workforce in Oman. This is important. They have already made 

great strides in other areas. 

Let’s now talk about labor. In labor, this is where we are all 

agree there is need and room for improvement. We passed, I think, 

the biggest bipartisan vote of a trade bill, in this Congress at least, 

or in a long time, was the Bahraini trade agreement. The question 

is: does the Omani trade agreement meet what we now kind of consider the Bahrain standard or not? I believe it does, but we need 

to discuss to make sure we both agree that it does. 

Let’s compare it to the Bahrain agreement for a moment. Bahrain committed to seek accession to the ILO Conventions 98 and 

138, and incorporate this into their laws. Oman’s issues are more 

with the Conventions 87 and 98. They are seeking accession to 

these conventions, and they will incorporate them into the laws, 

27 

and they have already given us a date certain, by October 31st, 

2006. Sandy, just let me finish, if you will. 

They submitted to their parliament, amendments. Bahrain submitted to their parliament amendments to improve anti-union discrimination and work to ensure that penalties are stiff enough. 

Oman has committed to doing the same thing by ministerial decree. Bahrain amended its laws to allow for more than one union 

per employer. Oman has committed to doing the same thing. Bahrain eliminated the requirement that all unions belong to one federation. Oman has committed to doing the same thing. Bahrain insured that technical requirements for a strike do not exceed ILO 

standards. Oman has committed to doing the same thing. Bahrain 

provided notice to labor panels and other bodies to have them reflected in actions even before the law was changed. Oman will seek 

the view of interested parties. That comes to this timing issue. I 

would argue that we want them to take a little bit of time to put 

these agreements in place so that they consult interested parties, 

so that they can consult ILO, the technical aspects of it, the labor 

unions’ interested parties. It does take some time to do this, and 

they ought to be able to take some time to do it so that it is done 

right in the first place. 

Mr. LEVIN. Would the gentleman yield? 

Mr. RYAN. Sure. 

Mr. LEVIN. First of all—— 

Mr. CARDIN. Let me just ask unanimous consent the gentleman 

be given an additional five minutes, because I think this is an important point. 

Mr. RYAN. I guess I am the Chair. This is a little new for me 

up here, so, yes. 

[Laughter.] 

Mr. LEVIN. First of all, when you talk about the Bahrain standard, it is not being suggested that you can take the Bahrain standard and apply it to every other country. 

Mr. RYAN. No, it is not. 

Mr. LEVIN. The Chairman said case-by-case, and I hope no one 

thinks that the Bahrain standard is applicable in other cases just 

across the board. Bahrain, like Oman, has a power structure that 

allows for very, very quick action. Let that be clear. Number two, 

in the case of Bahrain, there was a statement by the government 

that in practice the rights of workers, and by the way, this isn’t 

just a narrow issue, this relates to globalization, the sharing of the 

benefits of globalization. Globalization is in trouble in part because 

in many countries the majority of people aren’t receiving the benefits of it. the Bahrainian government told us that in practice, even 

if the laws did not reflect it, that these basic opportunities for 

workers were in place. I don’t care, frankly, what USTR tries to 

say. With all due respect, it isn’t true today, it simply is untrue. 

They made some changes a few years ago. If you go through the 

realities today, they don’t meet these basic international standards, 

not ours. 

Number three, Congressman Ryan, we have been talking with 

them since October, and let’s sit down and do this on a shared 

basis. We have taken on this talking to governments in part because no one else was doing it. We didn’t exclude Republicans from 

28 

these discussions. With Morocco it was left to us, and they made 

changes, and they had practices in place in a tradition of workers 

having freedoms. I mean the Middle East is vital. We prefer to 

move with an agreement with Oman, but let’s not play let’s pretend. That is what you are doing. 

Mr. RYAN. I am going to have to reclaim my time on that point. 

Mr. Levin, I think the important question and issue here is, where 

are they now, and where are they going to be? We received two letters in the last month from the Oman Government, one with five 

commitments, another one with eight commitments, to, by ministerial decree, making important changes, clarifying workers have the 

option to reinstatement for improper termination due to union activity; allowing more than one worker representative Committee 

per enterprise; allowing for more than one federation representing 

a group; ensuring penalties for anti-union discrimination are sufficient; ensuring technical standards for strikes do not exceed the requirements for ILOs. Many other very, very important worker 

rights are being committed to, and will be implemented by ministerial decree. I, for one, want to make sure that they take a little bit 

of time to do it correctly, get the ILO in there to make sure that 

they are drafted properly. 

Mr. LEVIN. Would you yield for a simple question then? 

Mr. RYAN. Sure. 

Mr. LEVIN. What is lost if the Omani government says it will 

do it by October? What is—— 

Mr. RYAN. I think they are saying October 31st. 

Mr. LEVIN. Why not wait, as is true for other provisions of a 

trade agreement, to see if these changes are in place? Why not wait 

if we care that much about this? 

Mr. RYAN. My response would be we didn’t do that with Bahrain. Why would we want to do—— 

Mr. LEVIN. They were in place. 

Mr. RYAN. —with Oman now? 

Mr. LEVIN. The practices were in place, and because there was 

a qualify of discussion between the Bahrainis and ourselves. The 

practices were in place. You have here the ability of a government 

to meet ILO standards, and to do it within four or 5 months. To 

say, go ahead on the basis of statements, is an indication, Mr. 

Ryan, of a lack of certainty. I won’t say seriousness. Certainty that 

is true of every other provision. We don’t take promises—— 

Mr. RYAN. I am going to reclaim just because I want to manage 

time fairly efficiently here. In my opinion, that is another way of 

saying we don’t trust you, and until you do it, we are not going to 

act. 

Mr. LEVIN. We don’t say that about any other part of the agreement. 

Mr. RYAN. Let me reclaim time and yield to the gentleman from 

Florida, and then I will make another point. 

Mr. SHAW. I will only take 10 seconds to say, Mr. Levin, what 

you stated is wrong. Those laws were not in place with regard to 

Bahrain. 

Mr. LEVIN. It was in practice. 

Mr. SHAW. That is not all together true either, that is not all 

together true either. Are we going to look and see what is going 

29 

on and then go ahead? I think the question here before the Committee should be, is it to the best interest to the U.S. and to Bahrain, or to Oman, to go ahead with these agreements, or isn’t it? 

That is the only question, I think, as far as this Committee is concerned. I yield back. Thank you for the time. 

Mr. RYAN. I will just take a minute to only we need to sit down 

and talk this out together, and it seems to me we have an extraordinarily good faith effort to improve, substantially improve worker 

rights in Oman, and that, I think, is largely because of points and 

concerns raised by the minority. we have great movement on the 

issues that were articulated very well by the minority side of the 

aisle. I think we have tremendous movement. You, obviously, don’t 

think it is enough movement. We need to work that out. We need 

to figure this out. 

Let’s go back to the big issue here, and that point is, this is a 

good thing for our country to pass these trade agreements, especially these trade agreements in the Middle East, so that we can 

improve not only our economic ties with the Middle East, but we 

can improve our cultural, political ties as well, and that we can put 

into these trade agreements the building blocks planting the seeds 

of openness and freedom so that we can improve peace and prosperity in a region that so desperately needs it. We have made these 

bipartisan in the past. I would like to think we are going to be able 

to continue to do that in the future. This is a good start and a good 

step in the right direction. I hope we can bring this to a conclusion 

fairly quickly. 

With that, I will—— 

Mr. RANGEL. Before the Chairman yields, especially before you 

yield, where did you get this—— 

Mr. RYAN. I will yield to the gentleman from New York. 

Mr. RANGEL. Where do you get this concept about Republicans 

and Democrats talking about labor provisions? 

Mr. RYAN. You and I talked on Monday. 

Mr. RANGEL. I was talking to you as the acting Chairperson, 

not just—— 

Mr. RYAN. Well, I—— 

[Laughter.] 

Mr. RANGEL. Where is this policy—— 

Mr. RYAN. I will reclaim my time, but you and I had a long talk 

about this very topic on Monday. 

Mr. RANGEL. You were not the acting Chairman then. 

Mr. RYAN. I am a Republican Member of the Committee. 

Mr. RANGEL. Then what you are saying is that you have the 

ability now to say it is the policy—— 

[Laughter.] 

Mr. RYAN. Reclaiming my time, okay, nice point. Are there any 

other Members who wish to seek time? Mr. Johnson, did you have 

a point you wanted to make? Mr. McCrery? 

Mr. BECERRA. Mr. Chairman? 

Mr. RYAN. Mr. Becerra. Mr. Becerra is recognized. 

Mr. BECERRA. Thank you, Mr. Chairman. I enjoyed listening to 

the exchange, and I would only point out to the acting chairman 

that there has been good movement, and we should always recogVerDate Aug 31 2005 04:25 Dec 21, 2006 Jkt 030441 PO 00000 Frm 00033 Fmt 6633 Sfmt 6602 E:\HR\OC\30441.XXX 30441
30 

nize our friends and our partners when they move in the right direction, or at least move in a direction we think is constructive. 

To the government of Oman and its people, we want to make 

sure it is clear that we appreciate what they are spelling out for 

us in these letters and the movement that they have expressed toward their labor laws and their practices, and we wish to see them 

continue that movement. As a President that I think the acting 

chairman or Mr. Ryan would agree had it right, when Ronald 

Reagan said, trust but verify, that is all we are asking, it that we 

be able to verify that these things will occur. Ambassador Schwab, 

thank you very much for being here. Welcome. Let me see if I can 

try to ask some questions that will require short responses. Actually, let me ask you a couple quick questions that you should be 

able to respond to pretty quickly. Do you own a home? 

Ms. SCHWAB. Do I own a home? Yes, sir. 

Mr. BECERRA. Do you own a car? 

Ms. SCHWAB. Yes. 

Mr. BECERRA. When you purchased that home, did you purchase it just on a verbal arrangement or agreement with the person selling you that home? 

Ms. SCHWAB. No. 

Mr. BECERRA. No. You got something in writing, correct? When 

you purchased your car, new or used, did you purchase it based 

solely on the verbal representations made by that car salesman? 

Ms. SCHWAB. Yes. 

Mr. BECERRA. You did? 

Ms. SCHWAB. It is a family—you don’t want the details. 

[Laughter.] 

Mr. BECERRA. I probably don’t. Have you purchased any other 

cars? 

Ms. SCHWAB. Yes. 

Mr. BECERRA. In essence, you have purchased vehicles, you 

purchased a home, and in each case you come at least home with 

a document verifying the substance of that agreement that you got 

when you either purchased or sold a home or purchased and sold 

a car, correct? 

Ms. SCHWAB. Yes. 

Mr. BECERRA. I think that is what we are saying with regard 

to these trade agreements. We are purchasing something here. We 

are purchasing the goodwill, the partnership with these friends in 

these other countries or governments, but we want to know what 

we got. If we do it based simply on a verbal agreement, or a handshake, we ain’t got nothing. let me ask you another question. 

Would this Administration, would the U.S. Trade Representative 

accept an agreement, a trade agreement with Oman or any other 

country that said, ‘‘enforce your own laws,’’ country, when it comes 

to pharmaceuticals? 

Ms. SCHWAB. Different parts of FTAs and the WTO are treated 

differently. 

Mr. BECERRA. I understand, but I am just asking you specifically. I think that you can just tell me if you think the administration or the U.S. Trade Representative would be accepting of this if 

we had a trade agreement, negotiated a trade agreement that said 

31 

simply: ‘‘Oman, enforce your own laws with regard to how you treat 

pharmaceuticals,’’ would we agree to that provision? 

Ms. SCHWAB. The implication is in contrast to—— 

Mr. BECERRA. No, no, no. There is no need to contrast. I am 

just asking isolate just that provision on pharmaceuticals. Forget 

about everything else for now. If the provision on pharmaceuticals 

said, ‘‘Enforce your own laws, country, Oman, Central America, 

whatever country, enforce your own laws with regard to pharmaceuticals,’’ would we support that provision? 

Ms. SCHWAB. No. 

Mr. BECERRA. If we had a provision with regard to intellectual 

property that told a country, ‘‘Enforce your own laws,’’ would we 

agree to that trade agreement? 

Ms. SCHWAB. No, nor have we done so in labor if that is where 

you are going, sir. 

Mr. BECERRA. The trade agreement with Oman says, ‘‘Enforce 

your own laws,’’ correct? 

Ms. SCHWAB. There are a variety of provisions within—— 

Mr. BECERRA. Forcible provisions of the trade agreement say, 

‘‘enforce your own laws.’’ 

Ms. SCHWAB. There are a variety of dispute resolution and consultative mechanisms with—— 

Mr. BECERRA. Based on enforcing your own laws. 

Ms. SCHWAB. Among other things, yes. 

Mr. BECERRA. What other legal requirements, mandated requirements are there under the trade agreement under law—— 

Ms. SCHWAB. There are consultative requirements related 

to—— 

Mr. BECERRA. Consultative, as you heard Mr. Doggett say, anyone can consult at any point in time. That is not a mandated activity that forces you to do something. 

Don’t try to confuse the issue. It is very simple. Just the way you 

wouldn’t buy a car without something that guarantees you a right 

to defend yourself in court, or buy a home that you didn’t know if 

it had shoddy construction done to it. This country should not enter 

into agreements where we can’t enforce the laws. If the only thing 

you tell a country is ‘‘enforce your own laws’’ and those laws are 

already weak, we undermine our own ability to protect working 

men and women, not just in this country, but in those countries 

abroad. it is a much simpler test than you or anyone else would 

like to make it look. It is fairly simple and straightforward, that 

if you just tell a country the enforce its own laws and they are deficient, you are setting yourself up, at least your men and women in 

your country who work—into a bad deal. I think I have lost the remainder of my time. 

Ms. SCHWAB. Mr. Chairman, I would hope I would have an opportunity to respond to the question. 

Chairman THOMAS. [Presiding.] Briefly. 

Ms. SCHWAB. Briefly. The reason it is important for me to respond, is that it relates to some statements that Congressman 

Levin also made, and that has to do with the current state of affairs in terms of the current law in Oman. It is important to note 

that the current law in Oman, the law that would be enforced 

under this FTA, made some dramatic improvements in Oman’s 

32 

laws as they affect worker rights, and that includes the right to associate, to bargain collectively, the repeal of their right to strike. 

If you want empirical evidence—and these are the provisions of law 

that are enforceable under this agreement—take the right to 

strike. There were, as we understand it, 33 work stoppages involving over 6,000 workers last year. We know that there are collective 

worker groups. We can give you the names of the people who head 

them up—and some of them are women, by the way—in this MidEastern country. there is a lot that has been done, recognizing that 

there is progress to make, but there are laws on the books that are 

effective, that are enforceable under this—— 

Mr. BECERRA. Don’t forget President Reagan’s admonition, 

trust but verify. 

Chairman THOMAS. The gentleman’s time has expired. 

The gentleman from Louisiana. 

Mr. MCCRERY. Yes, thank you, Mr. Chairman. I want to thank 

Ambassador Schwab for her testimony today and her persistence in 

trying to answer the questions factually, and I look forward to the 

next panel’s presentations. I think that is important. 

Chairman THOMAS. Would the gentleman yield briefly? 

Mr. MCCRERY. I yield. 

Chairman THOMAS. For purposes of illustration, there could 

easily be a series of questions and I don’t expect anyone to react 

to them, but they could be directed toward any one member of this 

panel, or in fact, you, Ms. Schwab. It would go somewhat along this 

line if you really want to get carried away. Are you married? 

Ms. SCHWAB. Yes, sir. 

Chairman THOMAS. Did you get any written contract in terms 

of what you were going to do in terms of obligations and responsibilities? You still went through with the ceremony? 

I am just telling you, that line of questioning may be interesting, 

but anyone else wish to be recognized, and I thank the gentleman—— 

Mr. MCCRERY. I yield the balance of my time—— 

Chairman THOMAS. I thank the gentleman for the time and 

yield back. 

Mr. RANGEL. Why don’t you follow through on your question? 

This was getting interesting. 

[Laughter.] 

Chairman THOMAS. I tell the gentleman that each Member 

should apply it to themselves and ask themselves that question. 

That, to me, would be far more interesting. Except I am interested 

in the cardio. We will talk later. 

[Laughter.] 

Chairman THOMAS. Do you yield back? 

Mr. MCCRERY. I did. 

Chairman THOMAS. Any other Members? The gentleman from 

Pennsylvania. 

Mr. ENGLISH. Madam Ambassador, I want to thank you for 

your presentation here today. Again, as the gentleman from Louisiana put it, for endeavoring heroically to answer some of these 

questions. I have to say, looking at the labor offer that Oman has 

made, I take a great deal of comfort in it because I have looked at 

the track record of Oman. Oman has been one of our best strategic 

33 

allies in the region. They have been with us when it was very unpopular in the region to be with us. This relationship is very, very 

important, and I certainly would hate to think that this small FTA 

would create another occasion for one of our good friends in the 

Middle East to become a political punching bag, and I, for one, 

don’t want to allow that to happen. 

The Sultan of Oman has done an extraordinary job since he assumed his position, replacing his father, of westernizing and modernizing his society and his culture. Obviously, by our standards, 

they still have a distance to go, but what they have done on the 

labor front, in my view, is very dramatic, and is something I think 

deserving of applause, and I will leave it for some of my friends, 

who have raised these issues, to take all of that into account. 

My question has to do with Oman’s economic profile, recognizing 

it is a small market, but it appears that the U.S. is at a relative 

disadvantage compared to blocks of trading partners when it comes 

to getting into that market, particularly, the EU–15 and Asia. How 

will this FTA allow us to penetrate with U.S. exports into the 

Oman market at levels comparable to European and Asian exports, 

and can U.S. producers expect to see gains in exports of a broader 

nature than the current concentration of machinery, transportation 

equipment and measuring instruments? 

Ms. SCHWAB. Congressman, Thank you very much for your 

question, and thank you for your support of this FTA and your active engagement in the Middle East Economic Partnership Caucus. 

Although U.S.–Oman trade is relatively small, I would note first of 

all that the U.S. last year ran a small trade surplus with Oman, 

and we do expect, as implied by your question, for U.S. exports to 

Oman to go up in the context of this Agreement in a variety of 

areas. 100 percent of industrial and consumer goods go duty-free 

upon date of entry, and virtually all agricultural products, 87 percent of the lines in agriculture go duty-free. This is very significant. 

It is also in services, and some of the areas that you have mentioned, with work that we will be doing, for example, with Oman 

in standards and certification. That has the potential for opening 

new markets. In textiles and apparel with this assessment’s rules 

of origin, there is potential for increased U.S. exports that have not 

been there before, in addition to the export areas that you mentioned, which we would expect to grow, automotive, medical, optical 

equipment and so on. 

Mr. ENGLISH. Thank you. 

Thank you, Mr. Chairman. 

Chairman THOMAS. Thank the gentleman. 

Thank you very much, Ambassador. 

Chairman THOMAS. The Chair would request the next panel. 

The Hon. Frances D. Cook, Chairman, Ballard Group and former 

U.S. Ambassador to Oman; Nicholas Billotti, President and Chief 

Executive Officer of Turner Construction International from New 

York; Michael P. Weitzel, Program Manager, DynCorp International, Muscat American Business Council in Muscat, Sultanate 

of Oman; Richard L. Trumka, Secretary-Treasurer, American Federation of Labor, AFL–CIO; Roger R. Schwartz, Business Vice 

34 

President, Polyethylene, the Dow Chemical Company in Midland, 

Michigan. I always thought everything was Maryland. 

You all have written statements, and we will be pleased to make 

it a part of the record, if you, in the time you have, wish to address 

us in any manner you see fit. It just seems appropriate the Chair 

would start on the far left with Ambassador Cook, and then move 

down the line. 

STATEMENT OF THE HONORABLE FRANCES D. COOK, CHAIRMAN AND PRINCIPAL, THE BALLARD GROUP, LLC; AND 

FORMER UNITED STATES AMBASSADOR TO OMAN 

Ms. COOK. Thank you, Mr. Chairman, distinguished Members of 

the House Ways and Means Committee, and friends, good afternoon. Thank you for inviting me to appear before you in support 

of the passage of the U.S.–Oman Free Trade Agreement. My comments are in my personal capacity as an American citizen and as 

former U.S. Ambassador to Oman. They are uncleared by the Department of State. 

I will summarize my remarks, and the full text you have for the 

record. 

I am going to try to speak to some of the issue raised in conjunction with the passage of this FTA in the hearing this morning, and 

try to explain Oman a little bit as I came to know it. 

The key to understanding Oman, I think, is the Sultan himself. 

In only 35 years he has taken his nation from an almost closed and 

near medieval state, to the vibrant and welcoming country that we 

know today. From three small primary schools, Oman now has 

600,000 children in the classroom, and English is required from 

grade one. From an American missionary run 12-bed hospital, 

Oman is now recognized by UNICEF as providing among the best 

primary health care in the world. 

From less than 10 miles of hard-surface road, Oman now boasts 

thousands of kilometers of super highways. From a few sleepy fishing ports, Oman now boasts the 11th busiest state of the art container terminal in the world, built during my time in Oman by an 

American company, I would add. How has the Sultan managed 

such a transformation, working with much smaller hydrocarbon 

revenues than other Gulf states, while dealing with a historically 

disputatious and tribally based population? Therein, I think, lies 

the political skills of the man. 

From 1970 he enunciated very big goals, they were really 

dreams, for a people who were just emerging from a grinding insurgent war in the south. The Sultan proclaimed that a modern state 

living in peace with its neighbors was his goal, but he never coerced or forced changes on his citizenry. He has proceeded on an 

evolutionary, gradual, deliberate track. After each move or new institution is announced and has been accepted and absorbed, he 

moves things on up a notch. This has been as true of reforms in 

education and the Omani legal system, as it is in gender equality 

and in Oman’s evolving political institutions. 

I was there when Oman’s first constitution, called the Basic Law 

or Statute, was announced. Omanis are proud of their country, but 

I don’t think I have ever seen them prouder than that day. The 

35 

document that he gave them actually includes something that we 

would call a bill of rights that would be recognizable as such to our 

Founding Fathers in Philadelphia. 

The role of religion, in my own analysis, is what has helped Sultan Qaboos in his reform program, specifically, the predominant 

Ibadhi brand of Islam, which is preponderant in Oman. Its chief 

characteristic is a deep tolerance of others. When you combine that 

with Oman’s historical seafaring tradition and long exposure to 

others’ cultures and religions, it produces a people who are secure 

in knowing who they are and who can therefore accommodate other 

people and beliefs more easily it seems than other groups in the 

Middle East. 

The Ibadhis, for example, worship alongside other sects of Islam, 

the Sunni, the Shi’a, in their mosques, just as they are used to seeing churches built on land granted by the Sultan, and Hindu temples in their cities. The Sultan’s unwavering quest for peace in the 

region has led Oman almost uniquely to pioneer in several other 

areas, some of which have been mentioned already this morning. 

Alone in the Arab Gulf, Oman has negotiated and formalized all of 

its land borders and had them registered at the United Nations. 

Alone in the Arab Gulf, indeed in the whole Middle East, Oman 

stood by Egypt after Camp David. Alone in the Arab Gulf, Oman 

still hosts a Track II Middle East Peace Process Institution, the 

MEDRC, with full Israeli membership. 

Water, most experts agree, will likely be the source of future tensions in the region, so MEDRC Center works to develop lower-cost 

desalinization methods for coastal states and to rationalize water 

usage in the region. I still recall the day when the Permanent Secretary of the Israeli Foreign Ministry came into my office in 

Muscat to show me a one million dollar Israeli contribution check 

to MEDRC. They have since added another million to the pot, and 

that has been created and continues to be overseen by Ministry of 

Foreign Affairs in Oman. 

It is a little hard to talk about Arab-Israeli relations right now 

because they have deteriorated after the second Intifada, but during that time there was a great flowering, and we welcomed 

Israel’s first trade representative to Muscat in 1996, and helped 

him set up an office. During that time we even had Israeli firms 

participate in trade fairs in Oman, and Omani trading houses sent 

management personnel to Israel to establish commercial ties. I 

even welcomed some Israeli friends, who came with their children 

to vacation in Oman. That was a very hopeful time, but I think it 

was also an important lesson, that small states with visionary leaders can show the way. I would hope that these pioneering efforts 

by Oman will be remembered in Washington. 

Let me move quickly to the labor situation in Oman. 

Mr. RYAN. [Presiding.] Ambassador, could you wrap up, please? 

Ms. COOK. Yes, please, okay. I would just say that all of the 

Gulf states have had large expatriate labor forces because they 

have tried to develop quickly with their oil resources while they are 

getting their own population educated. I think the recent reforms 

that you have been informed of today are absolutely in the right 

direction, and they will be honored. 

36 

One of the things I want to demonstrate, I think, in my comments is that Oman does honor its agreements. It has honored its 

agreements with us from the beginning, and I think that they have 

earned the kind of respect and friendship that this treaty implies. 

Thank you very much. 

[The prepared statement of Ms. Cook follows:] 

Statement of The Honorable Frances D. Cook, Chairman and Principal, 

The Ballard Group LLC, and former U.S. Ambassador to Oman 

Mr. Chairman, distinguished members of the House Ways and Means Committee, 

and friends: 

Thank you for inviting me to appear before you in support of passage of the U.S.– 

Oman Free Trade Agreement. In preparation for this hearing, I reviewed earlier testimony, and asked myself what further information I could provide, to facilitate the 

Congress’ decision-making in this matter? Unlike other witnesses, I have actually 

resided I Oman, so I bring personal experience to the table. I am the daughter of 

a union member, and have honored, throughout my lifetime, the contributions of 

working men and women to our own development, as a society, and a nation. I believe, in fact, the Congress and the AFL–CIO rightly focus on labor commitments 

in all trade agreements negotiated—by any administration—in our globalizing 

world. I was in Oman when the first tentative steps were taken with Israel, so I 

can speak to that issue. Finally, my specialization in the Foreign Service was in the 

political-military sphere, so I’d like to review, briefly, for you, the absolutely key role 

that Oman has played in our various engagements against Middle East extremism 

in recent decades—and the support the Sultanate provides to our men and women 

in uniform. More broadly, I’ll discuss my personal support for the notion (as stated 

in the 9/11 Commission’s final report) that any comprehensive U.S. strategy abroad, 

must include economic policies and engagements that encourage broad economic development and provide opportunities for families to enhance prospects for their children’s future. The FTAs that USTR is now negotiating in the region are key components of that effort. 

Understanding Oman 

The key to understanding Oman, which remains relatively unknown in America, 

is the Sultan himself. In only 35 years, this remarkable leader has taken his nation 

from an almost closed, and near-medieval state, to the vibrant and welcoming country we know today—— 

—from 3 small primary schools, Oman now has 600,000 children in the classroom, 

and English is required from Grade One; 

—from an American missionary-run 12 bed hospital, Oman is now recognized by 

UNICEF as providing among the best primary health care in the world; 

—from less than 10 miles of hard surface road, Oman now boasts thousands of 

kilometers of super highways—— 

—and from a few sleepy fishing and dhow ports, Oman now boasts the eleventh 

busiest, state of the art, container port in the world . . . built during my time in 

Oman by an American company (Sealand, now owned by Maersk) I’d add. 

How has the Sultan managed such a transformation, working with much smaller 

hydro-carbon revenues than other Gulf states, while dealing with an historically disputatious, and tribally-based population? Therein lies the genius of the man, I believe. From 1970, he enunciated very big goals—dreams, really—for a people just 

emerging from a grinding insurgent war in the country’s south. The Sultan proclaimed that a modern state, living in peace with its neighbors was his goal. But 

he never coerced or forced changes on his citizenry. He has proceeded on an evolutionary, gradual, deliberate track—after each move, or new institution, has been accepted, and absorbed, he moves on up a notch. This has been as true of reforms in 

education, and the Omani legal system, as it is in gender equality, and in Oman’s 

evolving political institutions. I was there when Oman’s first constitution, called the 

Basic Law or Statute, was announced. Omanis are proud of their country and their 

Sultan, but I don’t think I’ve ever seen them prouder than on that day. They understood that the Sultan had given them a document—he wrote it himself, he told me— 

and a roadmap forward, that exceeded anything else we have seen from the Arab 

world. It even includes what we Americans call a Bill of Rights, that would be recognizable, as such, to our Founding Fathers in Philadelphia. 

37 

The Role of Religion 

My own analysis, for what it is worth, is that Sultan Qaboos has been aided in 

his reform programs by the predominant Ibadhi brand of Islam which is preponderant in Oman. Deep tolerance of others is a hallmark of Ibadism—and when combined with Oman’s historical seafaring tradition (Omanis were head of the Foreign 

Traders Committee in the Port of Shanghai in the 11th and 12th centuries; many 

of today’s government ministers grew up in East Africa, when Zanzibar and coastal 

East Africa was part of Oman’s empire), it produces a people who are secure in 

knowing who they are, and who can therefore accommodate other people and beliefs 

more easily, it seems, than other groups in the Middle East. Ibadhis worship alongside others sects of Islam (Sunni, Shi’a) in their mosques, just as they are used to 

seeing churches (built on land grated by the Sultan) and Hindu temples in their cities. This kind of balanced world view, combined with a longstanding and unwavering quest for peace in the region, has led Oman, almost uniquely, to pioneer in several areas . . . 

Peace is the Goal 

—alone in the Arab Gulf, Oman has negotiated and formalized all of its land borders, and had them registered at the United Nations. (It doesn’t get much coverage 

here, but throughout my stay in Oman, there were deadly confrontations, on various 

other borders in the oil-rich Arabian peninsula, and that remains the case today.) 

—alone in the Arab Gulf (indeed in the Middle East), Oman stood by Egypt after 

Camp David (an Omani representative was among those killed when dissident 

Egyptian military personnel assassinated President Anwar Sadat in the reviewing 

stand in Cairo) 

—alone in the Arab gulf, Oman still hosts a Track II MEPP institution, MEDRC— 

with full Israeli membership. Water, most experts agree, which is in inadequate 

supply throughout the Middle East, will be the source of future tensions in the region. So, the MEDRC Center works to develop lower cost desal methods, for coastal 

states; and to rationalize water usage in the region. I still recall the day when the 

then-PermSec of the Israeli Foreign Ministry came to my office in Muscat to show 

me the $1 million Israeli contribution (it has since grown to $2 million) to the functioning of MEDRC, which was created, and continues to be overseen by one of the 

finest diplomats I knew in my long career at State, the Under Secretary of the 

Omani Foreign Ministry. (I’d add that that diplomat, along with his Minister of 

State for Foreign Affairs, were sent by Sultan Qaboos to PM Rabin’s funeral in Jerusalem. Before taking up my post in Muscat, I had the honor of discussing, with 

PM Rabin, his trip to Oman, and can describe his attitude toward Oman later during the Q & A, if there is interest.) 

Arab relations with Israel have been complicated greatly by the lack of recent 

progress toward overall peace, and by second ‘‘intifada’’—and the endless televising 

of its brutality into Middle Eastern homes. I was in Oman during the period between the two ‘‘intifidas’’. I welcomed Israeli’s trade representative to Muscat in 

1996, and help him set up an office (that was an embassy in everything but name), 

reciprocating what Oman had in Tel Aviv. During that time, we even had Israeli 

firms participate in a trade fair in Oman, and Omani trading houses sent management personnel to Israel to establish commercial ties. My Israeli colleague and I 

were pleased to welcome on a visit Israeli’s trade rep from Qatar (the only other 

state to have an Israeli trade office in the Gulf), and during this period I also welcomed Israeli friends who came to Oman on vacation, with their children, and 

stayed with me at the official U.S. residence. What a hopeful time that was! It is 

a bit painful for me now, to recall those days (the trade office effort is was ‘‘suspended’’ in 2000), but Americans did learn an important lesson about Oman’s commitment to Middle East peace—and that small states, with visionary leaders, can 

show the way. I would hope that these pioneering efforts by Oman, based on their 

own analysis of how to develop relations, across an historic divide, are not forgotten 

in the current atmosphere in Washington. 

Labor in Oman 

Let me move quickly to the labor situation in Oman. Labor is a complex issue 

in all of the GCC states in the Gulf, due to their reliance on foreign labor—in order 

to develop modern economies quickly, using new oil monies, while their own people 

are being educated. Oman, which has the second largest population in the GCC, is 

now in the midst of a large ‘‘Omanization’’ process, putting trained Omanis to work 

in slots formerly held by expats—at the same time it is opening up to tourism, and 

all of the jobs that will undoubtedly create for locals. 

When I was served in Oman 1995–1999, my labor reporting officer and I were 

aware that Oman did not have in place the various protection mechanisms required 

38 

by the ILO. We asked a lot of questions, and nudged—not because of any instruction 

from Washington, nor because there was any apparent labor unrest—but because 

it was an appropriate activity for representatives of a nation which values its working men and women. I have been very pleased, through this FTA process, to learn 

that the excellent Labor Minister, who was named just as I was leaving Oman, put 

priority on Oman’s ILO compliance, and enacted a comprehensive labor code in 

2003. This is obviously a work in progress—with ‘‘Omanization’’ and training undoubtedly remaining the top labor priorities in the Sultanate—but I refer you back 

to earlier comments on evolution and gradualism in all of Oman’s modern reforms. 

Nonetheless, the right to organize and to strike is now law—and the Minister of 

Commerce reports 33 strikes (involving 6000 workers) in 2004 alone. So, I think 

Oman is now ahead of most of its neighbors, in implementing a modern labor code. 

I’d think we’d want to encourage that move, rather than harm it, through the FTA 

process. I can also speak to the conditions of the large population of foreign workers 

in Oman, in the Q & A session, if that would be of interest to this Committee. 

Close Security Cooperation is the Foundation of our Ties 

Again, because of the Sultan’s vision, our security ties with Oman are both the 

longest-lived, and the most proven, in the region. A quick glance at a map will demonstrate why they are as valuable today, as when they were initiated in the Carter 

Administration. 

Again, the Sultan moved in this arena far before any of his GCC peers. (After 

being educated at Sandhurst, he served with the British Army in Germany—where 

he came to know the U.S. military at Garmisch, he once told me.) In fact, Kuwait 

offered Oman a multi-million dollar ‘‘package’’ of incentives NOT to sign an access 

agreement with the United States, so leery were they of a foreign presence in the 

Gulf after the British departure! Ten years later, at the time of the first Gulf war— 

to expel Iraq from Kuwait—the prepo supplies and equipment we had in Oman, valued then at over $1.5 billion, saved 4–6 months in the build-up prior to the commencement of hostilities. Again, look at the map and consider the attitude of our 

host in Oman—you then won’t be surprised also to learn that the first humanitarian 

food deliveries CENTCOM made to Somalia came from the Oman prepo, just as the 

first supplies to the Balkans, by EUCOM, came from the same place. Still, we have 

no ‘‘bases’’ in Oman, and seek none. Our supplies—Harvest Falcon sets, fuel, military hospital kits, emergency food rations, and vehicles—are all co-located on Omani 

air bases, where Oman’s highly professional military treat our soldiers, airmen and 

contractors, with great professionalism. We have run some very select operations 

from Oman over the years, which would be best discussed in a classified session. 

But two which have been in the media, are Oman’s help in the ‘‘Earnest Will’’ reflagging operation, in the late 80s, out of Masirah Island. And the first combat use 

of American B–1’s, was also out of Oman, during my time there. In all these delicate 

security operations, in a very dangerous part of the world, Oman’s size abets its 

vaunted discretion. U.S. strategists have considered themselves lucky to deal with 

a leader, over the decades, who understands both our historic reluctance to use military power—and our commitment to our troops to provide the best possible support 

once we opt to engage. As someone who spent part of her career negotiating military 

access agreements, as well as a renewal in Oman, I have never had the slightest 

doubt that the reason Oman has been such a steadfast partner for the United States 

of America, is that the Sultan has always viewed our security cooperation as profoundly in Oman’s best interest. In that, he is right. 

In conclusion, let me just note that the Sultan was also right to instruct his Ministry of Commerce to engage in a series of trade negotiations—with WTO, with 

India, with us. Oman will benefit not only from the greater transparency and enhanced regulatory environment that these agreements require, but—in spite of the 

now small amount of foreign trade between our two states—America will gain, too. 

A level playing field, and strict IPR enforcement, in signatory states, will be a big 

boost to U.S. industries—many of which are only now looking to invest abroad, and 

spread their wings to the export markets of the world. This is a win-win proposition 

for both sides (the best agreements always are), because it advances, in a significant 

way, America’s historic goals of peace and development in the Middle East region. 

The Sultanate of Oman, as I’ve tried to demonstrate, has clearly earned the right 

to be treated as a full-fledged partner of our nation. And, I hope this committee, 

and the Congress, will so vote. 

Thank you for your attention. 

f 

39 

Mr. RYAN. Thank the Ambassador. Mr. Billotti, and I also want 

to let every witness know that your written statements will be included in the record, so if you could keep your statements to 5 minutes, we would appreciate that. 

STATEMENT OF NICHOLAS BILLOTTI, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, TURNER CONSTRUCTION INTERNATIONAL LLC, NEW YORK, NEW YORK 

Mr. BILLOTTI. Thank you, Mr. Chairman. I will spare you from 

the entirety of my written text. Mr. Chairman and distinguished 

Members of the Committee, thank you for the opportunity to testify 

today on the proposed FTA between the U.S. and the Sultan of 

Oman. My name is Nick Billotti, and I am the President and CEO 

of Turner Construction International, which is a subsidiary of the 

Turner Corporation, the U.S.’s leading general building contractor. 

Internationally, Turner manages projects of more than 8.2 million 

square meters in building area, with a value in excess of U.S. $12.2 

billion. We are headquartered in New York City, and we provide 

comprehensive, professional building services in Africa, Asia Pacific, Europe, Latin America, the Middle East. Our area of expertise centers on program management, project management and 

construction management. 

We have been working in the Middle East for over 30 years on 

many landmark projects, and we have formed many strategic relationships with companies in the region. As members of the business community in Oman, we work hard to build strong relationships with our local clients, architects, subcontractors, laborers and 

government. Additionally, we are a member of the American Business Council of Oman. 

Today, we are active on three major programs in Oman. We work 

to manage the design, the procurement and the construction of a 

large resort called Al Jissah, which is a combination of three hotels 

that is valued at approximately $145 million. We are working on 

an enormous theme park entitled The Wave, which is valued at approximately $800 million, and we are also working to build support 

facilities for F–16 fighter planes at Thumrait Air Base in Oman. 

I can tell you from my own experience of 30 years in dealing with 

the Middle East, that our business deals in Oman have all been extremely fair, they are wholly transparent. We have no sponsor. We 

have no agent. We have no barriers to entry, and on a personal 

level we enjoy the relationships that we have developed with so 

many of our Omani clients. 

I will tell you as a construction manager, we have a great deal 

of influence on the selection of architects, engineers, and for the selection of so much of the equipment and materials that are put into 

the projects. As an American based company, we have an affinity 

for American based architects and engineers because of the expertise that they bring. I will tell you, on all three of our projects, we 

have American architects and engineers working. Those architects, 

and particularly engineers, have a great deal to do with the manufacturers that are specified for the supply of major pieces of plant 

and equipment, and there are numerous examples on the project’s 

on which we work, where Americans have been very successful in 

trade with Oman. 

40 

I will tell you that if this FTA goes through, it will give us even 

greater incentive to recommend to our clients for the purchase of 

American manufactured goods and materials. In our view, the 

FTAs that are currently being negotiated with countries in the 

Middle East will help both sides economically, increasing exports, 

generate jobs and developing common business practices. Labor has 

been a particular hot button today, and I will tell you, on those 

projects where Turner is involved, we work extremely hard to enforce the same standards that we employ here in the U.S. The 

same personnel policies that we employ in the U.S. are mirrored 

for all of the staff that work for us in Oman. 

The safety standards that we employ on projects here in the U.S. 

are written into our contracts for the contractors and the subcontractors who work on our projects. as Americans participate in 

the economy of Oman, we tend to take those standards that we employ and introduce them, and I think Oman is better for that, and 

I think that we are better for that. Agreements such as the one 

contemplated today represent the firm base from which U.S. interests, already present in the country, can move ahead for the benefit 

of both countries. A snapshot of our work—this is the propaganda 

portion—in Oman can be found in a recent issue of the U.S.–Arab 

Tradeline. It is the monthly newsletter of the National U.S.–Arab 

Chamber of Commerce, and in our opinion, the newsletter provides 

excellent overview of U.S. and Oman relations, and with your permission, Mr. Chairman, I request that this special issue of the 

Tradeline be included in the record of today’s hearing. I thank you 

for the opportunity to testify. 

[The information is being retained in the Committee files.] 

[The prepared statement of Mr. Billotti follows:] 

Statement of Nicholas E. Billotti, President and Chief Executive Officer, 

Turner Construction—International LLC, New York, NY 

Mr. Chairman and distinguished members of the committee: Thank you for the 

opportunity to testify today on the proposed Free Trade Agreement (FTA) between 

the United States and the Sultanate of Oman. 

My name is Nick Billotti, and I am President & CEO of Turner Construction— 

International, a subsidiary of The Turner Corporation, the United States’ leading 

general builder. Internationally, Turner manages projects of more than 8.2 million 

square meters in building area, with a value of some U.S. $12.2 billion. 

Headquartered in New York, Turner Construction—International provides comprehensive professional building services in Africa, Asia-Pacific, Europe, Latin 

America and The Middle East. Our area of expertise centers on program management, project management, and construction management. 

Turner has worked in the Middle East for over 30 years on many landmark 

projects and we have formed strategic relationships with many companies in the region. As members of the business community in Oman, we work hard to build 

strong relationships with local clients, architects, subcontractors, laborers, and the 

government. Additionally, Turner is a member of the American Business Council of 

Oman. 

American firms have a reputation for quality in Oman and Turner is doing its 

best to live up to that reputation. We bring high standards to every project we work 

on and we insist that our clients adhere to those standards, especially as they concern the health and safety of our staff and the subcontractors on our jobsites. 

Working with our clients and the government in Oman has been a positive experience with transparency in all of our business dealings. In fact, Turner has never 

experienced a lack of transparency in our work in Oman. We have found that the 

standards on our jobsites are not compromised and regulations are strictly adhered 

to by our clients and their subcontractors. Turner works hard to enforce these 

standards to ensure that our jobsites are well staffed with workers who are properly 

fed, properly clothed and paid on a timely basis. 

41 

Over the past several years, Turner has fostered strong ties with many Omani 

firms that work on our projects as general contractors and laborers. We are planning to hire qualified Omani engineers and architects to join Turner as it benefits 

our organization to have local staff on our team. 

Additionally, our staff at The Wave project is planning a mentoring program for 

local students who are pursuing engineering degrees. This is similar to programs 

that Turner runs in the U.S. and will give Omani students an opportunity to work 

for an American company and gain firsthand job experience. 

Today, Turner is currently working on the three distinguished projects in Oman 

which are indicative of the strong and growing ties that exist between U.S. business 

and the Sultanate: 

Turner served the project manager for the recently completed Shangri-La Barr Al Jissah Resort in Muscat, a project with a construction value of U.S. $145 million. 

The resort includes a total of 680 rooms and suites in three separate hotels. This 

luxury hotel is scheduled to celebrate its grand opening this month. 

As an extension to the successful work just completed at the Barr Al Jissah, Turner has been assigned to work on a new program for the construction of 125 residential units on the grounds. The residential complex will consist of 75 apartments, 30 

townhouses and 20 villas. 

In both of these efforts, Turner led a global team of engineers, contractors, and 

consultants including the U.S.–based design firm, Wimberly Allison Tong & Goo, 

and managed the inclusion of many suppliers from the U.S. who exported their 

goods to the project such as Superior Boiler Works and Baltimore Aircoil—two leading manufacturers of mechanical equipment. 

Turner is also working as project and construction manager for Oman’s tourism and beach front residential project, The Wave, also in Muscat, an $800 million construction project which will include a Greg Norman signature golf course, a 300- 

berth marina, villas, apartments and several themed hotels. Both the architect for 

the project, OBM, and golf course designer, Greg Norman Golf Design, are based 

in Florida. 

Finally, at the Thumrait Air Base for the Sultanate, Turner is managing construction of facilities for twelve U.S. manufactured F–16 fighter jets. This exhibits not 

only Turner’s commitment to the nation, but also the U.S. aircraft manufacturing 

community. 

In addition to these projects, Turner was also a corporate sponsor for ‘‘A Celebration of Omani Culture’’ at the Smithsonian Castle in Washington, D.C. in June, 

2005. 

In my travels to Oman, I have become acquainted with a beautiful country where 

the people are open and extremely generous. I have been particularly impressed by 

the Omanis’ respect for the environment and their desire to incorporate standards 

that respect the environment into their construction projects. For example, our clients have made special efforts to preserve the coral reef and the turtle breeding 

grounds at the Bar Al Jissah, and we are working with the client at The Wave to 

create an eco-sensitive building program. 

Overall, I believe that industry and tourism, the pillars of Oman’s sustainable development, are segments in which American businesses will continue to flourish and 

that there is great potential for Turner to work on additional projects in the Sultanate. 

In our view, the Free Trade Agreements that are currently being negotiated with 

countries in the Middle East will help both sides economically: increasing exports, 

generating jobs and developing common business practices. With each new project 

and private transaction between U.S. and Omani firms that conform to the international marketplace, this already solid trading partnership will continue to improve and grow in value to the citizens of Oman and the overall U.S. services industry of the region. Agreements such as the one contemplated today, represent a firm 

base from which U.S. interests already present in the country can move ahead for 

the benefit of both countries. 

Specific to the construction industry, I believe the FTA will bring practical benefits to U.S. firms. Our firm’s early involvement in construction projects often allows 

us to influence clients’ choice of consultants on the project, including the selection 

of architects, engineers and others. 

We often suggest U.S.–based firms, as we are familiar with the high-quality of 

their work. In turn, these consultants usually specify American-made materials for 

these large projects. It is part of Turner’s job to help clients obtain the best value 

for their projects. This FTA will help us recommend U.S.–based companies to clients 

at more competitive prices. 

A snapshot of Turner’s projects in Oman can be found in a recent special issue 

of U.S.–Arab Tradeline, the bimonthly newsletter of the National U.S.–Arab ChamVerDate Aug 31 2005 04:25 Dec 21, 2006 Jkt 030441 PO 00000 Frm 00045 Fmt 6633 Sfmt 6621 E:\HR\OC\30441.XXX 30441
42 

ber of Commerce. In our opinion, this newsletter provides an excellent overview of 

U.S.–Oman relations. With your permission, Mr. Chairman, I request that this special issue of Tradeline be included in the record of today’s hearing. 

Thank you for the opportunity to testify today. 

f 

Mr. RYAN. Thank you, Mr. Billotti. Mr. Weitzel? 

STATEMENT OF MICHAEL P. WEITZEL, PROGRAM MANAGER, 

DYNCORP INTERNATIONAL; AND PRESIDENT, MUSCAT 

AMERICAN BUSINESS COUNCIL, MUSCAT, SULTANATE OF 

OMAN 

Mr. WEITZEL. Thank you, Mr. Chairman, distinguished Members. I really appreciate this opportunity to come before you today 

to speak. My name is Mike Weitzel, and I am the President of the 

Muscat American Business Council. I am also the Program Manager for DynCorp International’s War Reserve Materiel contract 

with Central Command’s Air Forces. DynCorp International, as you 

know, is an international company that employs over 14,000 employees in some 35 countries, with revenues of over $2 billion. 

Both as an active duty Air Force Colonel assigned to U.S. Central Command (CENTCOM) and U.S. Central Command Air Forces 

(CENTAF), and after retiring as the War Reserve Material (WRM) 

Program Manager, I have experienced firsthand the partnership 

our country has long enjoyed with the Sultanate of Oman. I am 

based in the Middle East and live in Muscat, its capital. 

The Muscat American Business Council (MABC) was established 

in October of 2004. Its goals are to increase knowledge, strengthen 

business ties and stimulate the exchange of information between 

the American business community and Omani businesses and government. The MABC forms a forum for issues that impact the business community, and offers a single voice for communications with 

ministries and government decisionmakers. Membership is open to 

all companies in Oman that have an America interest, and we have 

over 45 companies that are members of our organization. 

Right to the point. One of our members talked—his name is Michael Hansen. He is an Oman Marketing and Services Company 

executive, and he said this is how the FTA is going to make a difference for his company. Honda, which is one of the cars that he 

sells, has a model called the Pilot here in the U.S. It is known as 

the MRV back in Oman. They are looking at increasing the number 

of vehicles to send to Oman. The FTA will reduce the logistical cost 

of bringing that over to Oman, increasing the sales of the Pilot, and 

it is manufactured in the U.S. He also talked about the Rheem Air 

Conditioners that are manufactured in the U.S. and sold in Oman. 

The FTA is going to reduce the cost of those Rheem Air Conditioners, thereby increasing American jobs. 

Yaser Tobeh, a General Manager of the Dhofar Power Company, 

provided the following example for the FTA’s potential benefit to 

the Oman economy. ‘‘The growth of our business relies directly on 

the number of customers and bulk consumers that get connected to 

our system in Salalah and the Dhofar region. With the Salalah 

Free Zone under construction, the FTA would encourage U.S. investors and companies to bring businesses or industries into the 

43 

zone, which means more power connections,’’ which means more investment, which means more profit, which means more investment, 

and on and on and on. He felt that it was going to make a big difference for his company. 

Oman is the size of New Mexico, with a population, as mentioned 

earlier, of over 3 million people, and they have made great strides 

in a short period of time. Since 1970, as Ambassador Cook mentioned, the renaissance has taken place in Oman. It is a wonderful 

place to live and it is a wonderful place to work. In act, I am kind 

of jealous of the Turner Construction Company with the wonderful 

resorts and areas that they are building and bringing more tourists 

into Oman, which is a good thing and also a bad thing for those 

of us who live there. 

In December of 2005, I participated in the Regional Labor Dialog, 

a 3-day event organized by the U.S. Embassy and the Oman Ministry of Manpower as a part of the U.S. Department of State’s Middle East Partnership Initiative. Held in Muscat, the event was well 

attended by government and private sector interest from across the 

region, including labor ministers from 10 different nations. Issues 

such as work conditions, third country workers, guest laborers and 

women in the workplace, were discussed openly and energetically. 

It was a significant event, and well attended, and well thought of. 

We have every reason to be optimistic in the MABC. Oman’s 

willingness to meet high standards required of FTA partners is a 

testament to the progressive spirit and determination of the Omani 

people and its leader, the Sultan Qaboos bin Said. The Muscat 

American Business Council supports the FTA as good business and 

good policy. We look forward to doing our utmost to support the 

agreement by increasing awareness locally and enhancing opportunities for trade between these two countries. Having more American products on the shelves in Oman will be a sure sign of the 

FTA’s success. Thank you, Mr. Chairman. 

[The prepared statement of Mr. Weitzel follows:] 

Statement of Michael P. Weitzel, Program Manager, DynCorp International, 

and President, Muscat American Business Council, Muscat, Sultanate of 

Oman 

Mr. Chairman and distinguished members of the Committee on Ways and Means, 

I thank you for this opportunity to testify on the proposed U.S.–Oman Free Trade 

Agreement. My name is Michael P. Weitzel, and I serve as president of the Muscat 

American Business Council—MABC. 

I am employed by DynCorp International as Program Manager of the U.S. Air 

Force’s War Reserve Materiel (WRM) Program in the Central Command 

(CENTCOM) Area of Responsibility (AOR). DynCorp International provides support 

services to the U.S. and foreign governments as well as private companies worldwide. We have over 14,000 employees in 35 countries and revenues of nearly $2 billion. Both as an active duty Air Force Colonel assigned to CENTCOM and then 

CENTAF and, after retiring, as the WRM Program Manager, I have experienced 

first hand the partnership our country has long enjoyed with the Sultanate of 

Oman. I am based in the Middle East and have spent the last two years in Oman’s 

capital city, Muscat. 

The Muscat American Business Council was established in October 2004. Its goals 

are to increase knowledge, strengthen business ties, and stimulate the exchange of 

information between the American business community and Omani businesses and 

government. MABC provides a forum for issues that impact the business community 

and offers a single voice for communication with ministries and government decision 

makers. Membership is open to companies in Oman with U.S. affiliation or interest 

in U.S.–Oman relations. 45 companies joined MABC in its first year. 

44 

The FTA is good for business. That, quite simply, is the bottom line. The agreement encourages trade by eliminating tariffs; promotes investment by creating a 

more transparent and therefore more inviting business environment; it requires 

partners to commit to standards—internationally recognized and agreed standards—regarding labor and intellectual property rights. The agreement is designed 

for mutual benefit, to create jobs and stimulate investment in both the U.S. and 

Oman. 

In a recent article, Oman’s Minister of Commerce and Industry, H.E. Maqbool Ali 

Sultan, identified FTA benefits to both sides as follows: ‘‘Oman needs a larger, global market to achieve their long-term goal of establishing a viable non-oil sector. The 

FTA will contribute to economic diversification. . . . The U.S. stands to gain from 

increased exports, which have grown each year since 2003. Imports from the U.S. 

January—October 2005 were $432.1 million, an increase of 23.6% from the previous 

year.’’ It is interesting, also, to note results of the U.S.–Jordan FTA, which was 

signed in 2000. Trade between Jordan and the U.S. prior to the agreement was approximately $300 million; by 2003, it had more than tripled to over $1 billion. 

MABC member Michael Hansen of Oman Marketing and Services Company 

translates statistics into tangible examples of benefit to the U.S. economy. The 

Honda SUV model MRV, known as the ′′Pilot′′ in the U.S., and the Honda Odyssey 

are produced in the U.S. and supplied to Oman and the GCC region. Honda is evaluating whether to increase the supply of cars to be produced in the U.S. for sale 

in Oman and the wider GCC region. This will create jobs in America. Rheem air 

conditioners are manufactured in the U.S. and sold in Oman by Oman Marketing 

and Services Company. FTA implementation would mean elimination of import duty 

and therefore a reduction in the high logistics costs from the U.S. to Oman. Increased sales are the end result. 

MABC member Yaser Tobeh, General Manager of the Dhofar Power Company, 

provides the following example of the FTA’s potential benefit to Oman’s economy. 

He writes, ‘‘The growth of our business relies directly on the number of customers 

and bulk consumers that get connected to our system in Salalah and the Dhofar region. With the Salalah Free Zone under construction, the FTA would encourage U.S. 

investors and companies to bring businesses or industries into the Zone, which 

means more power connections and more system expansions, thus providing growth 

to our utility.’’ And while the Dhofar Power Company would benefit, U.S. investors 

would also benefit from the company’s increased production made possible by additional sales and profits. 

Oman, the size of New Mexico, with a population approaching three million, has 

made dramatic strides in a short time. Prior to 1970 when Sultan Qaboos bin Said 

assumed leadership, the country was closed to outside influence; infrastructure and 

social services were negligible. Today, Oman has a modern infrastructure, outstanding educational and medical facilities, and women are welcomed in the workplace. The economy is growing, there is a significant campaign underway to achieve 

economic diversification, and major infrastructure development. 

Work is in progress to improve ports in Salalah and Muscat, to build a new port 

in Duqm, and the newly completed port of the industrial city of Sohar has been commissioned. Also underway are plans for a new terminal at the existing Seeb airport, 

plus additional airports elsewhere. A residential resort called The Wave is being 

built now and, for the first time, foreigners will be able to own property in Oman. 

Cultivation of tourism, and in particular eco-tourism, is a priority. Properties such 

as Shangri La’s recently opened Barr Al Jissah Resort, which includes three luxury 

hotels in a location of spectacular beauty, and largely built by the Dallas-based firm 

Turner Construction, will—I am both happy and sad to say—make Oman a much 

sought-after destination. 

Recent steps to enhance local labor conditions and comply with ILO labor requirements demonstrate Oman’s commitment to the FTA. Prior to 2003, Oman functioned under an archaic labor law that simply did not keep pace with the Sultanate’s ratification of core international labor standards and specifically forbade 

strikes. Today, workers are joining the rapidly growing number of unions and engaging in collective bargaining and even strikes with the full protection of the 

Omani government. The Omani government is not simply writing new laws—it is 

putting its modern labor policies into practical effect. 

In December 2005, I participated in the Regional Labor Dialogue, a three-day 

event organized by the U.S. Embassy and Oman’s Ministry of Manpower as part of 

the U.S. Department of State’s Middle East Partnership Initiative (MEPI). Held in 

Muscat, the event was well attended by government and private sector interests 

from across the region, including labor ministers from ten nations. Issues such as 

work conditions, third country workers, child labor laws, and women in the workVerDate Aug 31 2005 04:25 Dec 21, 2006 Jkt 030441 PO 00000 Frm 00048 Fmt 6633 Sfmt 6621 E:\HR\OC\30441.XXX 30441
45 

place were discussed openly and energetically. This in itself is significant and noteworthy progress. 

DynCorp International has operations throughout the region including Bahrain. 

As a result of the U.S.–Bahrain Free Trade Agreement, our company has a workers’ 

union. We view this as a plus, and we work together with the DynCorp Workers 

Trade Union and the General Federation of Bahrain Trade Unions (GFBTU) as they 

develop and take on the responsibilities of organized labor. We intend to be leaders 

in the implementation of the U.S.–Oman FTA labor provisions, and will be supportive of the formation of workers’ representative groups in Oman. 

Beyond economics, Oman is a positive presence in the region and a valued partner 

in the Global War on Terror. It is a country that rejects extremism and supports 

moderation and tolerance. For the last three decades, Oman has been a trusted ally 

and has enabled the United States to maintain its stabilizing military presence in 

the Gulf. At last week’s MABC meeting, Salem bin Nasser Al Ismaily, CEO of the 

Omani Center for Investment Promotion & Export Development (OCIPED), spoke 

on the subject of Economic Freedom in the Arab World. He emphasized the integral 

link between trade and security. They go hand in hand, and more trade means a 

better chance to end political instability as well as economic stagnation. Unemployment is a problem in Oman; the FTA will increase the number of jobs available for 

Omanis. We believe efforts to create jobs and raise standards of living will contribute positively to stability in the region. 

We have every reason to be optimistic. Oman’s willingness to meet the high 

standards required of FTA partners is a testament to the progressive spirit and determination of the Omani people and their leader, Sultan Qaboos bin Said. The 

Muscat American Business Council supports the U.S.–Oman FTA as good business 

and good policy. We look forward to doing our utmost to support the agreement by 

increasing awareness locally and enhancing opportunities for trade between these 

two countries. Having more American products on the shelves in Oman will be a 

sure sign of the FTA’s success. 

f 

Mr. RYAN. Thank you, Mr. Weitzel. Mr. Trumka. 

STATEMENT OF RICHARD L. TRUMKA, SECRETARY-TREASURER, AMERICAN FEDERATION OF LABOR AND CONGRESS 

OF INDUSTRIAL ORGANIZATIONS 

Mr. TRUMKA. Thank you, Mr. Chairman, Representative Rangel 

and Members of the Committee. I want to thank you for the opportunity to testify today on behalf of 91⁄2 million plus working men 

and women of the AFL–CIO. In our view, the Oman FTA provides 

the wrong answers to the challenge faced in Oman and the U.S. 

The Agreement is based on a failed model that neither addresses 

the problems confronted by workers in Oman, nor contributes to 

the creation of good jobs and decent wages at home. The workers’ 

rights provisions are entirely inadequate to ensure that fundamental human rights are respected, and the dispute settlement 

mechanism for workers’ rights and environmental protections is far 

weaker than that available for commercial provisions. 

At the same time, flawed provisions on services, investment, government procurement and intellectual property rights will undermine the ability of both governments to protect public health, 

strong communities and the environment. As you know, we have 

argued that Oman’s labor laws are egregiously out of compliance 

with the ILO core labor standards, and we remain deeply concerned about the lack of fundamental protection for Omani workers 

in both law and practice. Despite some improvements made to 

Oman’s legal framework, Oman’s labor laws today do not provide 

for the exercise of the most important and fundamental workers’ 

rights, that is, freedom of association and the right to organize and 

46 

bargain collectively. Omani labor laws provide the government with 

an entirely inappropriate level of oversight and control over the activities, meetings, finances and selection of representatives of the 

National and Industrial Worker Representative Committees. In addition, current laws fail to explicitly protect workers who participate in the worker committees from anti-union discrimination, and 

they do not spell out protections for workers who choose to engage 

in strikes. 

We understand that the Omani government sent letters to Chairman Thomas, pledging to make certain changes in bringing its 

labor laws into compliance with the ILO standard by October 31st, 

2006. We applaud those efforts, and we welcome this offer on the 

part of the government. However, we continue to have serious concerns. Congress should delay further proceedings on the Oman FTA 

until after these important changes have been fully implemented. 

It is essential to see the precise legislative language before it can 

be ascertained whether or not the reform laws do actually meet 

ILO standards. 

Also, while Oman might issue a new decree changing the law, it 

has no history of labor movement. Employers in Oman must have 

time to be educated on the role of workers representatives in fostering positive employment relations. This will not happen immediately, and certainly not by October 31st, the date by which the 

Omani government indicates decrees will be completed. Workers 

representatives must be given the tools and opportunities and time 

to organize workers into trade unions and fulfill their responsibilities to protect workers rights. We expect that this will take time. 

The effectiveness of these changes will not be seen overnight. It 

will also take time to monitor and judge whether or not any new 

decrees have been successful. Even more important to the AFL– 

CIO, the labor provisions included in the Oman FTA do not include 

any enforceable provisions preventing the weakening of or derogation from domestic labor laws. Only one labor right obligation, the 

obligation for a government to enforce its own labor laws, is actually enforceable through dispute settlement. All the other obligations contained in the labor chapter are explicitly not covered by 

the dispute settlement system. This directly violates the Trade Promotion Authority (TPA) which instructs our negotiations to treat 

all negotiating objectives equally. 

This means that if Oman’s labor laws are brought fully into compliance with ILO standards over the coming months, the U.S. Government would have absolutely no recourse to dispute settlement 

or enforcement if a future Omani government were to reverse those 

gains, or weaken, or gut Omani’s labor laws after congressional 

passage of the FTA. Because of this, 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 the 

labor laws. In addition, any vote on the Oman FTA must take into 

account the broader economic reality that we are facing today. 

Now, our executive council adopted a statement in March calling 

for a moratorium on all FTAs, including Oman, until we rewrite 

them to protect and advance workers’ interest. The labor provisions 

in the Oman FTA are woefully inadequate and clearly fall short of 

the TPA negotiating objectives. They will be extremely difficult to 

47 

enforce, and fines may be inadequate to actually remedy violations. 

Given Oman’s historic failure to respect core worker rights, and the 

troubling inadequacies in the current laws, it is especially problematic to implement an FTA with weak labor protections at this time. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Trumka follows:] 

Statement of Richard L. Trumka, Secretary-Treasurer, American 

Federation of Labor-Congress of Industrial Organizations (AFL–CIO) 

Good afternoon, Mr. Chairman, Representative Rangel, and members of the Committee. I thank you for the opportunity to testify today on behalf of the 9 million 

working men and women of the AFL–CIO on the U.S.–Oman Free Trade Agreement 

(FTA). Trade policy in general, and this agreement in particular, are of great interest and concern to our members, to America’s workers, and to workers in Oman as 

well. 

In our view, the Oman FTA provides precisely the wrong answers to the challenges faced in Oman and the United States. The agreement is based on a failed 

model that neither addresses the problems confronted by workers in Oman, nor contributes to the creation of good jobs and decent wages at home. The workers’ rights 

provisions are entirely inadequate to ensure that workers’ fundamental human 

rights are respected, and the dispute settlement mechanism for workers’ rights and 

environmental protections is far weaker than that available for commercial provisions. At the same time, flawed provisions on services, investment, government procurement, and intellectual property rights will undermine the ability of both governments to protect public health, strong communities, and the environment. 

In addition to the problems outlined above with the Oman FTA template, which 

are common to all the FTAs negotiated by this Administration, we continue to have 

very serious concerns about Oman’s 2003 Private Sector Labor Law, and the Ministry of Manpower’s decrees, which outline the detailed implementation procedures. 

As you know, we have argued that Oman’s labor laws are egregiously out of compliance with the ILO core labor standards, and we remain deeply concerned about the 

lack of fundamental protections for Omani workers in both law and practice. Despite 

some improvements made to Oman’s legal framework, Oman’s labor laws today do 

not provide for the exercise of the most important and fundamental workers’ rights: 

freedom of association and the right to organize and bargain collectively. 

ILO standards call for workers to be able to form their own organizations, free 

of interference from employers or 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 the national and industrial ‘‘worker representative committees.’’ In addition, the laws fail 

to explicitly protect workers who participate in the worker committees from antiunion discrimination, nor do they spell out protections for workers who choose to 

engage in strikes. The Omani Government claims the forthcoming Ministerial Decree outlining procedures on the Right to Strike will be reviewed by the ILO to ensure compliance with ILO Standards. 

We understand that the Omani government has sent a letter to Chairman Thomas (dated March 26, 2006), pledging to bring its labor laws into compliance with ILO 

standards by October 31, 2006. We applaud and welcome this offer on the part of 

the government. 

However, we continue to have some serious concerns. Congress should delay further proceedings on the Oman FTA until after these important changes have been 

fully implemented. We have plenty of experience with labor legislation, and we 

know that it is essential to see the precise legislative language before we can ascertain whether or not the reformed laws do actually meet ILO standards. 

Second, while Oman might issue a new decree changing the law, it has no history 

of a labor movement. Employers are reluctant to accept the representative committees, let alone actual trade unions with collective bargaining rights. Employers in 

Oman must have time be educated on the role of worker representatives in fostering 

positive employment relations. 

This will not happen immediately and certainly not by October 31, 2006, the date 

by which the Omani Government indicates the decrees will be completed. Omani 

worker representatives are currently at a distinct disadvantage compared to the 

Government and employers. This new legal framework will be a good start. But 

worker representatives must be given the tools, opportunities and time to organize 

workers into trade unions and fulfill their responsibilities to protect worker rights. 

We can expect this will take more time in Oman, as their worker rights were virVerDate Aug 31 2005 04:25 Dec 21, 2006 Jkt 030441 PO 00000 Frm 00051 Fmt 6633 Sfmt 6621 E:\HR\OC\30441.XXX 30441
48 

tually non-existent, lagging far behind even Bahrain. The effectiveness of these 

changes will not be seen overnight. It will also take time to monitor and judge 

whether or not any new decrees have been successful. 

Even more important, the labor provisions included in the Oman FTA do not include any enforceable provisions preventing the weakening of or derogation from domestic labor laws. This means that even if Oman’s labor laws are brought fully into 

compliance with ILO standards over the next couple of months, the U.S. government 

would have 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 Congressional passage of the FTA. And because 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. 

In addition to our concerns on Oman’s labor situation, any vote on the Oman FTA 

must take into account the broader economic reality that we are facing today. Our 

trade deficit hit a record-shattering $726 billion last year; we have lost more than 

three million manufacturing jobs since 1998; and average wages have not kept pace 

with inflation this year—despite healthy productivity growth. The number of people 

in poverty continues to grow, and real median family income continues to fall. Offshore outsourcing of white-collar jobs is increasingly impacting highly educated, 

highly skilled workers—leading to rising unemployment rates for engineers and college graduates. Together, record trade and budget deficits, unsustainable levels of 

consumer debt, and stagnant wages paint a picture of an economy living beyond its 

means, dangerously unstable in a volatile global environment. 

The AFL–CIO Executive Council adopted a statement in March calling for a moratorium on all new free trade agreements, including with Oman, until we can rewrite them to protect and advance workers’ interests. 

Labor Provisions of the Oman FTA 

Unfortunately, the Oman FTA labor provisions actually constitute a step backwards from existing labor rights provisions in the U.S.–Jordan FTA and in our Generalized System of Preferences (GSP) program. In the Oman agreement, only one 

labor rights obligation—the obligation for a government to enforce its own labor 

laws—is actually enforceable through dispute settlement. All of the other obligations 

contained in the labor chapter, many of which are drawn from Congressional negotiating objectives, are explicitly not covered by the dispute settlement system and are 

thus completely unenforceable. 

Labor Rights in Oman 

Again, while the government has made numerous pledges, current Omani law 

does not come close to meeting International Labor Organization (ILO) criteria for 

compliance with core labor standards, and the weak and inadequate labor rights 

protections in this agreement will allow these severe deficiencies in Oman’s labor 

laws to persist. 

The most serious issue is Oman’s systematic denial of workers’ freedom of association. The Omani government is in egregious violation of ILO conventions and universally accepted international practice. Again, we cannot expect these problems to 

be solved overnight. 

The Omani Government claims, in the March 26 letter Chairman Thomas, that 

‘‘a significant number of strikes occur every year since the adoption of the 2003 

Labour Law with no prosecution or retribution of any form for such work stoppages 

which is evidence that the freedom to strike exists under Omani law.’’ 

This assertion has yet to be proven. No documentation has been provided by the 

Omani authorities as to the dates, issues, and parties involved in actual strikes. 

Such information would constitute actual evidence that ‘‘the freedom to strike exists 

under Omani law.’’ If the law is unclear, and there is little or no evidence of the 

practice being different, the Omani Government cannot claim to adhere to the requirements of 87 and 98 on the right to strike. 

In Oman’s legal system, it is not clear what takes precedence on labor rights, a 

law developed by the parliament and approved by the Sultan, or a Ministerial Decree? Which is considered ‘‘Omani law’’? If the Omani Government does not amend 

its 2003 Labor Law to come into conformity with the Ministerial Decrees, then how 

will a judge determine which standard to apply, given the violations of 87 and 98 

present both the 2003 Law and the current Ministerial Decrees governing the internal procedures of the representative committees? The Bahraini Government made 

a commitment to amend both the 1976 Labor Law, as well as the 2002 Trade Union 

Law. The Omani Government should make a similar commitment. 

49 

1Omani Labour Code of 26 April 2003 

Ministry of Information 

The New Labor Code was issued by Royal Decree No. 35 of 2003, and abrogates the previous 

Labor Law issued by Royal Decree Nov. 34 of 1973. 

www.omanet.om/arabic/goverment/gov20.asp?cat=gov 

2Sultanate of Oman, Ministry of Manpower, ‘‘Ministerial Decision No. (135/2004), ‘‘On Principles of Formation and work of Representative Committees in Establishments,’’ and Ministerial 

Deicion No. (136/2004)—‘‘On Principles of Formation and Work of the Main Representative Committee.’’May 11, 2004, Translated by POLE: Ahmed Al-Sawei. 

A review of Oman’s current Labor Law, issued by decree in 2003,1 also reveals 

a pattern of exceptions to the very standards it proclaims as law, from the exclusion 

of foreign domestic workers and civil servants from protection under the law, to 

loopholes that allow for a wide variety of interpretations of basic rights. This leaves 

workers dependent not upon the law, but upon the discretion of powerful vested interest groups that form the core of a semi-authoritarian regime. 

Ministry of Manpower Decrees 135 and 136, issued in 2004, outline stringent and 

inappropriate government oversight parameters for both worksite level committees 

and a national committee intended to serve as a national representative body.2 The 

government reserves the right to ‘‘be notified one 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. 

In its defense of the provision allowing Ministry delegates to attend worker committee meetings, the government has said that ‘‘the presence of the representative 

from the Ministry is to help the committee in case of their need to consult with the 

Ministry on any issue.’’ It certainly seems that if the worker committees need advice 

from the government, they could ask for it, rather than having a government presence at all their meetings ordained in labor law. 

The government has claimed that ‘‘eleven members [of the Main Representative 

Committee] were all elected from the existing Representative Committees and are 

all workers.’’ This is untrue. The government appointed at least some of the members of the Main Representative Committee, and five of them actually serve in management positions within their companies, either as CEOs or Personnel Managers. 

Any paid representative of an enterprise with management responsibilities should 

be disqualified from running for office on either the enterprise level or Main Representative Committee. The candidates in the next round should be allowed to campaign publicly, and democratic elections should be held to decide the officers. 

Although the workplace level committees allow for a semblance of rank and file 

participation through the General Assembly, workers may not join the assembly 

until they have completed one year of employment. The Minister of Manpower is 

directly responsible for ratifying the election results for both the workplace and national committees, and may object to any nominee to the administrative bodies who 

does not meet a set of stringent conditions, including fluency in written and spoken 

Arabic language, a condition which would disqualify most foreign-born worker from 

leadership positions (contrary to the USTR factsheet). Non-citizens account for as 

much as 80% of the private-sector workforce (according to the State Department 

2004 annual human rights report). Under ILO Standards for Leadership Positions, 

workers should be able to choose their representatives free of Government or employer interference. 

The labor law also decrees that membership in the administrative body [of the 

worker committee] is terminated in the case that a member ‘‘commit[s] any act that 

causes material or moral harm to . . . the public interest of the Sultanate.’’ Again, 

this is totally inappropriate. 

The current labor law prohibits the administrative body of the worker committees 

outright from ‘‘join[ing] any organization or authority with headquarters outside the 

Sultanate,’’ from sending ‘‘delegations outside the Sultanate or receiv[ing] delegations,’’ and even from holding ‘‘public festivities or present[ing] public lectures’’ without the approval of the Minister. ILO standards explicitly lay out that unions may 

affiliate to international organizations of their choosing, and certainly the government has no business monitoring the travel, visitors, or public festivities and lectures of workers’ organizations. 

In a March 10 letter to the Committee on Ways and Means, the Omani government indicated that Article (6) of the Oman’s labor law does provide legal consequences in the case of the employer refusing the request of a representational 

committee to negotiate additional benefits schemes. 

50 

3State Department COUNTRY REPORTS ON HUMAN RIGHTS PRACTICES 2004 http:// 

www.state.gov/g/drl/rls/hrrpt/2004/41729.htm 

This appears to be a misrepresentation as Article 6 reads: ‘‘The employer may 

execute projects whereby the workers obtain more generous benefits than prescribed, or he/she may provide the workers with other benefits, conclude agreements 

covering more generous conditions than those prescribed in this law. If a provision 

of this law infringes with one or more of the conditions set by the referred projects 

or agreements, the most beneficial provision to the worker applies.’’ While this 

clause gives the employer the option to execute ‘‘projects’’ it fails to mention a committee’s role in negotiating such terms with the employer. The fact that no collective 

bargaining agreements exist in Oman indicates that employers do not feel compelled 

to allow workers to infringe on their unilateral exercise of power. 

This provision relies upon employer largesse, permitting such ‘‘schemes’’ to take 

place if the employer desires it, but not requiring employers to engage in collective 

bargaining. 

While all workers in Oman are denied basic labor rights, the large foreign workforce, who constitute the majority of private-sector workers in Oman, are especially 

vulnerable to abuse and exploitation. Foreign workers have the right to remain in 

the country for the duration of their work contracts; but employers are known to 

hold the passports of guest workers, and in the worst cases of abuse, even deny individuals the ability to extract themselves from dangerous or cruel work conditions. 

Laws protecting workers from forced labor are not enforced. According to the State 

Department: 

The Government did not investigate or enforce the law effectively. Foreign workers at times were placed in situations amounting to forced labor. Employers have 

withheld documents that release workers from employment contracts and allow 

them to change employers. Without such a letter, a foreign worker must continue 

to work for his current employer or become technically unemployed, which was sufficient grounds for deportation.3

Oman has an equally problematic record on trafficking in persons, according to 

the State Department’s 2004 Trafficking in Persons Report: 

Oman is a destination country for women and men who migrate legally and willingly from South Asia—primarily from India, Bangladesh, Pakistan, Sri Lanka, and 

the Philippines—for work as domestic workers and laborers but are subsequently 

trafficked into conditions of involuntary servitude. Some of these workers suffer 

from physical and sexual abuse or withholding of ages or travel documents . . . According to a noted human rights activist, several dozen foreign children trafficked 

for the purpose of exploitation as camel jockeys were reportedly seen near the border with the United Arab Emirates.4

Even should the current Omani regime alter it’s existing workers’ rights restrictions, the proposed FTA would allow Oman to undermine workers’ fundamental 

rights in the future. Even for the one labor obligation in the FTA that is subject 

to dispute resolution—the requirement to effectively enforce domestic laws—the procedures and remedies for addressing violations are significantly weaker than those 

available for commercial disputes in the agreement. This directly violates TPA, 

which instructs our negotiators to seek provisions in trade agreements that treat all 

negotiating objectives equally and provide equivalent dispute settlement procedures 

and equivalent remedies for all disputes. 

The labor enforcement procedures cap the maximum amount of fines and sanctions available at an unacceptably low level, and allow violators to pay fines that 

end up back in their own territory with inadequate oversight. These provisions not 

only make the labor provisions of the agreement virtually unenforceable, they also 

differ dramatically from the enforcement procedures and remedies available for commercial disputes: 

• In commercial disputes, the violating party can choose to pay a monetary assessment instead of facing trade sanctions, and in such cases the assessment 

will be capped at half the value of the sanctions. In labor disputes, however, 

the assessment is capped at an absolute level, no matter what the level of harm 

caused by the offending measure. 

• Not only are the caps on fines much lower for labor disputes, but any possibility 

of trade sanctions is much lower as well. In commercial disputes, a party can 

suspend the full original amount of trade benefits (equal to the harm caused 

by the offending measure) if a monetary assessment (capped at half that value) 

is not paid. In a labor dispute, the level of trade benefits a party can revoke 

if a monetary assessment is not paid is limited to the value of the assessment 

itself—capped at $15 million. 

51 

• Finally, the fines are robbed of much of their punitive or deterrent effect by the 

manner of their payment. In commercial disputes under the Oman FTA, the deterrent effect of punitive remedies is clearly recognized—it is presumed that 

any monetary assessment will be paid out by the violating party to the complaining party, unless a panel decides otherwise. Yet for labor disputes, the violating country pays the fine to a joint commission to improve labor rights enforcement, and the fine ends up back in its own territory. No rules prevent a 

government from simply transferring an equal amount of money out of its labor 

budget at the same time it pays the fine. And there is no guarantee that the 

fine will actually be used to ensure effective labor law enforcement, since trade 

benefits can only be withdrawn if a fine is not paid. If the commission pays the 

fine back to the offending government, but the government uses the money on 

unrelated or ineffective programs so that enforcement problems continue un-addressed, no trade action can be taken. 

The labor provisions in the Oman FTA are woefully inadequate, and clearly fall 

short of the TPA negotiating objectives. They will be extremely difficult to enforce 

with any efficacy, and monetary assessments that are imposed may be inadequate 

to actually remedy violations. Given Oman’s failure to respect core workers’ rights 

and the huge inadequacies in its labor laws, it is especially problematic to implement an FTA with weak labor protections at this time. 

In addition to the very serious problems with the labor provisions of the Oman 

agreement outlined above, commercial provisions of the agreement also raise serious 

concerns. 

Trade Impacts of the Oman FTA 

While the overall trade relationship with Oman is small relative to the economy 

of the United States, it is possible that the agreement will result in a deteriorating 

trade balance in some sectors, including sensitive sectors such as apparel. Even 

where the market access provisions of the agreement themselves may not have 

much of a negative impact on our trade relationship, these provisions when combined with rules on investment, procurement, and services could further facilitate 

the shift of U.S. investment and production overseas, harming American workers. 

The dramatically lower costs of energy in Oman provide enormous opportunities 

for energy-dependent industries to use the country as an export platform. As is the 

case with the United Arab Emirates (UAE), where a foreign glassware manufacturer has set up shop and may use the UAE’s natural gas—which costs less than 

1/12th of what it does in the U.S.—to flood the U.S. market with glassware, a similar opportunity exists with Oman. 

Chemical manufacturers, energy interests and others could similarly benefit from 

Oman’s energy pricing structure. Oman, like many other energy-rich nations, has 

a built-in advantage in low energy costs. But, beyond this initial advantage, energy 

costs to 

Oman’s manufacturing interests do not reflect market prices. Additionally, the 

failure of the United States to have a comprehensive energy policy to ensure longterm stable supplies and affordable prices puts the U.S. at a substantial disadvantage. The failure of the Bush Administration to aggressively address energy costs 

has serious repercussions for our manufacturing sector and, indeed, for all energy 

consumers. The U.S.–Oman FTA will exacerbate that disadvantage by providing enhanced access to the U.S. market without addressing the non-market pricing of energy. 

Investment: In TPA, Congress directed USTR to ensure ‘‘that foreign investors in 

the United States are not accorded greater substantive rights with respect to investment protections than United States investors in the United States.’’ Yet the investment provisions of the Oman FTA contain large loopholes that allow foreign investors to claim rights above and beyond those that our domestic investors enjoy. The 

agreement’s rules on expropriation, its extremely broad definition of what constitutes property, and its definition of ‘‘fair and equitable treatment’’ are not based 

directly on U.S. law, and annexes to the agreement clarifying these provisions also 

fail to provide adequate guidance to dispute panels. As a result, arbitrators could 

interpret the agreement’s rules to grant foreign investors greater rights than they 

would enjoy under our domestic law. In addition, the agreement’s deeply flawed investor-to-state dispute resolution mechanism contains none of the controls (such as 

a standing appellate mechanism, exhaustion requirements, or a diplomatic screen) 

that could limit abuse of this private right of action. Finally, the marked difference 

between the dispute resolution procedures and remedies available to individual investors and the enforcement provisions available for the violation of workers’ rights 

and environmental standards flouts TPA’s requirement that all negotiating objecVerDate Aug 31 2005 04:25 Dec 21, 2006 Jkt 030441 PO 00000 Frm 00055 Fmt 6633 Sfmt 6621 E:\HR\OC\30441.XXX 30441
52 

tives be treated equally, with recourse to equivalent dispute settlement procedures 

and remedies. 

Intellectual Property Rights: In TPA, Congress instructed our trade negotiators 

to ensure that future trade agreements respect the declaration on the Trade Related 

Aspects on Intellectual Property Rights (TRIPs) agreement and public health, adopted by the WTO at its Fourth Ministerial Conference at Doha, Qatar. The Oman FTA 

contains a number of ‘‘TRIPs-plus’’ provisions on pharmaceutical patents, including 

on test data and marketing approval, which could be used to constrain the ability 

of a government to issue compulsory licenses as permitted under TRIPs and the 

Doha Declaration. 

Government Procurement: The FTA’s rules on procurement restrict the public 

policy aims that may be met through procurement policies at the federal level. 

These rules could be used to challenge a variety of important procurement provisions including domestic sourcing preferences, prevailing wage laws, project-labor 

agreements, and responsible contractor requirements. We believe that governments 

must retain their ability to invest tax dollars in domestic job creation and to pursue 

other legitimate social objectives, and that procurement rules which restrict this authority are inappropriate. 

Safeguards: Workers have extensive experience with large international transfers 

of production in the wake of the negotiation of free trade agreements and thus are 

acutely aware of the need for effective safeguards. The safeguard provisions in the 

Oman agreement, which offer no more protection than the limited safeguard mechanism in NAFTA, are not acceptable. U.S. negotiators should have recognized that 

much faster, stronger safeguard remedies are needed. The Oman FTA has failed to 

provide the necessary import surge protections for American workers. 

Services: NAFTA and WTO rules restrict the ability of governments to regulate 

services—even public services. Increased pressure to deregulate and privatize could 

raise the cost and reduce the quality of basic services. Yet the Oman agreement 

does not contain a broad, explicit carve-out for important public services. Public 

services provided on a commercial basis or in competition with private providers are 

generally subject to the rules on trade in services in the Oman FTA, unless specifically exempted. 

Conclusion 

Congress should reject the Oman FTA, and send a strong message to USTR that 

future agreements must make a radical departure from the failed NAFTA model in 

order to succeed. 

American workers are willing to support increased trade if the rules that govern 

it stimulate growth, create jobs, and protect fundamental rights. The AFL–CIO is 

committed to fighting for better trade policies that benefit U.S. workers and the 

U.S. economy as a whole. For the reasons stated above, we urge the Congress to 

reject the U.S.–Oman FTA and begin work on a more just economic and social relationship with Oman. 

f 

Mr. RYAN. Thank you, Mr. Trumka. Mr. Schwartz? 

STATEMENT OF ROGER SCHWARTZ, BUSINESS VICE PRESIDENT, POLYETHYLENE, THE DOW CHEMICAL COMPANY, 

MIDLAND, MICHIGAN 

Mr. SCHWARTZ. Mr. Chairman and distinguished Members of 

the House Ways and Means Committee, thank you for the opportunity to provide testimony on behalf of the U.S.–Oman FTA. The 

Dow Chemical Company is a diversified chemical company that 

harnesses the power of science and technology to improve living 

daily. The company offers a broad range of innovative products and 

services to customers in more than 175 countries, helping them to 

provide everything from fresh water, food, pharmaceuticals, to 

paints, packaging and personal care products. Built on its commitment to principles of sustainability, Dow has annual sales of $46 

billion and employs 42,000 people worldwide. 

53 

Dow is a 109-year-old American company headquartered in Midland, Michigan, and in 2004 we announced a joint venture agreement with the government of the Sultanate of Oman, and the 

Oman Oil Company, to design, build and operate a petrochemical 

complex in the Sohar Industrial Port Area. The complex includes 

feedstock production facilities, and ethylene gas-cracking unit, and 

world-scale polyethylene production units based upon the state of 

the art catalyst and process technology. As a company, we are very 

excited about this project. Oman is one of the key locations in the 

Middle East where Dow is preferentially investing due to its proximity to the Asian markets and access to cost-competitive hydrocarbon feedstocks which we need to make these products. 

The FTA helps in our development by gaining market access for 

American products and manufacturing inputs to support the 

growth of our production in Oman, and ultimately makes us more 

competitive in the Asia-Pacific consumer market. The project is a 

key step in Dow’s strategy of having cost competitive, geographic 

and product positions that will enable value growth. The project is 

a true partnership, helping the Omani government to meet its objectives of attracting foreign investment, diversifying the economy, 

creating job opportunities, and laying the foundation for future 

downstream industries, or helping us to access cost competitive 

feedstocks for the fast-growing markets in Asia. While we began 

our discussion with the Omanis prior to the launch of the FTAs, 

we have been tremendously impressed by the speed and the 

progress made in the U.S.–Oman FTA negotiations. In particular, 

we give significant credit to the Omani negotiating team for their 

very progressive attitude toward liberalization, not just in the reduction of tariffs, but augmenting and improving domestic rules on 

intellectual property protection, investor rights, and government 

procurement. 

The Omanis are already signatories of the plurilateral Chemical 

Harmonization Tariff Agreement, that not only helps my company 

but also supports simplification and efficient trade of chemical 

products worldwide. This Agreement is yet another example of the 

tremendous progress on reforms within Oman, and the Sultan’s 

progressive agenda. The Sultan has fostered a high degree of political stability within the country by instituting a new constitution 

which has created a more democratic infrastructure, including a 

deputy prime minister post, bicameral legislature and guarantees 

for basic civil liberties. Ultimately, Oman is a key growth opportunity for American companies, particularly those like Dow that 

are heavily reliant on sustained access to low-cost energy and feedstocks. With our value park concept of bringing in manufacturing 

partners to co-locate near our facilities, the FTAs will support additional American investment, creating significant new employment 

and economic opportunities in downstream plastic industries. This 

is a concept that we have already successfully implemented at Dow 

Chemical’s Germany operations in Schkopau, a former East German site. 

Dow views Oman as yet another strategic investment that enhances our global reach, accessing low-cost natural resources in a 

geographically strategic location to ultimately participate in the 

tremendous consumer growth in the Asia markets. That pattern of 

54 

growth helps us as an American company deliver significant value 

back to our shareholders. The FTA is not only a recognition for 

Oman’s progress on economic reform and trade liberalization, but 

serves as a high-quality, high-standard benchmark for further 

progress on the President’s vision for MEFTA by 2013. Oman 

serves as a living example of the benefits of progressive reform. We 

are pleased to be a partner in Oman’s development, and urge the 

House to recognize Oman’s progress on economic reform and trade 

liberalization with an expeditious and positive vote on this agreement. Thank you. 

[The prepared statement of Mr. Schwartz follows:] 

Statement of Roger R. Schwartz, Business Vice President, Polyethylene, 

The Dow Chemical Company, Midland, MI 

Mr. Chairman, and distinguished members of the House Ways & Means Committee, thank you for the opportunity to provide testimony on behalf of the U.S.– 

Oman Free Trade Agreement. 

The Dow Chemical Company is a diversified chemical company that harnesses the 

power of science and technology to improve living daily. The Company offers a broad 

range of innovative products and services to customers in more than 175 countries, 

helping them to provide everything from fresh water, food and pharmaceuticals to 

paints, packaging and personal care products. Built on a commitment to its principles of sustainability, Dow has annual sales of $46 billion and employs 42,000 people worldwide. 

Dow is a 109-year-old American company, headquartered in Midland, Michigan. 

In 2004, we announced a joint venture project with the Government of the Sultanate of Oman and Oman Oil Company (OOC) to design, build and operate a petrochemical complex in the Sohar Industrial Port Area. The complex will include feedstock production facilities, a gas cracker, and world-scale polyethylene production 

units based on state-of-the-art catalyst and process technology. 

As a company, we are very excited about this project. Oman is one of the key locations in the Middle East where Dow is preferentially investing, due to proximity to 

Asian markets and access to cost-competitive hydrocarbon feedstocks which we need 

to make many of our products. 

The FTA helps our development by gaining market access for American products 

and manufacturing inputs to support growth of our production in Oman and ultimately make us more competitive in the Asia/Pacific consumer markets. This project 

is a key step in Dow’s strategy of having cost competitive geographic and product 

positions that will enable value growth. 

The project is a true partnership—helping the Omani government to meet their 

objectives of attracting foreign investment, diversifying the economy, creating job 

opportunities and laying the foundation for future downstream industries while 

helping us to access cost-competitive feedstocks to supply the fast-growing markets 

of Asia. 

While we began our discussions with the Omanis prior to the launch of the FTAs, 

we have been tremendously impressed by the speed and progress made in the U.S.– 

Oman FTA negotiations. In particular, we give significant credit to the Omani negotiating team, for their very progressive attitude towards liberalization, not just in 

the reduction of tariffs but augmenting and improving domestic rules on intellectual 

property protection, investor rights and government procurement. 

The Omanis are already signatories to the plurilateral Chemical Harmonization 

Tariff Agreement (CHTA)—not only helpful to my company but also to supporting 

simplified and efficient trade in chemical products. 

This agreement is yet another example of the tremendous progress on reforms 

within Oman and the Sultan’s progressive agenda. The Sultan has fostered a high 

degree of political stability within the country by instituting a new Constitution, 

which has created a more democratic infrastructure—including a deputy Prime Minister post, bicameral legislature and guarantees for basic civil liberties. 

Ultimately, Oman is a key growth opportunity for American companies—particularly those, like Dow, that are heavily reliant on sustained access to low cost energy 

and feedstocks. With our value park concept, bringing in manufacturing partners to 

co-locate with our facility, the FTA will support additional American investment, 

creating significant new employment and economic opportunities in down stream 

55 

plastics industries. This is a concept we have already successfully implemented at 

the Dow Chemical Germany Schkopau site, in the former East Germany. 

Dow views Oman as yet another strategic investment that enhances our global 

reach—accessing low-cost natural resources in a geographically strategic location to 

ultimately participate in the tremendous consumer markets of Asia. 

That pattern of growth helps us, as an American company, deliver significant 

value back to our shareholders. 

The FTA is not only a recognition for Oman’s progress on economic reform and 

trade liberalization, but serves as a high-quality, high-standard benchmark for further progress on the President’s vision for a U.S.–Mid East Free Trade Area by 

2013. Oman serves as a living example of the benefits of progressive reform. 

We are pleased to be a partner in Oman’s development—and urge the House to 

recognize Oman’s progress on economic reform and trade liberalization with an expeditious and positive vote on this agreement. 

f 

Mr. RYAN. Thank you. Let me start with just one question to 

you, Ambassador Cook. You are perhaps the best qualified to answer this. The Sultan has made a lot of concrete commitments in 

the area of labor issues, and you mentioned briefly in your testimony that your experience with the Sultanate is that they honor 

their words. I would like to see if you could elaborate more on that 

point specifically. This trade agreement is progressing based upon 

the agreements made by Oman in the area of labor. What in your 

estimation—how should we evaluate that? How do you believe, 

based on your track record with them and your understanding of 

the government, we should interpret those agreements and our 

faith in those taking place? 

Ms. COOK. Thank you very much, Mr. Chairman. My experience 

with them has been over a range of issues, not just on labor or on 

trade but I could give you a couple of quick examples to show how 

they do honor their word. One of them is in the military sphere. 

As you know, we negotiate military access agreements in countries 

where we keep troops. If that has to be implemented, usually under 

very difficult circumstances, it is trying for the host nations. 

One specific example is a fatality of a local citizen, which occasionally occurs where we have troops abroad—that was a very sensitive issue for Oman, where a troop killed an Omani driving accident. It was nothing more than an automobile accident, but you 

can understand how such an incident can be very sensitive, as indeed it is in Washington, D.C., when it occurs with diplomatic vehicles. They honored that agreement to the letter. It was obviously 

a very difficult issue for them locally, abut they carried out every 

bit of—it was handled in 48 hours. That one is extremely sensitive, 

and something that they did honor very quickly in my time there. 

They have done that as well with our various agreements with 

DOD for access to our facilities. those are legal agreements that 

they have honored in my time there that have been difficult for 

them to honor, but they honor it without flinching. There was no 

attempt to negotiate or renege something-else. They did what they 

said they would do in the treaty, and that was it. 

Mr. RYAN. Thank you. Mr. Rangel? 

Mr. RANGEL. Mr. Chairman, I think those questions are so unfair because it detracts from the credibility of our former ambassador, who obviously served our country well, and has a good working relationship with the Sultan. You know, if we did business that 

56 

way, just on trust, we don’t need any agreement. If the President 

said, ‘‘You are ambassador. Work out something with these people,’’ 

and you came back and told the President, ‘‘We worked it out. I 

trust them,’’ it would not look good on the U.S., nor on our embassy 

in that country. 

Just because we differ doesn’t mean that the we challenge the 

credibility of the Sultan. He is a nice man, but when we get out 

there and represent our constituents, we can’t say, ‘‘You told us 

trust him.’’ You know that, and you know it. We need to have 

something that is the U.S. policy. We have to talk to make certain 

we are talking the same language, since, I think, we basically want 

to reach the same goal. 

Mr. Trumka, are your union officials willing to help out some of 

these countries that have cultural differences that can assist them 

in the language, whether it is ILO, or no matter what it is? It is 

just basic decency that we are talking about, and the ability of poor 

people to acquire funds so that they can buy U.S. products. Are you 

willing to go and help them since we have to assume that there is 

good faith involved in this by USTR, by our embassy, and by the 

countries and the Congress? 

Mr. TRUMKA. Yes, very much so, sir. Not only are we willing 

to, we have been doing just that for any number of years, for decades, trying to help workers in other countries through the ILO, 

through the ICFTU, the International Confederation of Free Trade 

Unions, to help them get a better standard of living, help them get 

more enforceable rights and to help them increase their standard 

of living, of course we are. In fact, we have actually participated 

in negotiations in other countries with companies to help those 

workers get a better standard of living. 

Mr. RANGEL. I would guess that if the USTR would ask what 

is the biggest impediment to getting bipartisan trade agreements, 

they would say it is labor. Have they consulted, to the best of your 

knowledge, with the leaders in your organization to see how we 

could work out those language differences? 

Mr. TRUMKA. They have not. 

Mr. RANGEL. Well, that is something maybe we can talk about, 

Mr. Acting Chairman, because communications is so important 

since there are so many people who don’t want to listen on both 

sides. They shouldn’t be using ILO as an excuse because we are not 

looking to support the ILO. We are looking for basic standards that 

everyone can agree upon, and they have to be minimum standards. 

Mr. Billotti, you had indicated that the actions of your construction company in the U.S. is reflected in part in how you do business abroad in Oman. The Mayor of the city of New York had to 

set up a special commission because of the apparent absence of minorities in these construction jobs in New York, and I would assume, around the country. I don’t know how familiar you are in 

New York City, but they don’t have—well, what do you think about 

the hiring practices of your construction company in New York? 

Mr. BILLOTTI. Of my construction company in New York? Well, 

I am most familiar with what we do outside of the U.S. That is my 

area of expertise. 

Mr. RANGEL. I know, but you say that you reflect U.S. policies. 

57 

Mr. BILLOTTI. Yes. We have taken our U.S. personnel policies 

and we mirror them in places where we do business. 

Mr. RANGEL. Well, if you deal with foreigners within a foreign 

country, I would like to know how you deal with Americans in New 

York City who are minorities. 

Mr. BILLOTTI. That is a very good and fair question, and I can’t 

speak to the specific accomplishments or statistics, but I do know 

that we go out of our way to form joint ventures with local minority 

companies in Brooklyn where I am from, and Manhattan, in the 

Bronx, where we will be building the new Yankee Stadium, but to 

us, minority participation is a very, very important part of our industry, and I could just—— 

Mr. RANGEL. Well, as you travel in New York City, you do see 

then the absence of minorities working on these sites, so much so 

that the unions and the Mayor and construction people have joined 

a special commission to see what we can do to change this obscene 

policy of the absence of minorities. 

Mr. BILLOTTI. Again, I am not in a position to speak to the specifics of the industry in New York City. I can tell you though that 

Turner’s policy has been, and continues to be, to attract minority 

participation in our industry. 

Mr. RANGEL. Would you send me something on that as soon as 

possible? 

Mr. BILLOTTI. Absolutely, I would be happy to. 

[The written response from Mr. Billotti follows:] 

May 18, 2006 

Congressman Charles Rangel 

163 West 125th Street, Suite #737 

New York, NY 10027 

Dear Congressman Rangel: 

We met recently at the U.S. House of Representatives’ Committee on Ways and 

Means hearing regarding the implementation of the U.S.–Oman Free Trade Agreement. At the hearing, you asked me about minority participation in the projects 

Turner Construction is involved in the U.S. and specifically in New York City, Turner’s headquarters for almost 100 years. As the leading general builder in the U.S., 

Turner recently announced that it had awarded over $1 billion worth of construction 

contracts to minority and women owned businesses (M/WBEs) during 2005. This is 

the first time in the history of Turner that the company has surpassed the $1 billion 

mark. 

By establishing joint venture and association partnerships, utilizing supplier and 

prime contractors, Turner was able to continue the company’s ongoing commitment 

to minority and women owned business and secure more than 2900 contracts with 

M/WBE firms in 2005. Turner is committed to supporting communities in areas 

where we do business and has a longstanding record of this support across the U.S. 

The company has received well over 100 awards for leadership in utilization of M/ 

WBEs. Our objective is to increase the visibility, improve the economic viability and 

expand opportunities for these businesses. 

In New York, we have increased the total volume of work awarded to MWBEs 

from $300,275,574 in 1995 to $978,851,957 in 2005. Specifically, within your own 

Congressional District, District 15, Turner has worked on City University of New 

York/City College of New York, Columbia University and Harlem Center with minority and women-owned businesses over the last several years. I have attached a 

report from our New York business unit’s Community Affairs department which 

highlights our MWBE work locally. I believe that companies must reflect the communities in which we live and work. The utilization of M/WBE firms is critical to 

the overall success of the construction industry and of Turner. Our environment, 

culture, policies, programs and practices reflect the high value we place on diversity 

and outreach to M/WBEs. 

In closing, I would again like to thank you for allowing me to speak in support 

of the U.S.–Oman Free Trade Agreement. Please feel free to contact me should you 

58 

or other committee members desire additional information about the M/WBE participation 

Sincerely, 

Nicholas Billotti 

President and CEO 

Turner Construction—International 

cc: U.S. House of Representatives’ Committee on Ways and Means 

Congressman William Thomas 

Congressman E. Clay Shaw 

Congresswoman Nancy Johnson 

Congressman Wally Herger 

Congressman Jim McCrery 

Congressman Dave Camp 

Congressman Jim Ramstad 

Congressman Jim Nussle 

Congressman Sam Johnson 

Congressman Phil English 

Congressman J.D. Hayworth 

Congressman Jerry Weller 

Congressman Kenny Hulshof 

Congressman Ron Lewis 

Congressman Mark Foley 

Congressman Kevin Brady 

Congressman Thomas Reynolds 

Congressman Paul Ryan 

Congressman Eric Canter 

Congressman John Linder 

Congressman Bob Beauprez 

Congresswoman Melissa Hart 

Congressman Chris Chocola 

Hilton O. Smith, Turner Construction 

f 

Mr. RANGEL. What is Turner’s policy in terms of hiring non-citizens? 

Mr. BILLOTTI. In terms of hiring non-citizens? 

Mr. RANGEL. People who are not citizens of the U.S. of America. 

Mr. BILLOTTI. Working inside the U.S. or outside of the U.S.? 

Mr. RANGEL. Inside the U.S. 

Mr. RYAN. I will have to ask you to answer briefly. Time has 

expired. 

Mr. RANGEL. Yes, we are over time. 

Mr. BILLOTTI. We only hire people who are either U.S. citizens 

or who have valid work permits in the U.S. to work in the U.S. 

Mr. RANGEL. Thank you. 

Mr. RYAN. Mr. Camp. 

Mr. CAMP. Thank you. Mr. Chairman, I want to thank all of our 

witnesses for their testimony. Thank you very much. 

My question is really to Mr. Billotti and Mr. Weitzel and Mr. 

Schwartz. If you could just briefly answer. You all have experience 

in the region. Based on that experience in the region, I would like 

to know how closely these countries and their citizens follow developments in the U.S. on our relationship, and how do you believe 

the people of the region would react if action on the agreement is 

delayed or if Congress seeks to reopen it for negotiation? If you 

could just comment. Mr. Billotti, why don’t you start? 

59 

Mr. BILLOTTI. In my experience, they follow what happens in 

the U.S. very closely, and if this agreement was not to go forward, 

I think it would have a detrimental affect on relations with Oman. 

Mr. CAMP. Thank you. Mr. Weitzel? 

Mr. WEITZEL. We have three English newspapers in Muscat, 

and every one of them has an American section. We know what is 

going on back home, plus television has CNN everywhere, and Fox 

News, the whole bit. We are very aware of what is going on. The 

FTA has been discussed and talked about in the business community from the very beginnings of the time when negotiations started, and there is excitement, there is anticipation that—it is like 

Christmas, if you will, with a new toy coming out the door. There 

will be a lot of disappointment if it is delayed, and the business 

community is ready to execute and make this happen, and make 

it good for both Omani and the U.S. 

Mr. CAMP. All right. Mr. Schwartz? 

Mr. SCHWARTZ. My experience is the Omanis are very proud of 

their relationship with the U.S., and that they are excited about 

this FTA agreement going forward, and I think it would be a very 

big disappointment, and very much impact our relationships with 

the country. 

Mr. CAMP. Thank you. 

Thank you, Mr. Chairman. 

Mr. RYAN. Mr. Levin? 

Mr. LEVIN. Thank you. 

A couple of quick comments. I think commercial benefits of this 

Agreement are clear. In fact, I think all of you, except Mr. 

Trumka—I don’t think he is—one way or another, are involved 

with the commercial benefits, right, your companies or your consulting business? It is clear there are commercial benefits, and 

there are important commercial benefits. 

Secondly, I hope nobody thinks this is a question of goodwill between our two nations, it isn’t. I think Democrats prefer to be able 

to vote for an FTA. I think whether it is in October, November or 

September, or late July is hardly a matter that would affect goodwill between our Nations. It seems to me a bit of an exaggeration. 

It is clear there has been progress in the country under the Sultan. 

No one is challenging that. 

Mr. Rangel and I are not sure who is left, who is listening, but 

he asked a good question. In no other provision do we rely on 

promises. We don’t, whether it is tariff reductions, intellectual 

property, investment procedures, we don’t say it is good enough 

that they say they will do better. I just want to emphasize the reason this matters, it is not a narrow issue, but it affects the whole 

pattern and path of globalization, and we are learning more and 

more what happens in a country where globalization benefits are 

not shared. I just want to quickly refer, while Mr. Ryan is here, 

I just want to go through what appear to be some of the shortcomings, and I have just a minute or two. 

It is true, there is a labor law reform, and it was a step forward, 

but this appears to be the fact today, that in these representative 

Committees, that is what they are called, they have to notify a 

ministry a month before a meeting, provide a copy of the agenda. 

The company can send a delegate to these meetings, but the repVerDate Aug 31 2005 04:25 Dec 21, 2006 Jkt 030441 PO 00000 Frm 00063 Fmt 6633 Sfmt 6602 E:\HR\OC\30441.XXX 30441
60 

resentative Committee cannot join any organization with headquarters outside of Oman. Those are clear violations of ILO standards. You have to be an employee for a year before you can belong 

to a representative Committee. That is another clear violation. This 

appears to be the language under the 2003 law. I read: the employer has the sole discretion—no, the employer may establish 

schemes from which his workers may get advantages which are 

more beneficial than what is prescribed or provided than with 

other benefits or enter into agreements with them, the terms of 

which are more beneficial than the terms provided for in this law. 

That is not at all a mandate to bargain collectively. It is permissive as we read it. Then under the 2003 law relating to Committees, it appears that employers can elect people to these Committees. Also, the law requires a single main representative Committee and requires that all representative Committees belong to 

it. That is a clear violation of freedom of association. it is because 

of this larger issue that we raise these questions, and there is no 

use trying to skirt them, and I am not sure who is here, I think 

I do from the Omani government. I simply urge that there be a 

major effort to sit down and to talk about these issues, and see if 

there cannot be remediation meeting the basic standards before 

this matter comes up for a vote. There is no reason, Mr. Acting 

Chairman, why that can’t happen. 

Mr. RYAN. Thank you. The gentleman’s time has expired. Mr. 

English. 

Mr. ENGLISH. Thank you, Mr. Chairman, acting or otherwise. 

I want to thank this panel for really providing some thought-provoking insights on this very important FTA. Because the issue has 

been raised, and because three of you represent organizations that 

have operations in Oman, can you please comment, Mr. Schwartz, 

Mr. Weitzel and Mr. Billotti, how have you found the overall business climate and working conditions in Oman compared to other 

nations in the Persian Gulf Region, and to what extent is Oman 

a model for other nations in the region as a country that has dramatically modernized itself since 1970? Mr. Schwartz. 

Mr. SCHWARTZ. Currently our project in Oman is in the design 

stage, so we don’t have a big employment workforce there to comment on, but I can comment, based upon my visits there, my interactions with the Omani people, people have been very impressed 

with the interaction, how progressive they are in terms of how they 

operate, and how much women are involved in the workforce. My 

perception is a very progressive labor environment. 

Mr. ENGLISH. Mr. Weitzel? 

Mr. WEITZEL. Sir, our organization has operations in Qatar, 

Bahrain and Oman, so I can tell you that the three countries are 

different, but yet, Oman is unique in the fact of its openness, in 

my opinion. The government is willing to speak and talk with the 

companies that have questions. In preparing my testimony, we sent 

an e-mail to the Minister of the Interior, and he sent back an answer the very same day. 

The companies, the Omani companies, are very interested in 

finding out ways to get into the American market and bring products over to Oman. Compared to the other countries, they are a 

step ahead in the business world because they do not have the 

61 

hustle and bustle of Qatar and the construction that is going on 

there. They just seem to be a little bit faster in accepting the 

changes that come about, and I am very pleased that they are 

doing that because it means business for everybody. 

Mr. ENGLISH. Mr. Billotti? 

Mr. BILLOTTI. The Turner Company works in all of the Gulf nations with the exception of Yemen. I have traveled the region for 

30 years now, and I have worked in Saudi, the UAE, and all of the 

countries. I find that the Omanis are a little bit different and I 

think that is because they don’t have the same oil, gas or petroleum wealth that so many of the other Gulf countries carry. I think 

because of that, they are more open. They certainly tend to be more 

appreciative of some of the business standards and ethics that we 

try to bring, and our working relationship, I have to honestly say, 

has probably been as good or better in Oman than in any of the 

other Gulf nations, even though we do more work in Dubai, for instance, and Abu Dhabi and even in Saudi. 

Mr. ENGLISH. Mr. Trumka, I want to congratulate you for raising issues about labor standards in Oman, and certainly this is 

something that our Committee has been very interested in and 

very concerned about, and accordingly, we have been very pleased 

with the statement that the Omani government has provided us, 

a commitment to move toward those ILO standards as we advance 

the FTA. 

One thing that was missing from your testimony, I know that we 

have received analysis from USTR and the Department of Commerce about the point that the gentleman from Michigan made, 

that there are clearly commercial benefits from this FTA. With 

some FTAs, Mr. Trumka, you know, we have had legitimate concerns about job loss on the U.S. Do you have any economic analysis 

or study that suggests that we would experience significant job 

losses in the U.S. if we were to enter into this Omani FTA? 

Mr. TRUMKA. Thank you, Representative English. First of all, 

in my full testimony, I answer some of those questions. We would 

be glad to provide additional amplification if you are interested in 

it. There is some chance that in energy-intensive industries that 

there will be job loss to Oman from the U.S., not nearly as significantly as NAFTA or the other FTAs that have been entered into. 

Mr. ENGLISH. I think Mr. Schwartz would probably point out 

and I will conclude on this point, that although low energy costs 

are obviously one of the reasons why Dow finds Oman attractive, 

nevertheless, the jobs that would likely move to Oman, as I understand it, would be jobs that would otherwise be offshore anyway because they are so energy price sensitive. I will examine your testimony in detail, and if you have anything else concrete to provide 

the Committee about actual potential job losses, we would certainly 

like to see them, because so far, the overpowering evidence here is 

that although the benefits will be modest from this FTA, clearly, 

there are net benefits. 

I thank the Chairman for your indulgence. 

[The response from Mr. Trumka was not received at the time of 

printing.] 

Mr. RYAN. Thank the gentleman. Mr. Cardin? 

62 

Mr. CARDIN. Thank you, Mr. Chairman, and let me thank all 

the witnesses for their testimony. 

During the CAFTA debate, I was visited by a lot of representatives from the business community in support of CAFTA, and I 

went over with them some of the discussions I had on workers’ 

rights and the fact that we could have made greater gains in 

CAFTA on workers rights, but that it was mainly our country that 

was holding back the progress on workers rights. The business representatives were surprised to hear that. 

I guess my point is similar to the discussion I had with the first 

panel, with our Trade Representative, in that with Bahrain we negotiated for stronger provisions on workers’ rights, and it was like 

pulling teeth, not with the people from Bahrain, with the people 

from our Administration. 

My point is this, where is the business community on workers’ 

rights? What do you want to see accomplished in international 

agreements? I find that when labor and business works together, 

there is nothing we can’t accomplish. When we did the Trade Promotional Authority, TPA, we had a huge fight in this Congress on 

workers’ rights, and we got no support from the business community to give us the opportunity to negotiate stronger workers’ rights 

internationally. My own observation is that we have some of the 

strongest protections for workers than any country that we trade 

with, although at times, I wonder whether that is being enforced 

properly. 

My point is this, your silence speaks volumes. You want us, and 

I want to open up markets. Part of your priority to raise standards 

in this regard so that American workers, American businesses, 

American manufacturers can have a better competitive environment internationally. It seems to me it makes sense to do that. I 

will check my files. I don’t remember receiving a single letter urging us to be more aggressive on workers’ rights from any of the 

business groups that you all represent today. I would love to have 

your comments. 

Mr. BILLOTTI. I have to comment to that. I tell you, the Turner 

Company, and particularly, those of us who work internationally 

are absolutely committed to worker rights. There are some deplorable conditions that exist outside of the U.S., places like the Middle 

East, places in Latin America, places in Asia where we have work. 

Our staff has worked extremely hard in enforcing safety standards 

and organizing to know that people are fed properly, that they are 

paid on time. We had people go out to a labor camp to inspect it. 

This is not our labor camp, but a contractor’s, and we forcibly 

closed that labor camp because it did not come close to any humane 

standards. 

The Turner Company, whether we may or may not have written 

and taken issue through the U.S. Congress, but I can tell you that 

as a practical matter, each and every one of us who work out in 

the field in so many of these locations outside of the U.S., work 

every day to enforce labor standards. It is to our benefit, because 

workers who are well paid, who are well fed, who are housed properly, are better workers, and it increases the productivity. We do 

it for selfish reasons. We want people to work for us and to work 

hard for us. 

63 

Mr. CARDIN. Will you support Congress’ effort to give the U.S. 

Trade Representative greater authority to negotiate worker standards internationally in trade agreements? 

Mr. BILLOTTI. I can’t imagine how I could say no to that. 

Mr. CARDIN. Thank you. I would appreciate other Members’ 

views on it. 

Mr. WEITZEL. Sir, we have almost 800 employees in Oman, and 

269 of them are Omanis, and the rest are expatriates. We are excited about the opportunity that the Omanis are going to be given 

with their representative groups. We have set up an English language course formed down at one of our operations at Thumrait Air 

Base. We want to see them mature as a workers’ representative 

group into a union and into taking care of their concerns and 

rights. It is something, three operations have to occur. The workers 

have to get knowledge and they have to become mature in being 

a representative group. The government has to do the same thing. 

It is foreign to them to have a union. The courts must also do that 

same thing because they have to learn how to adjudicate union 

cases. 

The trends and the thoughts and the ideas of the courts need to 

focus on what is right for the workers and what is right for the 

companies. 

Mr. CARDIN. I will just make this final observation. Unless it 

becomes part of core trade agreements, you are not going to get the 

respect from the other countries to do what they need to do to raise 

international worker rights. 

Mr. RYAN. Thank the gentleman. Mr. Becerra. 

Mr. BECERRA. Thank you, Mr. Chairman. First, welcome and 

thank you very much for being here, and Ambassador Cook, especially. Thank you for the insights on how things operate, what we 

should expect with regard to the Omani government and the people. I think for the most part, every Member here would agree with 

what you are saying. They have proven over the years that they 

are really a friend, someone who really wants to continue a partnership with us, and I think most of us would agree that they have 

made progress, meaningful progress, with regard to the labor 

standards. The difficulty is, we know they still have a bit to go, and 

the difficulty some of us have, is that if we don’t try to make sure 

that our agreements get them there. Then what we do is in essence 

give them a pass if they should not get there in the future; it only 

hurts American working men and women and Omani working men 

and women. 

If you take a look, and I know all of you had a chance to sit 

through the first part of the discussion with Ambassador Schwab, 

and now this discussion. We have not had a discussion about a disagreement with any other aspect of the trade deal except this, the 

treatment of labor and environment, and how it is treated differently. Why we would want to treat the protection of working 

men and women in America differently than we treat products 

from America, I am not sure, or why we would want to treat industrious men and women who work in America differently than the 

intellectual property that is amorphous that we protect, I am not 

sure, but that is the crux of this. 

64 

Quite honestly, I think those of you who followed some of these 

trade debates, probably you know this as well, that if we could 

handle this issue, we would have what we used to have, robust bipartisan agreement on trade deals that would show a clear face of 

the U.S. when it comes to trading with our partners, and it is unfortunately, because most of these trade deals that have passed in 

the last few years have passed by one vote, and that is the worst 

face you want to show your competitors, even your foreign partners, because you want to show a very united front in America 

when it comes to that trade deal. 

Quite honestly, I think as some of you have just indicated, especially from the business community, we are really not that far 

away. What some of us are saying is what President Reagan said, 

trust but verify. We want to know that it is in the agreement that 

we will continue to lift standards, and by the way, we are willing 

to also give time so some of those countries that are developing 

have that opportunity to get there. We do not expect them to be 

there yesterday. 

If all you say is enforce your own laws, how does that work? Mr. 

Billotti, let me ask you this. If all the work that you do, all of a 

sudden you found that the contractors in Oman simply had to 

abide by a law which said Oman contractors and subcontractors get 

preference when it comes to disputes, and therefore, they are entitled to have representation in court, but foreigners are not; would 

that seem right to you? 

Mr. BILLOTTI. Well, it certainly wouldn’t seem right. If it 

doesn’t take place, and we wouldn’t participate. 

Mr. BECERRA. See, that is the point, none of us expects that to 

be the case. Where there are areas of deficiency, as we know exists 

on some of the labor side, what we want to make sure is that they 

continue to cleanse those, so that we do have appropriate laws. I 

think some of you have just said it from the business community. 

You wouldn’t expect to see us wanting to reach agreements with 

countries that aren’t going to respect whether it is intellectual 

property, financial services laws, or certainly labor laws, because it 

makes it tough for you to compete. I continue to say that the biggest losers when we don’t have good agreements on these labor provisions, are American companies, because as you just expressed, we 

probably bring higher standards into some of these countries than 

what exist. It is going to be tough for American companies to continue to want to do that if you have got other competitors from 

other countries who don’t care to bring up standards. 

At some point you are going to have to decide, do I compete with 

them at the lower standards to be able to match them, or do I continue to just have a higher cost? Ultimately, American companies 

lose. I don’t think American companies go abroad simply to take 

advantage of cheap labor. I think we go out there because we see 

there is a good business decision being made, and also it benefits 

all of us here and abroad when you all produce more, create more 

jobs. You still have to hire an American here to do the accounting 

if nothing else because of the work that you have done abroad. 

Rather than have a question, let me just make a plea to you, as 

I think the gentleman from Maryland—to help us. We are that 

close to having deals that are again bipartisan with robust votes 

65 

in favor on both sides of the aisle. We are not far apart on the language. Some of us are simply saying, let’s have that floor so you 

can’t see companies go below it. That is clear and enforceable. 

Right now these agreements don’t have enforceable language to 

protect working men and women, not just in America, but in those 

other countries as well. Let’s, again, respect that the Omani government has been moving forward. 

I don’t really have a question there. If any of you wish to comment with the time that I have remaining, I would be more than 

willing to open up the floor. 

Mr. RYAN. Sorry, but the gentleman’s time has expired. We will 

just have to call it at that. I want to thank the witnesses for taking 

the time to come here. Some traveled great distances. I want to 

thank the first panel. This hearing is adjourned. 

[Whereupon, at 1:08 p.m., the Committee was adjourned.] 

[Submissions for the record follow:] 

Statement of David Hamod, National U.S.–Arab Chamber of Commerce 

‘‘From the first recorded contact—the arrival in Muscat of a ship hailing 

from Boston named the Rambler in September 1790—until the present day, 

the bonds between Oman and the United States have been warm and enduring. Both nations share a seafaring heritage, mutual commercial interests, a tradition of tolerance and a desire for contact with other cultures 

as some of the distinguishing features of this long-term relationship.’’ U.S. 

Embassy, Muscat, Oman 

Mr. Chairman, Mr. Ranking Member, and distinguished members of the House 

Ways and Means Committee: Thank you for the opportunity to testify today on the 

proposed Free Trade Agreement (FTA) between the United States and the Sultanate 

of Oman. My name is David Hamod, and I serve as President & CEO of the National U.S.–Arab Chamber of Commerce (NUSACC). I have also been a regular visitor to Oman for most of the past two decades. 

NUSACC, established nearly 40 years ago, is widely regarded as the voice of 

American business in the Arab world. We are America’s longest serving chamber of 

commerce dedicated to 

U.S.–Arab business, with membership rolls that now include more than 1,500 

companies. With offices in New York, Houston, Los Angeles, and our headquarters 

in Washington DC, NUSACC is a nexus for U.S.–Arab business and the only chamber of its kind that covers the nation from coast to coast. 

Moreover, NUSACC is the only entity in the United States with official recognition conferred by the League of Arab States and the General Union of Arab Chambers of Commerce, Industry, and Agriculture. As such, we serve as the U.S. point 

of contact for the national chambers of commerce in the 22 Arab nations—including 

the Oman Chamber of Commerce and Industry. We also have longstanding relationships with the American Business Council of the Gulf Countries (ABCGC) and the 

Muscat American Business Council. 

NUSACC supports free trade agreements between the United States and our trading partners around the world because we believe that such agreements create ‘‘winwin’’ opportunities. In our view, the FTAs that are currently being negotiated with 

countries in the Arab world will help both sides to increase exports, generate jobs, 

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. 

We are pleased and honored that the House Ways and Means Committee has invited us to provide this ‘‘big picture’’ assessment of U.S.–Oman relations and why 

we believe that an FTA between our two nations would be in the best interests of 

the United States and Oman alike. 

Under the thoughtful leadership of H.M. Sultan Qaboos bin Said al Said, Oman 

has been transformed from an economic backwater to one of the most progressive 

and attractive nations in the region. And unlike some of its neighbors in the Arabian Gulf area, Oman has achieved this status without the benefit of huge energy 

reserves—relying instead on the resilience, determination, and entrepreneurial spirit of its people. 

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 

66 

15,000 direct U.S. jobs. The 2006 figures represent an increase of nearly 56 percent 

over 2005, when U.S. merchandise exports totaled $593.3 million. 

The U.S. has become the third largest exporter to Oman, and if our two nations 

implement this FTA, market share for U.S. products in Oman is expected to close 

in on that of the United Arab Emirates and Japan, ranked first and second, respectively. The UAE is an important hub for re-exports to Oman. If and when the U.S.– 

Oman FTA enters into force, it is safe to assume that the FTA will increase profit 

margins for U.S. exporters by cutting out some of the transshippers and ‘‘middlemen’’ who drive up the costs of U.S. products. And as for Japan, it is moving aggressively to sign its own FTAs with Oman and other nations in the region. 

Under the terms of the FTA, according to the Office of the U.S. Trade Representative, 100 percent of bilateral trade in industrial and consumer products, and no less 

than 87 percent of agricultural tariff lines, will become duty-free immediately upon 

entry into force of this agreement. The United States and Oman will phase out tariffs on the remaining products within ten years. 

With this in mind, our chamber encourages the U.S. Congress to support the Free 

Trade Agreement with the Sultanate of Oman for a variety of reasons: 

Successful Market for the United States—In recent years, Oman has steadily 

grown its commercial relationship with the United States. As a result, there are upwards of 100 U.S. companies with a presence in Oman, and U.S. firms are playing 

an important role in Oman’s strategic planning for the 21st century. 

A little over a year ago, for example, the Dow Chemical Company entered into 

a partnership with the Oman Oil Company to build a polyethylene complex at the 

Sohar industrial port zone. H.E. Maqbool Ali Sultan, Oman’s Minister of Commerce 

& Industry, hailed the new partnership as a ‘‘further milestone in the Omani Government’s objective to attract foreign investment, diversify the economy, create job 

opportunities, and lay the foundation for future downstream industries.’’ 

Equally impressive was the initial public offering (IPO) last year for shares of 

AES Barka, the largest operating independent power and water project in Oman. 

Led by the AES Corporation of the United States, the IPO was oversubscribed by 

more than 16 times, according to BankMuscat, amounting to nearly half a billion 

U.S. dollars. The company, which has an installed capacity of 427 MW and 20 million gallons of water, started commercial production in June 2003 and, within the 

first year, it reached profitability. The project was named ‘‘Investment Project of the 

Year—2003’’ at the Oman Awards for Excellence. 

Another high profile undertaking involving a U.S. company is the $3.5 billion Dolphin project, in which Occidental Petroleum is a joint venture partner. This ambitious project is linking the gas networks of Qatar, the UAE, Oman and, eventually, 

the Indian subcontinent. Under a deal reached in March 2003, Oman Gas Company 

(OGC) began supplying gas to Dolphin in the fourth quarter of 2003, and deliveries 

will continue for a period of up to five years. This agreement marks the first crossborder gas delivery in the history of the GCC. 

Open Economy—Oman has made significant progress over the years in integrating its economy into the global marketplace, and an FTA with the United States 

would further reinforce Oman’s efforts to promote economic liberalization. According 

to Economic Freedom of the World: 2005 Annual Report, published by The Fraser 

Institute (www.freetheworld.com), Oman has the seventeenth freest economy in the 

world. This ties Oman with Finland and places the Sultanate ahead of such nations 

as Germany (#19), Taiwan (#24), Spain and Japan (tied for #30), South Korea (#35), 

and Italy (#54). 

Just a few years ago, some of Oman’s tariffs ranged as high as 15 percent (e.g.— 

food products). Today, according to the National Association of Manufacturers, 

Oman’s applied tariff rates range from 4.5 percent to 5.7 percent. The Government’s 

decision to lower tariffs is helping to make U.S. products more competitive in the 

Omani market, thereby serving Oman’s consumers and curbing overland imports 

from Dubai, the re-export capital of the Arabian Gulf. 

Respect for the Rule of Law—The best objective measure of Oman’s adherence to 

the rule of law may be Transparency International’s Corruption Perception Index 

2005, which ranked Oman 28th in the world—tied with Israel—with a low level of 

perceived corruption. (www.transparency.org) Oman ranks number one in the Arab 

world and placed higher than such nations as Taiwan (#32) and Italy & South 

Korea (tied for #40) among the 159 nations that were studied. TI’s Corruption Perceptions Index draws on 16 different polls from ten independent institutions. 

Oman is also making headway in its efforts to promote good governance. For example, the Central Bank of Oman (CBO), in association with the Arab Banking 

Union and the Oman Chamber of Commerce and Industry, has been hosting seminars on the role of corporate governance in Arab banking institutions. One such 

seminar recently attracted corporate leaders from throughout the Arab world. 

67 

Political Stability and Investment Appeal—Under the leadership of H.M. Sultan 

Qaboos, Oman has been one of the most stable nations in the Arab world for more 

than three decades. This is not easy, given the ‘‘tough neighborhood’’ that the Middle East can sometimes be. Oman has a well deserved reputation for diplomacy and 

moderation, two traits that have enabled the Sultanate to stay on good terms with 

just about everyone in the region. Because of Oman’s commitment to tolerance, the 

Sultanate has also been very successful at accommodating traditional Islam while 

at the same time hosting a wide variety of cultures among Oman’s many expat residents and foreign visitors. 

Oman remains heavily dependent on oil, which makes up approximately 40 percent of the country’s GDP, more than 80 percent of the country’s exports, and some 

75 percent of the government’s revenues. Such dependence is of great concern to the 

Government of Oman because the life cycle of the nation’s oil fields is in decline. 

With this in mind, Oman is aggressively pushing for diversification and privatization, particularly in the form of ‘‘Omanization’’—replacing expatriate workers with 

Omanis. 

In an effort to make Oman more attractive to prospective partners around the 

world, Oman has waived requirements that foreign businesses had to enter into exclusive agency agreements. In addition, a ministerial decision was issued in 2000 

waiving the requirement for foreign firms to partner with a 51 percent Omaniowned company in order to obtain an import license. 

Oman has also created a series of incentives in recent years that will encourage 

investments by U.S. partners and others. Some of these incentives include tax exemptions for five years for industrial enterprises that contribute to Oman’s economy, 

a stable currency with full convertibility, no personal income tax and no foreign exchange controls, tax and import duty exemptions, and interest-free long-term loans 

for industrial and tourism projects that involve foreign investment. Oman also touts 

its price stability, with an inflation rate that has not exceeded one percent since 

1992. 

NUSACC sees these efforts to liberalize Oman’s economy as important steps along 

the path to a U.S.–Oman Free Trade Agreement. 

Adherence to International Agreements—Oman is a member of the World Trade 

Organization (WTO) and is making steady progress in its efforts to support intellectual property rights (IPR). The Omani trademarks regime consists of Royal Decree 

68/87, Decree Law No. 635/1991 and Royal Decree 33/91. Oman’s latest Copyright 

Law, No. 37/2000, updated the earlier Royal Decree 47/96, enacted in 1996. In addition, Oman has joined the Patent Cooperation Treaty and has asked the World Intellectual Property Organization (WIPO) to register the Sultanate as a signatory to 

the Paris and Berne Conventions on IPR. 

According to the International Intellectual Property Alliance (IIPA), Oman is enforcing its copyright laws and bringing down piracy levels. The piracy level for business software was 87 percent in 2000 and dropped to 71 percent two years later. 

The piracy level for motion pictures is even more impressive: from a high of 100 

percent in 1995, it has dropped to below 25 percent—making it one of the lowest 

rates in the region. However, the IIPA reports that there is still room for improvement when it comes to the WIPO Copyright Act and the Performances and 

Phonograms Treaty. 

During my visits to Oman 15 years ago, the telltale signs were everywhere that 

there was relatively little enforcement of intellectual property rights. Pirated computer software, bootleg videos, and designer clothing knock-offs were widely available. Following its accession to the WTO, however, Oman began cracking down in 

earnest on IPR violations. Today, with support from the private sector, Omani authorities are keeping the heat on IPR offenders, routinely conducting sting operations on illicit video producers and busting rings of counterfeiters. 

Strategic Support—The Sultanate of Oman, with its close proximity to the strategic Straits of Hormuz, is an important asset for the United States military in the 

Middle East. Over the years, Oman has provided invaluable support to the U.S. 

forces in terms of forward deployments of U.S. servicemen and women and the prepositioning of U.S. materiel. Oman hosts an estimated 3,000 U.S. servicemembers, 

particularly from the U.S. Air Force. 

According to the U.S. Department of Defense, ‘‘Oman has been a coalition partner 

for over thirty years. 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 success in the region.’’ 

Supporting the Fight Against Terrorism—Oman has been a strong and reliable 

partner in the war against terrorism. Since 2001, the Sultanate has taken decisive 

steps to combat money laundering and to shut down any financial resources that 

might be available to terrorists. Oman is also hoping to become the second Arab naVerDate Aug 31 2005 04:25 Dec 21, 2006 Jkt 030441 PO 00000 Frm 00071 Fmt 6633 Sfmt 6621 E:\HR\OC\30441.XXX 30441
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tion to put the U.S. Container Security Initiative in place, allowing U.S. personnel 

to inspect cargo bound for the United States. 

Oman has been unequivocal about its willingness to stand ‘‘side by side’’ with the 

United States in America’s fight against terrorism. H.E. Yousef Bin Alawi Bin 

Abdullah, the Head of Oman’s Delegation to the United Nations, stated in New 

York not long after 9/11, ‘‘We would like to reaffirm again our solidarity with the 

United States of America in fighting all forms of terror against humans wherever 

they are.’’ He went on to say, ‘‘Stemming from my country’s firm position of condemning terrorism in all its forms, and in compliance with the goals of the United 

Nations of maintaining international peace and security, my country ensures its 

support toward the international efforts in fighting terrorism. . . .’’ 

Commitment to Human Development—When it comes to capacity building through 

social policies, Oman is one of the most progressive nations in the region, thanks 

to the enlightened leadership of H.M Sultan Qaboos. The Sultan 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.’’ In large part 

as a result of the Sultan’s encouragement over the years, there are more female 

graduates these days than male graduates. 

Women in Oman have the right to vote and run for office in Consultative Council 

elections, held every four years. Oman has three women in its Cabinet, and it is 

no coincidence that Oman has produced the first fully accredited female ambassador 

to the United States from the Arab world, H.E. Hunaina Sultan al-Mughairy. 

A strong commitment to education is a key component of a nation’s ability to encourage economic development, and Oman has one of the most respected literacy 

rates in the Arab world. The Omanis have made remarkable progress since 1970, 

when H.M. Sultan Qaboos acceded to the throne. Before 1970, Oman had only three 

schools, and only boys were allowed to receive an education. Today, Oman boasts 

upwards of 1,000 schools, and boys and girls are equally represented. 

There was also a time in Oman when the opportunity to learn English was only 

available to small number of Omanis. Today, in recognition of English as the lingua 

franca of international commerce and diplomacy, English is being taught in the first 

grade, with five lessons per week. 

One academic success story that connects the United States to Oman is The 

American International School of Muscat (TAISM), which ‘‘pursues academic excellence for students in the international community through an American-based education that develops ethical, responsible, and globally conscious life-long learners.’’ 

TAISM, designed to afford expatriate children of all nationalities with an educational program in the context of an American-based curriculum, is accredited by 

the New England Association of Schools and Colleges (NEASC) and the Council of 

International Schools (CIS). 

Respect for Workers’ Rights—Oman joined the International Labor Organization 

in 1994, and the Sultanate has come a long way over the years in its efforts to encourage labor reform and support the rights of workers. This is still a work in 

progress, but NUSACC is encouraged by steps that Oman has taken and continues 

to take. 

In NUSACC’s view, the most significant step forward came in 2003 with the passage of a new labor law (Royal Decree 35) that 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. According to the Office 

of the U.S. Trade Representative, ‘‘Oman is currently working with the ILO on additional regulations to ensure that the implementation of collective bargaining provisions is consistent with international labor standards.’’ 

Environmental Protection—Under the leadership of H.M. Sultan Qaboos, a lifelong 

environmentalist, Oman has been dedicated for decades to the preservation of nature. Oman was the first country in the Arab world to establish a full-fledged Ministry of Environment, and Oman was one of the first nations in the region to design 

a strategic plan for the environment. As part of that nation’s efforts to raise public 

awareness, Omani Environment Day is celebrated each year on January 8. 

In addition to establishing the Ministry of Regional Municipalities and Environment to handle environmental issues, H.M. Sultan Qaboos sponsors a major biennial conservation award, the first of its kind in the Arab world. The award is presented as part of the UNESCO ‘‘Man and the Biosphere’’ Program to highlight outstanding contributions to environmental preservation. 

In recognition of his environmental stewardship, H.M. Sultan Qaboos has received 

the prestigious John C. Phillips Memorial Medal from the World Conservation 

Union and the Order of the Golden Ark from the World Wildlife Fund (WWF). In 

69 

cooperation with the WWF, Oman has established six nature preserves to protect 

and support the breeding of endangered species. 

When the United States and Oman inked the Free Trade Agreement on January 

19, 2006, U.S. Trade Representative Rob Portman noted, ‘‘With our signatures 

today, we cement our long-standing friendship and growing commercial ties and create new economic opportunities for both of our countries . . . For decades, Oman 

and the United States have shared a desire for peace, stability and economic opportunity in the Middle East. Today we take an important new step in our partnership.’’ The U.S. is well aware of ‘‘Oman’s enthusiasm for open trade and free markets,’’ concluded Ambassador Portman. ‘‘We welcome that spirit and we are pleased 

to have Oman as a partner in our efforts to raise living standards and promote 

peace through trade.’’ 

In many ways, these statements echo sentiments of the House Ways and Means 

Congressional delegation that visited Oman in late 2004. That report stated, ‘‘The 

delegation strongly supports the negotiation of an FTA with Oman and is pleased 

to see the commitment and drive by Oman to conclude such negotiations. . . . Oman 

has undertaken significant economic and political reforms in a short time, particularly in the banking and insurance sectors, demonstrating its capacity and willingness to use objective, transparent standards.’’ 

A wide range of business leaders and U.S. policymakers recognize Oman’s genuine 

commitment to reform and to enhancing free trade with the United States. With 

this in mind, NUSACC lends its full support to a U.S.–Oman Free Trade Agreement, and we look forward to doing our part to help turn this vision into a reality 

in the months ahead. 

Thank you for the opportunity to testify today, Mr. Chairman. I would be pleased 

to answer any questions that you may have. 

f 

Statement of Frank A. Keating, American Council of Life Insurers 

Mr. Chairman, Mr. Ranking Member and distinguished members of the House 

Ways and Means Committee: Thank you for the opportunity to submit a statement 

on behalf of the American Council of Life Insurers in support of the proposed United 

States—Oman Free Trade Agreement. Our industry looks forward to swift and successful passage of the aforementioned agreement. 

The American Council of Life Insurers (‘‘ACLI’’) represents three hundred seventy-seven (377) member companies operating in the United States that account for 

91 percent of total assets, 90 percent of the life insurance premiums, and 95 percent 

of annuity considerations in the United States. Internationally, ACLI members account for over 99 percent of life insurance premiums generated in overseas markets 

by U.S. based life insurance and retirement security companies. 

ACLI applauds the achievement of U.S. trade negotiators in concluding the U.S.– 

Oman Free Trade Agreement because we believe it continues the high standard of 

commercially meaningful free trade agreements (‘‘FTAs’’) which support our bilateral objectives in these markets and facilitate progress in the World Trade Organization’s Doha Development Negotiations. We fully support the ongoing U.S. strategy 

of bilateral and regional FTAs as a mechanism for expanding market opportunities 

for U.S. insurance and retirement security exporters. 

ACLI’s members are proud of the positive contribution we make to the U.S. financial services export surplus and are committed to further expand our global market 

presence through trade negotiation and facilitation to further create wealth and jobs 

at home in towns across America. We are also proud that our industry’s products 

help build individual and national economic stability in markets where they are 

freely available, and that in turn supports strong and growing global economies 

throughout the world. 

While Oman is a relatively small insurance market by global standards with a 

population of under three million, the Omani insurance premiums as a percentage 

of GDP (1. 28%) and per capita spending on insurance (U.S.$103) are both well 

above the regional averages. As the vision of a broader Middle East Free Trade Area 

gains support, these positive Omani market indicators, coupled with a young and 

growing regional population, make this agreement a strong foundation upon which 

to build even more advanced regional objectives. 

Overall insurance premiums in the region grew by 4.1% in real terms in 2004 

against the backdrop of Oman’s 2004 7.5% growth rate, based largely on an increasingly efficient, open and transparent regulatory system. The Omani government has 

demonstrated an understanding of the importance of an innovative and dynamic inVerDate Aug 31 2005 04:25 Dec 21, 2006 Jkt 030441 PO 00000 Frm 00073 Fmt 6633 Sfmt 6621 E:\HR\OC\30441.XXX 30441
70 

1FAOSTAT Agricultural Production Database, Live Animals, Livestock Primary, and Agriculture & Food Trade, United Nations Food and Agriculture Organization, available on-line at 

http://faostat.fao.org/. 

surance market and it has endeavored to build one for all companies operating in 

the market. In addition to a virtually perfect set of commitments on market access 

and national treatment for our industry, the U.S.–Oman FTA disciplines on transparency and administrative procedures will lock in important pro-competitive regulatory practices that allow U.S. companies to provide new and innovative products. 

The value of these disciplines can not be overstated in building U.S. market share. 

As a highly regulated financial service, transparency and administrative procedures commitments are regionally and globally critical to our success and the regulatory, and by extension, market stability of the nations in which we operate. Vague, 

inconsistent or capricious regulation and supervision is in many ways worse than 

outright barriers to market access and expansion. By contrast, in signing this agreement, Oman has committed to provisions based largely on the U.S. Administrative 

Procedures Act. 

Put in a broader context, the transparency and other ‘‘rule of law’’ provisions in 

this agreement also set a strong foundation for the Omani regulatory and legal environment which has tangible benefits for our companies as foreign stakeholders in 

the Omani economy. This in turn allows access to competitive insurance and benefits products, which is beneficial for Omani workers and families and represents one 

of the best elements of U.S. commercial diplomacy. 

Described more specifically, through this FTA, Omani citizens will have increased 

access to world standard financial services products to help them protect their families and take individual responsibility for their economic futures. Second, Omani 

workers will have increased access to world standard life insurance, retirement security and health insurance products. Third, Omani businesses will have increased 

access to world standard employee benefits and risk management technologies. Our 

companies therefore look forward to advancing their stake in this marketplace. By 

any yard stick, this agreement is a major step forward for all involved. 

In conclusion, we believe the U.S.–Omani FTA builds on all previous FTAs and 

represents a gold standard for future bilateral and multilateral agreements, while 

extending traditional American values of transparency, economic empowerment and 

rule of law to the Middle East. ACLI looks forward to Congress’ approval of the proposed United States–Oman Free Trade Agreement, and would be pleased to provide 

any further information that the subcommittee may request. 

f 

Statement of Ranchers-Cattlemen Action Legal Fund 

The Ranchers-Cattlemen Action Legal Fund—United Stockgrowers of America (R– 

CALF USA) appreciates this opportunity to submit testimony on the U.S.–Oman 

Free Trade Agreement (Oman FTA). R–CALF USA is a non-profit association that 

represents over 18,000 U.S. cattle producers in 47 states across the nation. R–CALF 

USA’s mission is to represent the U.S. cattle industry in trade and marketing issues 

to ensure the continued profitability and viability of independent U.S. cattle producers. R–CALF USA’s membership consists primarily of cow/calf operators, cattle 

backgrounders, and feedlot owners. Various main street businesses are associate 

members of R–CALF USA. 

R–CALF USA believes that U.S. cattle producers can compete and thrive in global 

markets if the rules that regulate those markets are fair. Today, U.S. exports of cattle and beef are thwarted by high import tariffs abroad, large subsidies to cattle and 

beef producers in other countries, and a failure to harmonize health and safety 

standards to allow for increased trade while protecting animal health and consumer 

safety. In addition, the highly perishable nature of our product demands the creation of special rules for cattle and beef trade that reflect the special needs of our 

producers and protect them from import surges and excess price volatility. While 

many of these issues may be most comprehensively addressed at a global level, 

progress can also be made through a strategic program of bilateral and regional negotiations. 

The Oman FTA is one example of how such negotiations can be pursued to benefit 

the U.S. cattle and beef industries. Oman is not a significant producer or exporter 

of cattle and beef. Oman has a small domestic cattle herd of 335,000 head and produces about 4,160 metric tons of beef and veal a year.1 Oman exports little beef to 

71 

2 Id. 

3 Id. 

4 Id. 

5 U.S. export statistics from U.S. Department of Commerce, Census Bureau, Foreign Trade 

Statistics. 6 Id. 

the world, and none to the U.S.2 Though Oman is a net importer of beef, its market 

has so far been largely untapped by U.S. producers. Currently, Oman imports more 

than two-and-a-half times more beef and veal than it produces.3 All in all, Oman 

imported nearly $22 million worth of bovine meat products from the world in 2004.4

Yet U.S. exports of beef and veal to the region make up a very small percent of 

those imports. Even before Oman closed its border to imports of U.S. beef after the 

discovery of a Canadian animal infected with BSE in Washington state in late 2003, 

U.S. shipments of beef and veal regularly accounted for less than 5 percent of all 

of Oman’s beef and veal imports.5 If all bovine products are included, such as beef 

offal and beef preparations, the U.S. has accessed an even smaller portion of the 

Omani import market, less than 1 percent on average since 2000.6 Though Oman 

lifted its temporary BSE ban in April 2005, significant U.S. exports have yet to resume. Under the Oman FTA, Oman’s tariffs on all imports of beef products from the 

U.S. go to zero immediately. This will eliminate Oman’s current tariff of 5 percent 

on imports of frozen beef, beef offal, bull semen, and prepared beef products from 

the United States. Under the FTA, Omani beef exports to the U.S. are also granted 

immediate duty-free access, as long as they enter under the general ‘‘all others’’ 

quota available to exporters of beef to the U.S. under U.S. WTO commitments. Some 

out-of-quota exports from Oman will also have duty-free access under an additional, 

dedicated quota of 15,000 kilograms if the general U.S. beef quota is exhausted. 

This dedicated quota will grow gradually until it allows unlimited imports from 

Oman in 10 years, and tariffs on any Omani beef entering out-of-quota will phase 

out over the same 10 years. Since Oman produces only a minimal amount of cattle 

and beef, the majority of which is currently consumed domestically within Oman, 

this additional market access is unlikely to have a significant impact on U.S. producers. The net impact of liberalization of cattle and beef trade under the FTA 

should be to allow U.S. producers to access more of the Omani beef market and 

build an important, strategic presence in the Middle Eastern region. 

While R–CALF USA supports the Oman FTA, it is worth noting that the agreement does not incorporate the rules of origin for cattle and beef that R–CALF USA 

has sought in preferential trade agreements. R–CALF USA believes that preferential trade agreements should include a ‘‘born, raised and slaughtered’’ (BRS) 

rule of origin for cattle and beef to ensure that the benefits of the agreement accrue 

to product of the country, or countries, participating in the agreement. While the 

failure to include a BRS rule of origin is not especially significant in the Oman 

agreement, it could be critical in other ongoing FTA negotiations. Stronger rules of 

origin are particularly important in FTAs with countries where the risk of circumvention is substantial, and where the third countries that would potentially benefit from circumvention are themselves resisting entering into FTA negotiations directly with the United States. In these situations, rules of origin must be strengthened to prevent diluting the benefits of the agreement and to ensure that third 

countries are not allowed to benefit from preferential access to the U.S. market 

without providing reciprocal access to U.S. products. 

R–CALF USA is encouraged by the fact that, along with the Oman FTA, an increasing number of newly proposed FTAs promise potentially substantial benefits 

for U.S. cattle producers. As trade in cattle and beef is liberalized through such 

agreements, it is important that, overall, the agreements achieve a balance between 

the size of new export markets opened for U.S. producers and the volume of potential foreign production given preferential access to the United States. It is critical 

that FTAs with countries that differ significantly from Oman—that have large domestic herds, produce significant quantities of beef, and/or are net exporters of cattle and beef—should be assessed on their own merits and may require longer phase 

outs of U.S. tariffs, backloading of expansion of tariff rate quotas (TRQs) and additional provisions to ensure that trade in cattle in beef will work for U.S. cattle producers. 

While supporting the Oman FTA, R–CALF USA will continue to push for improvements in overall U.S. trade policies regarding cattle and beef and assess future 

trade agreements on a case-by-case basis. In particular, R–CALF USA believes U.S. 

trade negotiators should pursue a strategic program of bilateral, regional, and multilateral trade negotiations that: 

72 

• Reduce global market distortions such as high import tariffs abroad, restrictive 

quotas, and large subsidies to cattle and beef producers in other countries; • Upwardly harmonize health and safety standards to allow for increased trade 

while protecting animal health and consumer safety; • Include a ‘‘born, raised and slaughtered’’ rule of origin for beef receiving preferential market access; and • Create special rules for cattle and beef trade that reflect the highly perishable 

nature of our product and the special needs of our producers by protecting them 

from import surges and excess price volatility. 

Until distortions in international cattle and beef markets are addressed comprehensively at a global level, the U.S. should pursue FTAs strategically to move 

toward the goals outlined above. Because the Oman FTA represents an important 

step in the right direction for U.S. cattle and beef producers, R–CALF USA urges 

its support. 

f 

Statment of the Chamber of Commerce of the United States of America 

On behalf of the Chamber of Commerce of the United States of America (U.S. 

Chamber), we are pleased to present the House Committee on Ways and Means 

with this testimony regarding the U.S.–Oman Free Trade Agreement (FTA). International trade plays a vital part in the expansion of economic opportunities for 

American workers, farmers, and businesses. As the world’s largest business federation—representing more than three million businesses and organizations of every 

size, sector, and region—the U.S. Chamber views efforts to expand trade opportunities as a national priority. 

As such, the U.S. Chamber has helped lead the business community’s effort to 

make the case for initiatives to expand trade, including global trade negotiating 

rounds under the purview of the World Trade Organization (WTO) and its predecessor, the General Agreement on Tariffs and Trade, as well as bilateral and regional FTAs. We do so because U.S. businesses have the expertise and resources to 

compete globally—if they are allowed to do so on equal terms with our competitors. 

Trade, Growth, and Prosperity 

America’s international trade in goods and services accounts for nearly a fifth of 

our country’s GDP. As such, it is difficult to exaggerate the importance of the Congressional vote in 2002 to renew Presidential Trade Promotion Authority (TPA). As 

we predicted, this action by Congress helped reinvigorate the international trade 

agenda and has given a much-needed shot in the arm to American businesses, workers, and consumers. The leadership demonstrated by the many members of the 

House Committee on Ways and Means was critical to this progress. 

The evidence is overwhelming that trade is a powerful tool to strengthen the U.S. 

economy. As the Office of the U.S. Trade Representative has pointed out, the combined effects of the North American Free Trade Agreement (NAFTA) and the Uruguay Round trade agreement that created the WTO have increased U.S. national 

income by $40 billion to $60 billion a year. In addition, the lower prices for imported 

goods generated by these two agreements mean that the average American family 

of four has gained between $1,000 and $1,300 in spending power—an impressive tax 

cut, indeed. It is also widely recognized that jobs in the export sector pay a premium 

of approximately 15% on average. 

When TPA lapsed in 1994, the international trade agenda lost momentum. The 

Uruguay Round was implemented, but no new round of global trade negotiations 

was launched as the 1990s wore on. Moreover, the United States was compelled to 

sit on the sidelines while other countries and trade blocs negotiated numerous preferential trade agreements that put American companies at a competitive disadvantage. As we pointed out during our 2001–2002 advocacy campaign for approval of 

TPA, the United States was party to just three of the roughly 150 free trade agreements in force between nations at that time. The passage of TPA allowed the United 

States to demonstrate once again the leadership in the international arena that has 

seen trade emerge as a primary engine of growth and development since 1945. 

General Benefits of Free Trade Agreements 

The FTAs the United States has negotiated since 2002 represent an ambitious 

and comprehensive approach to opening markets one country or region at a time. 

While the U.S. Chamber is strongly backing the Doha Development Agenda negotiations for a new global trade-expansion agreement, we believe it is entirely approVerDate Aug 31 2005 04:25 Dec 21, 2006 Jkt 030441 PO 00000 Frm 00076 Fmt 6633 Sfmt 6621 E:\HR\OC\30441.XXX 30441
73 

priate to leverage both the breadth of the DDA and the depth of FTAs. In this fashion, U.S. business can attain important new market opportunities in the years 

ahead. 

As noted above, the United States is an extraordinarily open economy. Consider 

how U.S. tariffs compare with those of countries where FTA negotiations have recently been concluded, are underway, or were recently proposed. According to the 

World Bank, the United States has a weighted average tariff rate of less than 2%. 

By contrast, the weighted average tariff of Panama is 7%, Thailand 8%, Peru 9%, 

Colombia and Korea 10%, and Oman 14%. 

We made this point repeatedly in 2004–2005 during our advocacy campaign for 

Congressional approval of the U.S.–Dominican Republic-Central America Free 

Trade Agreement (DR–CAFTA). The United States eliminated tariffs on nearly all 

imports from Central America and the Caribbean in 1983 through the Caribbean 

Basin Initiative. In 2003, 77% of Central American and Dominican industrial products (including 99% of non-apparel industrial products) and 99.5% of agricultural 

products entered the United States duty-free. On the other hand, U.S. consumer, 

industrial, and agricultural exports to these countries faced average tariffs in the 

7–11% range. As we often pointed out during the DR–CAFTA campaign, this was 

like going into a basketball game 11 points down from the tip off. 

An academic observer may regard as insignificant the resulting 12% price disadvantage that follows from these lopsided tariffs (to cite the difference in average 

tariffs between the United States and Oman). However, business men and women 

face narrower margins than these every day, very often with the success or failure 

of their firm on the line. Best of all, a free trade agreement can fix this imbalance 

once and for all. 

The way free trade agreements level the playing field for U.S. workers, farmers, 

and business is borne out in the results attained by America’s FTAs. For example, 

the U.S.–Chile Free Trade Agreement was implemented on January 1, 2004, and 

immediately began to pay dividends for American businesses and farmers. U.S. exports to Chile surged by 33% in 2004, and by a blistering 85% in 2005. In fact, U.S. 

exports to Chile have risen nearly two-and-a-half fold in the agreement’s first two 

years of implementation, reaching $6.7 billion in 2005. 

Other recent FTAs have borne similar fruits. Trade with Jordan has risen fourfold since the U.S.–Jordan Free Trade Agreement was signed in 2000, fostering the 

creation of tens of thousands of jobs in a country that is a close ally of the United 

States. The U.S. trade surplus with Singapore nearly quadrupled over the first two 

years of implementation of the U.S.–Singapore Free Trade Agreement (2004–2005), 

reaching $5.5 billion last year. And over the 12 years since implementation of the 

North American Free Trade Agreement (NAFTA), by far the largest and most important of these agreements, U.S. exports to Canada and Mexico have surged by 

$189 billion (to a total of $331 billion in 2005), sustaining literally millions of new 

jobs and businesses. 

One of the most compelling rationales for these FTAs is the benefit they afford 

America’s smaller companies. America’s small and medium-sized companies are 

leading the charge into foreign markets, accounting for more than three-quarters of 

exporting firms to markets which have recently completed FTAs or are in the process of doing so. As a corollary, it suggests how smaller businesses stand to gain disproportionately from the market-opening measures of a free trade agreement: 

Beyond the highly successful track record of America’s FTAs as measured in 

terms of new commerce, the U.S. Chamber and its members also support free trade 

agreements because they promote the rule of law in emerging markets around the 

globe. This is accomplished through the creation of a more transparent rules-based 

business environment. For example, FTAs include provisions to guarantee transparency in government procurement, with competitive bidding for contracts and extensive information made available on the Internet—not just to well-connected insiders. 

FTAs also create a level playing field in the regulatory environment for services, 

including telecoms, insurance, and express shipments. In addition, recent FTAs 

have strengthened legal protections for intellectual property rights in the region, as 

well as the actual enforcement of these rights. 

The Agreement with Oman 

On January 19, 2006, the United States and Oman signed a free trade agreement. 

With bilateral trade surpassing $1.1 billion in 2005, the FTA is of particular interest 

to U.S. exporters of telecommunications equipment, oil and gas equipment, medical 

equipment, and electrical and manufacturing equipment. As noted above, Oman has 

a weighted average tariff of 14%, presenting U.S. exporters with relatively high barVerDate Aug 31 2005 04:25 Dec 21, 2006 Jkt 030441 PO 00000 Frm 00077 Fmt 6633 Sfmt 6621 E:\HR\OC\30441.XXX 30441
74 

riers to market access; the FTA will eliminate all tariffs on industrial and consumer 

products immediately upon entry into force. 

The FTA also addresses agriculture products. Under the agreement, U.S. agriculture exports in 87% of the agriculture tariff lines will be given immediate dutyfree access to the Omani market. All remaining tariffs on agricultural products between the two countries will be phased out over the next ten years. 

From a services standpoint, this agreement will allow additional opportunities for 

U.S. companies in the banking, insurance and securities sectors. The agreement will 

allow for U.S. financial services companies to create subsidiaries in Oman and enter 

into joint ventures with Omani companies. The agreement will also provide for a 

framework which ensures transparency in these sectors and assurances to U.S. investors. 

From a regional standpoint, the U.S.–Oman FTA is an important strategic step 

in the overall U.S. foreign policy in the Middle East. The Bush Administration has 

announced its intention to create a Middle East Free Trade Area by 2013. The 

United States already has FTAs with Bahrain, Israel, Jordan, and Morocco and is 

in negotiations with the United Arab Emirates. Congressional approval of this FTA 

is a crucial step in attaining the MEFTA goal. Passage of this comprehensive agreement will set a high standard for future FTAs with Gulf Cooperation Council member countries and other countries in the region. 

The U.S. Chamber looks forward to leveraging this agreement for our member 

companies and the broader U.S. business community. The Chamber has an accredited affiliate in Oman—the Muscat-American Business Council—which we intend to 

work with as a means of fostering increased bilateral trade and investment between 

the two countries—once this agreement is entered into force. The existence of this 

business council is evidence of the interest by both the Omani and American business communities of furthering trade, investment and commercial ties. 

Conclusion 

Trade expansion is an essential ingredient in any recipe for economic success in 

the 21st century. If U.S. companies, workers, and consumers are to thrive amidst 

rising competition, new trade agreements such as the DDA and the various free 

trade agreements cited above will be critical. In the end, U.S. business is quite capable of competing and winning against anyone in the world when markets are open 

and the playing field is level. 

The U.S. Chamber appreciates the leadership of the House Committee on Ways 

and Means in advancing the U.S. international trade agenda, and we applaud your 

efforts to move forward with the U.S.–Oman FTA. We stand ready to work with you 

on this agreement and other challenges in the year ahead. Thank you. 

Æ