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ADVANCING CONGRESS’S TRADE AGENDA: 

THE ROLE OF TRADE NEGOTIATING AUTHORITY 

HEARING 

BEFORE THE

COMMITTEE ON FINANCE 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

JANUARY 16, 2014 

( 

Printed for the use of the Committee on Finance 

COMMITTEE ON FINANCE 

MAX BAUCUS, Montana, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

RON WYDEN, Oregon 

CHARLES E. SCHUMER, New York 

DEBBIE STABENOW, Michigan 

MARIA CANTWELL, Washington 

BILL NELSON, Florida 

ROBERT MENENDEZ, New Jersey 

THOMAS R. CARPER, Delaware 

BENJAMIN L. CARDIN, Maryland 

SHERROD BROWN, Ohio 

MICHAEL F. BENNET, Colorado 

ROBERT P. CASEY, Jr., Pennsylvania 

ORRIN G. HATCH, Utah 

CHUCK GRASSLEY, Iowa 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

MICHAEL B. ENZI, Wyoming 

JOHN CORNYN, Texas 

JOHN THUNE, South Dakota 

RICHARD BURR, North Carolina 

JOHNNY ISAKSON, Georgia 

ROB PORTMAN, Ohio 

PATRICK J. TOOMEY, Pennsylvania 

AMBER COTTLE, Staff Director 

CHRIS CAMPBELL, Republican Staff Director 

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

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

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

Hatch, Hon. Orrin G., a U.S. Senator from Utah ................................................. 4 

WITNESSES 

Cote, David M., chairman and chief executive officer, Honeywell International, Morristown, NJ .................................................................................... 6 

Allen, Jim, president, New York Apple Association, Inc., Victor, NY ................. 8 

Stegemann, Elena M., director of international business, NuStep, Inc., Ann 

Arbor, MI .............................................................................................................. 10 

Cohen, Larry, president, Communications Workers of America (CWA), Washington, DC ............................................................................................................. 12 

ALPHABETICAL LISTING AND APPENDIX MATERIAL 

Allen, Jim: 

Testimony .......................................................................................................... 8 

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

Responses to questions from committee members ......................................... 50 

Baucus, Hon. Max: 

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

Prepared statement .......................................................................................... 53 

Cohen, Larry: 

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

Prepared statement .......................................................................................... 56 

Cote, David M.: 

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

Prepared statement .......................................................................................... 75 

Responses to questions from committee members ......................................... 80 

Hatch, Hon. Orrin G.: 

Opening statement ........................................................................................... 4 

Prepared statement .......................................................................................... 84 

Stegemann, Elena M.: 

Testimony .......................................................................................................... 10 

Prepared statement .......................................................................................... 87 

Responses to questions from committee members ......................................... 98 

COMMUNICATIONS

Advanced Medical Technology Association (AdvaMed) ........................................ 105 

Computer and Communications Industry Association (CCIA) ............................ 109 

National Association of Manufacturers (NAM) ..................................................... 116 

United Automobile, Aerospace, and Agricultural Implement Workers of America (UAW) .............................................................................................................. 120 

(III) 

(1) 

ADVANCING CONGRESS’S TRADE AGENDA: 

THE ROLE OF TRADE 

NEGOTIATING AUTHORITY 

THURSDAY, JANUARY 16, 2014 

U.S. SENATE, 

COMMITTEE ON FINANCE, 

Washington, DC. 

The hearing was convened, pursuant to notice, at 10:03 a.m., in 

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

(chairman of the committee) presiding. 

Present: Senators Wyden, Cantwell, Nelson, Menendez, Carper, 

Cardin, Brown, Casey, Hatch, Grassley, Crapo, Thune, Isakson, 

Portman, and Toomey. 

Also present: Democratic Staff: Amber Cottle, Staff Director; 

Bruce Hirsh, Chief International Trade Counsel; Elissa Alben, 

International Trade Counsel; Chelsea Thomas, Professional Staff 

Member; Lisa Pearlman, International Trade Counsel; and Jason 

Park, International Trade Counsel. Republican Staff: Chris Campbell, Staff Director; Everett Eissenstat, Chief International Trade 

Counsel; Kevin Rosenbaum, Detailee; Rebecca Eubank, International Trade Analyst; and Shane Warren, International Trade 

Counsel. 

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

FROM MONTANA, CHAIRMAN, COMMITTEE ON FINANCE 

The CHAIRMAN. The committee will come to order. 

Thomas Edison once said, and I quote, ‘‘We often miss opportunity because it is dressed in overalls and looks like work.’’ 

Today we have a tremendous opportunity to boost our economy 

and create American jobs through trade. Talks are underway with 

countries in Europe and across the Pacific. These agreements will 

open huge new markets for American exports. 

Ninety-five percent of the world’s consumers are outside of the 

United States. They hold 80 percent of the world’s purchasing 

power. We need trade deals to reach those consumers. Why? To 

create jobs here in the United States, and to strengthen our economy. 

Some people argue that pursuing trade deals is not the right solution for America’s jobs crisis, but here are the facts. Exports support nearly 10 million American jobs. That includes 25 percent of 

all jobs in manufacturing. Those numbers are increasing. These are 

good-paying jobs. Workers in factories that export earn nearly 20 

percent more than workers in factories that do not export. BusiVerDate Mar 15 2010 20:59 Sep 02, 2014 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 R:\DOCS\89425.000 TIMD
2 

nesses that export create jobs more quickly, and they are less likely 

to go out of business. 

So how can we help create these jobs? How can we get more 

American exports into foreign markets? Through trade agreements. 

And, to complete trade agreements, we need Trade Promotion Authority, also known as TPA. 

Last week, Senator Hatch and I introduced a bill to renew TPA. 

It is called the Bipartisan Congressional Trade Priorities Act of 

2014. Why do we need this bill? For several reasons. First, we have 

to level the playing field with our international competitors. The 

United States is already open to trade. Too often, our trading partners are not. The trade deals we are negotiating will provide new 

opportunities for U.S. exports in many countries, and that would 

mean more jobs here in the United States. 

The fact is dozens of nations are cutting their own deals with one 

another as we speak: China, Japan, Korea, just to name a few. If 

we do not stay in the game, we will be left on the sidelines. Our 

exports will face high tariffs, whereas our competitors will not. 

And, frankly, we may not like the look of some of the deals that 

other countries—that is, our competitors—are cutting. 

That leads to another reason why the TPA bill is so important. 

Labor rights, environmental protection, currency rules, disciplines 

for state-owned enterprises—all of these issues and more will be 

left out of trade deals if we do not push for them. We will have forfeited our role as a global power. We will have lost the chance to 

shape the rules on trade. 

Some argue that we need to do more, that we need to bring our 

policies into the 21st century. The TPA bill does that. It reflects the 

bipartisan agreement on labor and environment and the need to 

foster innovation and promote access to medicines. 

TPA will call for countries to adopt and maintain core labor 

standards and environmental commitments, not just enforce their 

own laws as they stand. The bill will direct USTR to back those 

commitments with the same strong dispute settlement and remedies that apply to commercial commitments. 

The bill ensures that parties to U.S. trade agreements cannot 

manipulate their currency. The bill also recognizes the importance 

of the Internet. It ensures that trade rules facilitate legitimate digital trade. And it calls for tougher, enforceable rules against unscientific barriers to U.S. agricultural exports. 

The bill updates TPA to address several other 21st-century challenges. These provisions need to be included in trade deals to win 

congressional support. This helps guarantee that America’s workers and companies can compete on a fair, level playing field. What 

are some of the updates that are in this bill? Localization barriers 

to trade that shut out American companies or force them to surrender intellectual property; restrictions on the flow of data across 

borders. 

In short, this is not the same old TPA. This strengthened bill 

tells the administration and our trading partners the provisions 

that need to be included to win congressional support. As I said, 

it helps guarantee that America’s workers and companies can compete on a fair and level playing field. 

3 

Many in Congress have expressed concerns about lack of transparency and consultation in trade negotiations. We heard that message, and this bill addresses those concerns. It sets significantly 

stronger rules for the administration to follow in negotiations, and 

ensures Congress is a full partner. 

The bill gives every member of Congress a strong voice in the negotiation process. That includes the right to access information, including classified information. And it includes the ability to attend 

all negotiating sessions and serve as an advisor. These privileges 

were previously reserved for only some members. Now they are 

available for all members of Congress. Our bill would make these 

privileges available to all. 

The bill also requires USTR to hold close consultations with any 

committee whose jurisdiction would be affected by a trade agreement. It also requires USTR to prepare new rules of engagement 

with Congress, stakeholders, and the public. For Congress, these 

rules will ensure detailed and timely briefings and access to information. For stakeholders, they mean improved coordination. And 

for the public, they will boost transparency, public participation, 

and collaboration in the negotiation. All of these improvements are 

backed by a strong mechanism for congressional disapproval. 

If the trade agreement fails to meet any consultation requirement, Congress can disallow the final deal from being considered 

under TPA procedures. In short, the bill gives Congress a much 

bigger role in trade negotiations. 

Some have argued we do not need TPA. They say this is not the 

right time. But I believe we have an obligation—not just an opportunity, but an obligation—to show that the United States leads on 

world trade. For a trade negotiation to work, countries need to 

know that our negotiators are good for their word. So we need TPA, 

and we need a TPA that empowers Congress to play a larger role 

in negotiations from the beginning. 

As I noted at the outset, Thomas Edison said, ‘‘We often miss opportunity because it is dressed in overalls and looks like work.’’ In 

order for our job-creating trade agenda to succeed, we have to act, 

and we have to renew Trade Promotion Authority now, as well as 

Trade Adjustment Assistance. TPA and TAA have always gone together, and that will be no different in this case. 

Trade bills are always tough, but we work together to get them 

done. This committee has a history of rolling up our sleeves and 

working together to get a product that will pass the Senate and the 

Congress. I am deeply proud of the work we have done together in 

my time here as chairman. And I am confident that that spirit of 

collaboration will continue in the days, months, and years ahead. 

This bill is not a perfect solution to all the issues we face, but 

I know that we can work together and get it done. 

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

The CHAIRMAN. Senator Hatch? 

4 

OPENING STATEMENT OF HON. ORRIN G. HATCH, 

A U.S. SENATOR FROM UTAH 

Senator HATCH. Thank you, Mr. Chairman. I want to thank you 

for holding this hearing and also for your leadership on these trade 

agreements that are so important for our country and its future. 

Today we are examining the role trade negotiating authority 

plays in advancing our Nation’s international trade agenda. 

Before I begin my remarks, I just want to take a moment to express my sincere disappointment that the U.S. Trade Representative did not accept our invitation to testify at this hearing today. 

This is an important issue. It should be important to the administration too. If the administration does not get more involved in this 

effort to pass trade negotiating authority, we are not going to be 

successful. It is just that simple. 

Put simply, this is not an issue where the President can lead 

from behind. With that in mind, I hope we can still have a productive and informative hearing today. 

As any student of government knows, article 1, section 8 of the 

U.S. Constitution grants Congress the power, quote, ‘‘to lay and collect taxes, duties, imposts, and excises,’’ and, quote, ‘‘to regulate 

commerce with foreign nations.’’ Congress uses this constitutional 

authority in many different ways. These ways include creating 

trade remedies to help U.S. businesses compete with unfair imports; imposing sanctions on imports from unfriendly nations, such 

as Iran; granting unilateral tariff reductions through approval of 

bills granting miscellaneous tariff relief, or through programs such 

as the Generalized System of Preferences; implementing reciprocal 

trade agreements among countries to reduce tariffs; and, finally, 

creating agencies to administer U.S. trade law and policy, such as 

the Office of the United States Trade Representative and the International Trade Commission. 

When it comes to negotiating trade agreements with other countries, however, Congress’s capacity to speak with one voice to foreign nations is inherently limited. Under article 2 of the Constitution, the executive branch has the authority to negotiate treaties 

and international agreements. Throughout U.S. history, Congress 

has sought the most effective way to enhance and effectively utilize 

its authority over international trade agreements. 

As our world became increasingly globalized at the turn of the 

20th century, the issue became more acute, culminating in congressional approval of the Smoot-Hawley Tariff Act in 1930. Now, I do 

not want to unfairly denigrate Senator Smoot. After all, Senator 

Smoot had a highly distinguished career as the senior Republican 

Finance Committee leader from Utah. But in this instance, he and 

Congressman Hawley got it flat wrong, although I sincerely do not 

believe that they should have gotten the whole blame for the Depression, which some have tried to lay on them. 

The Smoot-Hawley Tariff Act was perhaps one of the most misguided trade bills ever devised by Congress. It raised tariffs to unprecedented levels, contributing to the longevity and severity of the 

Great Depression. 

Franklin Delano Roosevelt recognized the role trade could play 

in helping spur economic prosperity and proposed a new framework 

under which Congress could effectively regulate tariffs at home 

5 

and, in so doing, reduce tariffs overseas and open up markets for 

U.S. products, which means jobs in America. 

Under the Reciprocal Trade Agreements Act of 1934, Congress 

authorized the President to negotiate limited tariff reductions on a 

reciprocal basis. That bill has served as the foundation for every 

iteration of trade negotiating authority since 1934. It has been a 

highly effective tool in reducing trade barriers overseas and opening up global markets to U.S. goods and services, all the while retaining Congress’s constitutional authority over trade. 

Unfortunately, the last iteration of trade negotiating authority 

expired over 7 years ago. Since then, our Nation has not concluded 

negotiations on a single new trade agreement. 

The Obama administration has launched several new trade initiatives, including the Trans-Pacific Partnership in the Asia-Pacific 

region and the Transatlantic Trade and Investment Partnership 

with the European Union. But without trade negotiating authority, 

Congress’s power to set priorities for these negotiations and to ensure that our priorities are met is really limited. That is why Senator Baucus and I, along with Chairman Camp of the House Ways 

and Means Committee, recently introduced the Bipartisan Congressional Trade Priorities Act, which will renew trade negotiating authority. 

Through the strong negotiating objectives outlined in our bill, 

Congress has the opportunity to set forth clear priorities for our negotiations and to articulate standards that our trade agreements 

must meet in order to be approved. These negotiating objectives 

were developed after close consultation with many stakeholders. 

The objectives are updated to address many of the challenges our 

workers and job creators face when competing to export American 

goods and services overseas, including problems related to localization barriers, state-owned enterprises, and currency manipulation. 

The bill also maintains objectives seeking high standards of protection for U.S. intellectual property rights holders and advances 

trade negotiating objectives for the digital age. 

In addition, the bill expands and enhances Congress’s role in ongoing international trade negotiations through strengthened consultation mechanisms, including provisions that require USTR to 

meet and consult with any interested member of Congress at any 

time. It also allows any member of Congress to be designated as 

a congressional advisor and to attend negotiating rounds. Should 

the administration fail to consult with Congress or abide by the 

procedures outlined in the bill, Congress retains the ability to cut 

off the authority provided under our legislation. 

Finally, our bill ensures that Congress retains clear authority 

over the scope of the implementing bill, as well as enhancing congressional oversight over ongoing trade negotiations. It is a carefully crafted and balanced package which will enable Congress to 

more effectively utilize its constitutional authority to open global 

markets for U.S. goods and services and grow our economy even 

better than it does today. 

While I am, once again, disappointed that Ambassador Froman 

did not accept our invitation to testify today, I am pleased that we 

have a number of witnesses representing a broad range of views to 

6 

help us discuss Congress’s role in advancing international trade negotiations. 

So, Mr. Chairman, I look forward to the testimony of our witnesses today. I want to thank you again for all of your hard work, 

both on this legislation itself and in helping us prepare for today’s 

hearing. And this is a bill I hope we can get through before you 

leave for China. It would be a great capstone to your very, very 

good career while you are here. 

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

The CHAIRMAN. I am going to have to ask the demonstrators, 

those holding the signs, to bring them down. I think it would be 

inappropriate, frankly, for this committee to allow a contest of who 

has the best signs during a congressional hearing. So I am going 

to have to ask you all to bring your signs down and listen to the 

hearing, because, if you do not bring your signs down, we are going 

to have to ask that you be removed. So, please, just bring your 

signs down. Otherwise, there will be a competition on signs, and 

I do not think that would be appropriate here. 

I see one sign still up. Thank you very much. Now, I will introduce the witnesses. 

We are pleased to begin our hearing today with Mr. David Cote, 

who is chairman and chief executive officer of Honeywell International in Morristown, NJ. Following Mr. Cote is Mr. Jim Allen, 

president of the New York Apple Association in Victor, NY. Our 

third witness is Ms. Elena Stegemann, director of international 

business of NuStep, Incorporated, located in Ann Arbor, MI. The 

fourth witness is Mr. Larry Cohen, president, Communication 

Workers of America. 

Thank you all for coming. We deeply appreciate your effort, both 

in preparing your remarks and taking the time to come here, because I know you are all deeply committed to trying to figure out 

the best solution for this issue. Obviously, it is to pass the TPA. 

I will begin with you, Mr. Cote. 

STATEMENT OF DAVID M. COTE, CHAIRMAN AND CHIEF EXECUTIVE OFFICER, HONEYWELL INTERNATIONAL, MORRISTOWN, NJ 

Mr. COTE. Chairman Baucus, Ranking Member Hatch, and distinguished members of the committee, thank you for the invitation 

today. It is my pleasure to appear on behalf of Honeywell, the Business Roundtable, and Trade Benefits America, a coalition of about 

160 associations and companies that support passage of 21stcentury Trade Promotion Authority legislation. 

In order to meet the challenges and seize the opportunities in the 

global economy, the United States needs policies to ensure American companies and workers are the most competitive in the world. 

A pro-growth trade policy, including passage of TPA, is an area 

where government can create an environment where jobs can be 

created. I therefore commend you, Mr. Chairman and Ranking 

Member, for working with House Ways and Means Committee 

Chairman Dave Camp to develop legislation to significantly improve TPA to address today’s trade issues. 

7 

With more than 95 percent of the world’s population and about 

three-quarters of world GDP outside of the U.S., economic growth 

and jobs increasingly depend on the expanded trade and investment opportunities available worldwide. By strengthening and 

passing TPA, a key enabler for trade agreements, Congress can 

help complete 21st-century agreements that U.S. companies need 

to be competitive. 

The global economic world has changed significantly over the last 

20 years and will change even more in the next 20. Twenty years 

ago, there were only about a billion people involved in the global 

economy, basically the U.S., Europe, and Japan. Today there are 

about 4 billion people participating in the global economy with the 

addition of China, India, and numerous other countries that have 

recognized that a robust private sector is essential for their prosperity. 

Now, this is a good phenomenon for the world, because we now 

have at least 4 billion people thinking about how to make things 

better and how to improve productivity. An improved standard of 

living comes from productivity, the ability to innovate and invent, 

and the ability to have free flow of ideas, of people, of goods, and 

of money. 

So, as a country, we need to recognize, first, that we are in a different global economy than we were 20 years ago; second, that the 

global economy will move forward with us or without us; and three, 

that in all our political arguments, there is truth on both sides, and 

we need to pull together toward a common objective. 

While the negative effects of trade are sometimes more obvious, 

they are more than outweighed by its positive effects overall on 

jobs. And trading nations from the Phoenicians to the Hanseatic 

League to the Dutch, the British, and the U.S. have done well. 

According to research provided by the Business Round Table, 

trade and U.S. trade agreements have helped support American 

growth and jobs. U.S. companies, including Honeywell, have capitalized on opportunities that trade agreements have created. 

Honeywell is a $39-billion industrial company with more than 

130,000 employees. Since 2002, we have grown sales by more than 

75 percent from a base of about $22 billion. During that time, we 

also grew sales outside the U.S. from 41 percent of total sales to 

54 percent of our total sales. In other words, while sales in the U.S. 

during those 10 years grew about 33 percent, sales outside the U.S. 

more than doubled. 

Since the vast majority of the world’s GDP is outside the U.S. 

and many developing countries are growing faster than the U.S., 

we need to be there. The rest of the world is moving, and we are 

not. 

There are legitimate concerns about labor and environmental 

laws—helping those disrupted by trade—and adherence to agreements. So we need to work together to achieve the best balance of 

both. This will become especially important over the next 20 years, 

because the geographic composition of world GDP will be changing 

substantially. As you can see in the chart provided with my testimony, by 2030, the percentage of world GPD generated from the 

U.S. will decline from 26 percent to 24 percent. Other developed 

countries will decline from 39 percent to 29 percent of world GPD. 

8 

And importantly, developing economies will grow from 35 percent 

to 47 percent of world GPD. In other words, in 20 years what we 

think of as developing countries will account for about half of the 

world’s GDP. That is a big deal, and we need to be in there forging 

relationships now. 

If the U.S. is not in the vanguard of pursuing new agreements, 

we risk falling behind other countries that are pursuing agreements of their own. We also surrender the opportunity to negotiate 

new rules to address trade barriers and issues that did not exist 

previously. And that is why it is crucial for the U.S. to continue 

to aggressively pursue new agreements and for Congress to pass 

the improved Trade Promotion Authority. 

So thank you for the opportunity to testify, and I look forward 

to answering any questions the committee may have. 

The CHAIRMAN. Thank you very much, Mr. Cote. 

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

The CHAIRMAN. I see signs back there. One more time, if I see 

the signs up, I am going to have to ask the police to remove you. 

Mr. Allen, you are next. 

STATEMENT OF JIM ALLEN, PRESIDENT, NEW YORK 

APPLE ASSOCIATION, INC., VICTOR, NY 

Mr. ALLEN. Good morning. Thank you, Chairman Baucus, Ranking Member Hatch, and distinguished members of the Senate Committee on Finance. I am honored to be invited here today to speak 

with you about the importance and the value of Trade Promotion 

Authority in the execution of free trade agreements. 

My name is James S. Allen, and I am president of the New York 

Apple Association. I have the pleasure of representing close to 700 

commercial apple growers in the State of New York. In my 14 

years as president, I have worked very closely with our past and 

present apple leaders, serving on Senator Clinton’s, Senator Gillibrand’s, and Senator Schumer’s many different ag advisory committees and related task forces. 

At the risk of sounding provincial, I would like to take the opportunity to recognize the honorable Charles Schumer for his unyielding support of the apple industry in New York State. He is often 

referred to as the Senator Farmer from Brooklyn. 

We take apple growing very seriously here in New York State, 

and we are presently the second-largest apple-growing State in the 

Union, pumping over $300 million dollars a year into our economy. 

The leader in production is Senator Cantwell’s State of Washington. And number three is held by Senator Stabenow’s home 

State of Michigan. Pennsylvania and California round out the top 

five. 

But today I want to speak to you with an industry message with 

an industry voice, echoing concerns of all the major apple producing States across the country. 

The United States is the world’s leading exporter of ag products, 

reaching a value of $140 billion a year and providing nearly 1 million U.S. jobs. It is well-known that soy beans, corn, and wheat are 

the top three, but fruit and fruit products is number four, reaching 

$7.82 billion. Fresh apples represent well over $1 billion in trade 

to over 70 countries. 

9 

The four mentioned apple-exporting States rely on export markets to help balance the domestic supply levels and to expand their 

markets. For New York State, the close to 1 million cartons exported greatly enhance our overall apple business; for Washington 

State exports, close to 40 million cartons a year, which is close to 

32 percent of their total production. 

I would be remiss if I did not point out that the Market Access 

Program, MAP, which is authorized in the Farm Bill, plays a major 

role in our export programs and underscores the importance of the 

Farm Bill. 

In the world apple market, all U.S. apples generally compete on 

the same playing field. And when it comes to trade agreements and 

Trade Promotion Authority, as an industry, we work closely together to benefit all U.S. apple growers. It is safe to say that a 

trade barrier that impedes Washington apple exports would adversely affect New York, Michigan, and Pennsylvania in the same 

way. 

My counterpart, Todd Fryhover, president of the Washington 

Apple Commission, makes a good point, and I agree, when he 

states that trade agreements provide a platform for all participants 

to address the wants and the needs of potential exporting countries, while extending the same benefits to importing countries for 

the betterment of consumers. Without trade agreements, the status 

quo remains the same and consistent and is adverse to the principles of free trade. Ultimately, free trade is best for every economy, and FTAs open the door for increased commerce. 

The U.S. apple industry supports renewing the TPA for two reasons, the first being timing. Trade agreements are being negotiated 

every day between countries, and, because TPA is not authorized, 

the U.S. lags behind in our ability to effectively negotiate and 

quickly execute trade agreements. Secondly, authorizing TPA provides the negotiators the ability to act within the parameters set 

forth by Congress, while being a credible negotiating party. It is 

difficult to image our negotiators returning to Congress with the 

risk of potential amendment. 

TPA provides the detail in negotiating objectives and a strong 

consultations process which allows for an up and down vote on 

agreements. A great example of a successful free trade agreement 

that previously passed under TPA is CAFTA. U.S. apple exports 

into those countries are now treated equally as the other trading 

countries are. TPA could allow us to conclude trade talks that similarly level the playing field in Europe and Asia. 

As U.S. Trade Representative Michael Froman said last week, we 

need to open markets, support U.S. jobs, and increase exports of 

products made in America. The TPA will help accomplish this. 

Apple growers urge Congress to support updated TPA legislation so 

that they can grow markets and supply nutritious and delicious apples to new markets around the world. 

Mr. Chairman, Ranking Member Hatch, and distinguished members of this panel, thank you for allowing me the opportunity today 

to discuss the importance of TPA for American apple growers. And 

I would close with just one simple question, and that is: Have you 

had your apple today? 

Thank you. 

10 

The CHAIRMAN. Thank you, Mr. Allen, very much. 

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

The CHAIRMAN. Ms. Stegemann, you are next. 

STATEMENT OF ELENA M. STEGEMANN, DIRECTOR OF 

INTERNATIONAL BUSINESS, NUSTEP, INC., ANN ARBOR, MI 

Ms. STEGEMANN. Chairman Baucus, Ranking Member Hatch, 

and distinguished members of the committee, my name is Elena 

Stegemann, and I am the director of international business at 

NuStep, located in Ann Harbor, MI. 

I am very pleased to testify today on behalf of my company, as 

well as 3 million small businesses, State and local chambers of 

commerce, as well as large companies that are members of the U.S. 

Chamber of Commerce and its national federation. We strongly 

support the Bipartisan Congressional Trade Priorities Act of 2014, 

which will renew TPA. 

TPA is vital because economic growth and job creation at home 

depend on our ability to sell American goods and services to the 95 

percent of the world’s customers living outside of the U.S. NuStep 

designs and manufactures recumbent cross-trainers to make exercise possible for users who are unable to access regular exercise 

equipment due to injury, medical conditions, or other physical limitations. 

We manufacture our product in a beautiful state-of-the-art facility in Ann Arbor. We supply our products to thousands of rehab 

centers across the U.S., but we also have sales in more than 25 

other countries now. 

Why does trade matter to NuStep or to our country? In a word, 

it comes down to jobs. Our biggest challenge as a Nation is to get 

Americans back to work, and we believe trade can help do that. 

Let me tell you a bit about our company’s experience with international trade. NuStep began to focus on exporting in 2009, when 

our country faced a terrible recession. Our CEO and owner, Dick 

Sarns, saw the decline in our domestic sales and decided to go look 

for new customers abroad. Since then, our international sales have 

almost quadrupled. Exports today account for nearly 20 percent of 

our unit sales. Our success as an exporter was even recognized 

with the President’s ‘‘E’’ Award at a White House ceremony in May 

of 2012, definitely a career highlight for me. 

Today NuStep employs nearly 100 people, which is twice as 

many as when I started in 2009, and about 20 of our employees 

are involved in our international business. But all of our people are 

proud of the fact that our products are shipped all over the world. 

So you might be wondering, how do you take a small company from 

a small town in Michigan and go global? Well, with a lot of enthusiasm and a lot of help. 

The first step was to create a job for someone like me. I was 

hired to help develop the international business for our company. 

And today, our international sales are growing in many countries. 

However, the playing field for trade is not always level. While our 

market is generally open, U.S. exports face foreign tariffs that 

often soar into double digits, as well as the thicket of non-tariff 

barriers. 

11 

Now, as you have heard, I am not from Washington. But, as we 

have already heard today, TPA will require Congress and the 

White House to work together on trade agreements. Well, that does 

not sound like a radical notion to me. 

And those trade agreements will tear down the foreign barriers 

that shut out products made by companies like mine, and I think 

it makes a world of sense. So where are the big opportunities? Asia 

is currently my company’s biggest export market, because 2 billion 

Asians have joined the middle class in the past 20 years. We are 

very pleased to see containers full of our beautiful products headed 

to Japan and a growing number now going to other countries in 

Asia. 

TPP will get rid of many of the barriers that make it hard for 

us to compete in some Asian markets. Also, the Trade Priorities 

Act will guide American negotiators to ensure that TPP protects intellectual property and trade secrets. 

Even though we are not a high-tech company, NuStep has made 

big investments in producing high-quality, innovative products, and 

it would be simply devastating for us to have our know-how stolen 

because we either did not have a trade agreement in place or because the agreement lacked strong protections that we need. 

Europe is another big market for us. We are proud that our products are gaining popularity in such markets as Germany, where 

consumers have very high standards and where we face intense 

competition. Regulatory cooperation is another big focus of the 

Transatlantic Trade and Investment Partnership. NuStep is committed to complying with regulatory standards everywhere that we 

do business. But anything our trade negotiators can do to streamline regulatory compliance for U.S. exporters would be a huge help 

for a small business like NuStep. 

In conclusion, I have had the privilege during my travels of meeting with business owners and decision makers all around the 

world. And I have met with people who use our products and 

whose lives are transformed by them. On one such visit to a care 

home in Britain, I had the privilege to witness the first time that 

a wheelchair-bound man saw his legs move in a very long time. I 

was so proud of the fact that a small company from Michigan had 

made this product and made this moment possible for him. As an 

exporter, it is a huge honor for me to represent our country abroad. 

During my travels, many people refer to me as the lady from 

America, and I am very happy to see that being an American is a 

door-opener. People are hungry for our products, and we are hungry for more trade. 

On behalf of small exporters like NuStep, I urge you all to support TPA and the trade agreements it can make possible. 

Thank you. 

The CHAIRMAN. Thank you, Ms. Stegemann. 

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

The CHAIRMAN. Mr. Cohen? 

12 

STATEMENT OF LARRY COHEN, PRESIDENT, COMMUNICATIONS WORKERS OF AMERICA (CWA), WASHINGTON, DC 

Mr. COHEN. Thank you, Chairman Baucus and members of the 

committee. I am here today not only as president of the 700,000 

members of the Communication Workers of America, but as part 

of a broad citizens coalition with more than 30 million members 

quite concerned about where we are going in this Nation on trade, 

as well as fast-track or Trade Promotion Authority. 

When we come to see any of you in your offices, we are as likely 

to be there with Public Citizen or the Sierra Club or Food and 

Water Watch. We are a community organization, as we are with 

the AFL–CIO, and it is in that spirit that I am here today. 

We recognize that we are living in a global economy, but we 

must ensure that our trade framework serves our national goals, 

and we must measure those results. We cannot delegate the responsibility to achieve those goals to private or secret negotiations 

or appointed officials without meaningful, democratic control. 

This hearing is timely, coming on the 20th anniversary of the 

North American Free Trade Agreement. As the administration 

seeks to negotiate two more massive trade pacts that would dwarf 

NAFTA, Congress must establish negotiating priorities and enforceable consultations by the administration. 

Key are the following: one, we must document that any new trade deal will not add to the nearly $1-trillion annual trade deficit. When do we start to measure the results of 20 years of these 

trade deals in fast-track authority? No other nation has trade deficits like this, and, while we respect this body in deliberating over 

budget deficits, every economist, Economics 101, knows there is a 

direct relationship between trade deficits and budget deficits. 

Second, we must document the likely net effect on employment. 

These micro-examples are wonderful, and we applaud them. But 

what is the net effect? What has the net effect been of 20 years of 

these trade deals? What has happened to our jobs, our communities, the North Philadelphia that I grew up in, the Cleveland that 

I can picture right now? Devastation throughout those communities; nowhere near the replacement in jobs for the more than 

700,000 jobs lost from NAFTA alone. Even the Korea trade agreement that was supposed to bring new jobs—in fact, we have lost 

40,000 more jobs since its passage. 

We can take micro-examples, like telecom equipment. There is no 

telecom equipment made in this country at all. And yet what do 

we have today? What did we have when we grew up? We had Bell 

Labs, we had Western Electric, we had Lucent. Every one of those 

hundreds of thousands of jobs is gone, and yet we are the biggest 

consumer of those products. And yet China, which stayed on to enterprise ZTE and Huawei, and European companies that are promoted by their nations, whether Alcatel or Siemens, or Ericsson or 

Nokia, are thriving. 

Third, we must document the effect on pay and the standard of 

living. Since NAFTA, in these 20 years, average weekly take-home 

pay in the United States has declined by more than $100. It is directly related. 

I could tell you story after story where CEOs say to me, it is 

gravity. We have to move the jobs or you have to cut the pay. And 

13 

so we have high-tech jobs, like Internet help jobs, at $10 an hour 

in Goldsboro, NC, and we cannot raise the pay despite collective 

bargaining. 

We must ensure, fourth, that consumer protection regulations by 

Federal, State, and local governments are not diminished. We are 

quite concerned about that in terms of the text that I have read 

on Trade Promotion Authority that we are considering here today. 

Most U.S. consumer groups are concerned that trade agreements 

can be used to degrade our food safety protection. Allowing for fasttrack consideration of TPP would further jeopardize the safety of 

food consumed in the U.S., as food standards, country-of-origin labeling, and other laws could be undermined. 

Fifth, we must ensure that all trading partners comply with 

International Labor Organization principles and conventions. Most 

countries have ratified eight core conventions. Sadly, the United 

States has only ratified two. Amazingly, those conventions—child 

labor protection, freedom of association—require a two-thirds vote 

of this body. Yet, this fast-track authority would provide that a 

multilateral trade bill covering a billion people would go through 

with a majority vote. 

We need to take those ILO conventions and put them in the fasttrack authority. 

Sixth, we must ensure that environmental standards are not degraded and are enforceable. If recent leaks in news reports are correct, the USTR may be backing down on some key issues, like 

internationally recognized pollution controls and logging regulations. We need to make improvements in global environment 

issues, not negotiate a retreat. 

Seventh, we should ensure that social goals on the environment, 

labor rights, and consumer protection are enforceable, at least at 

the same level as other sections. We cannot have a democratic society if corporations have access to superior remedies to address 

their concerns. 

And finally, we must ensure that Congress plays a meaningful 

role. We applaud those members of the committee who have written to the USTR demanding exactly that. 

Thank you. 

The CHAIRMAN. Thank you very much, Mr. Cohen. 

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

The CHAIRMAN. I would like to ask Mr. Cote, Mr. Allen, and Ms. 

Stegemann, in your companies, your businesses, what are some of 

the opportunities that you see we could pursue here with TPA and 

the trade agreements to further help your companies export overseas? 

That is, what are some of the barriers that you face today? I 

might say, just for example—it is not your business—but Malaysia, 

for example, has a 40-percent tariff on tires, and we have a big export business in the United States that exports tires overseas. But 

they have a 40-percent duty on American tires, and Malaysia is 

doing an agreement with other countries, which means other countries nearby, Indonesia and others, will not have to face that same 

40-percent tariff. 

There are really two parts to that question. One, we are looking 

for opportunities. But, second, if we do not pursue opportunities 

14 

under TPA, other countries will do their agreements and give an 

advantage to their companies. 

But in your industries, what are some of the areas where you see 

barriers that could be addressed with TPA and TPP, for example? 

Any of you. 

Ms. STEGEMANN. I will take that. It is a great question. I am 

thinking about the TPP agreement. There are a lot of countries involved. 

For a small company like us, as I mentioned, we are very committed to meeting very high regulatory standards in every market 

that we participate in. 

Because the countries are so varied in their approach to regulatory requirements, from Canada to Japan to Australia to Singapore, they all have a different take on requirements in our industry. It is very difficult for us, with very limited resources and a limited budget, to stay abreast of regulatory requirements as they develop and change in every country. 

For every country we export to, we have to ask ourselves, ‘‘What 

are the latest requirements? What do we need to do to stay compliant?’’ 

So, if the negotiators on both sides can take a look at how we 

can make things more efficient, easier for a small company to understand what the regulatory requirements are in the TPP member 

countries, so that we have some kind of a simplified approach, if 

you will, an ability to meet very high regulatory standards, that 

would be a great help for us. 

The CHAIRMAN. Mr. Allen? 

Mr. ALLEN. Thank you very much for asking that question, Senator. 

I would refer back to CAFTA as an example, once again. Once 

that trade agreement was settled, it put U.S. apples on the same 

playing field as the other importing countries from the southern 

hemisphere. By removing the tariffs and removing some of those 

barriers, our business into that part of the world grew very quickly. 

I think it is very important that we are able to compete on a 

level playing field in different markets. Traditionally, unfortunately, what has happened is that we are confronted with a lot of 

barriers, such as phytosanitary and protocol issues, that are built 

to keep us out of those markets. And I believe that the trade agreements should address and can address them, but being mindful 

that we need to make sure that we protect our markets with the 

products coming into this country the same way that we are being 

asked to protect foreign markets. 

The CHAIRMAN. Mr. Cote? 

Mr. COTE. I would say those are two very good, specific examples. I would have to get back to you with some of our more specific 

examples. But I would say we are a net exporter and have been 

for a long time, and, to the extent that tariff barriers are reduced, 

it makes it easier for us to increase the capability of our exports. 

The CHAIRMAN. I would like to ask all of you—I do not have 

much time left here—the degree to which you are concerned that 

if we do not do this, that is, if we do not have a solid Trade Promotion Authority and, therefore, negotiate solid trade agreements, 

like the Trans-Pacific Partnership, that we will lose the opporVerDate Mar 15 2010 20:59 Sep 02, 2014 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 R:\DOCS\89425.000 TIMD
15 

tunity to set higher standards, because those other countries negotiating agreements are not going to set high standards. 

A good example would be right now, for example, Mexico and 

Japan have concluded a trade agreement 2 years after the last TPA 

expired, and that contained no commitments on labor standards or 

rights. It contained no provisions on environment, which, obviously, 

is of interest to the United States in trying to set standards in 

agreements. 

In addition, I might say China is now negotiating their own deal 

with Japan and Korea, and that surely will not address currency 

manipulation, another issue that is very, very important to this 

country, certainly members of Congress, but also this country and 

companies as they do business overseas. 

So to what degree are you concerned, panelists, that a failure to 

negotiate this agreement, to conclude an agreement, will tend to result in the United States missing an opportunity to set higher 

standards? 

Let me put it differently. If those agreements other countries are 

negotiating have low labor standards, low environmental standards, the United States will still do business in those countries, but 

under low labor standards and low environmental standards and 

no currency manipulation provisions. 

So to what degree is that a concern? Because, if we do not do 

these agreements and other countries do theirs, it helps their people but does not include standards which are important to the 

United States. 

I do not have much time. In fact, my time has expired. You can 

think about that. I will ask you on my next round. 

Senator Hatch? 

Senator HATCH. Thank you. 

Mr. Cote, a number of op-eds in prominent papers across the 

country are calling upon the administration to more actively engage in ensuring prompt passage of TPA. For example, the Chicago 

Tribune wrote that, quote, ‘‘The President made no push for TPA 

in his first 4 years. Recently, he has spoken out about the need for 

it, but he has not twisted arms on Capitol Hill. If TPA is the high 

priority that it should be for the administration, Obama needs to 

demand it from members of both parties.’’ 

The Washington Post recently wrote that, quote, ‘‘The GOP is demanding that the President himself advocate fast-track aggressively. It’s not an unreasonable request. Mr. Obama could start by 

giving the issue a prominent mention in his State of the Union Address.’’ 

Do you agree that the renewal of Trade Promotion Authority 

should be a top priority for President Obama this year? 

Mr. COTE. I absolutely agree it ought to be a top priority, not just 

for the President, but for the Congress. And I really think that 

there is not enough recognition in the country about how much the 

economic world has changed over the last 20 years, with the fall 

of the Berlin Wall, and how much it is going to change over the 

next 20 years. And that shift, where developing countries are going 

to become half of world GDP, and the fact that other countries are 

creating agreements and this is our best opportunity to start to inVerDate Mar 15 2010 20:59 Sep 02, 2014 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 R:\DOCS\89425.000 TIMD
16 

fluence how those economies develop—it would be a shame if we 

would miss that opportunity. 

I really think that that is a huge trend that we need to be addressing as a country, as part of our global competiveness. 

Senator HATCH. Thank you. As you know, intellectual property 

is increasingly critical to the U.S. economy. In my own home State 

of Utah, it is the lifeblood of our industries, from information technology to the life sciences. Like many businesses in Utah, I know 

that Honeywell has a long history of innovation and depends on 

strong intellectual property protections. 

As I said in my opening statement, our bill maintains negotiating 

objectives that seek the high standards found in U.S. law. So let 

me ask you this question. Can you please discuss why it is so important for innovative job-creating businesses such as yours to have 

these high IPR standards as a benchmark for U.S. trade agreements? 

Mr. COTE. Yes. It is a huge deal for us. And to your point, technology is one of the ways we differentiate all of our businesses. 

If a country wants innovation, if the world wants innovation, it 

has to be protected or people stop innovating, because it just gets 

stolen. To the extent that you can help to improve IP standards 

around the world, that is absolutely wonderful for any company 

that is trying to innovate. 

Senator HATCH. Well, thank you. 

Mr. Cohen, I respect you for your advocacy on behalf of your 

members, but I just want to mention a few things to you. 

One of my really dear friends, in the early part of my service 

here in the Senate, was none other than Irving Brown, who was 

the international vice president of the AFL–CIO and, of course, the 

head of our tripartite negotiators at the ILO in Geneva, Switzerland. In fact, at one time, he asked that I come over and help him 

with a particular problem that could have resulted in the United 

States leaving the ILO. 

In all my discussions with Irving—and I used to stop in Paris, 

and we would get together. We had a very close relationship, and 

I had nothing but great respect for him. I thought he was one of 

the greatest people I ever met. 

But he seemed to appreciate the importance of international 

trade in creating jobs in America, and I think Mr. Cote would certainly agree that this is a way of creating jobs, not hurting jobs. 

Naturally, some jobs do go, but by and large, it is much better for 

us. 

I do not see anybody there at the AFL–CIO today of Mr. Brown’s 

caliber. Of course, he was unique, there is no question about that, 

and one of the truly great people, and yet hardly anybody in America knows anything about him. But he actually headed our tripartite delegation over in Geneva, Switzerland, at the ILO, the 

largest U.N.-affiliated organization, and everybody respected him. 

Our tripartite delegation consisted of business, management, and 

government. 

This international vice president of the AFL–CIO, who saved Europe from communism, like I said, was one of the greatest men who 

ever lived. It seemed to me he was pretty solidly in support of really good trade agreements. 

17 

You are a very intelligent man. Why is it that the unions cannot 

see that there are a lot of high-paid jobs that come from really effective international trade? 

Mr. COHEN. So, we support global trade, number one, and our 

own union is—most of our members are high-tech and work in a 

global economy—— 

Senator HATCH. Right. 

Mr. COHEN [continuing]. Every single day. I think the question 

is, what is the platform that we work off of? And, again, I speak 

not only for labor in this case, but a broader group of environmental and consumer groups. And we are quite concerned about 

the platform. 

So we need some version of fast-track authority, but we need to 

make the standards that you spoke of, ILO standards, for example, 

part of our standards. When we go to look at a—— 

Senator HATCH. But even Irving Brown knew that we could not 

sign on to the conventions that the Soviet Union did all the time, 

but never lived up to, because we would have to live up to them, 

and it would throw a lot—— 

Mr. COHEN. For example, on TTIP, which this would also effect, 

every member of the E.U. has adopted Convention 97. And the conventions on freedom of association and child labor are never considered here in this body, and we are saying that those are the global 

standards. 

Senator HATCH. But is that a reason for rejecting this bill? 

Mr. COHEN. It is a reason to say—excuse me for interrupting. It 

is a reason to say that because, apparently, those require a twothirds vote, that we can put those standards in fast-track and say 

that we support child labor laws as a global standard, we support 

the global environmental standards as a basis of the trade deals, 

and we support freedom of association as a basis for these trade 

agreements, and that that is enforceable as opposed to saying it is 

up to each nation to figure it out. 

We are just saying those should be part of fast-track authority— 

and the currency manipulation standards—and that they should be 

enforceable in the same way that a Honeywell can go and enforce 

the standards in a TPP. 

So we do not really disagree, except that the standards, in our 

view, should be part of the fast-track authority. 

Senator HATCH. My time is up, Mr. Chairman. Thank you very 

much. 

The CHAIRMAN. Thank you, Senator. 

Senator Carper? 

Senator CARPER. Thanks, Mr. Chairman. 

I want to really thank our friends, our witnesses from across the 

country, for being here, for the work that you do and the leadership 

that you provide, not only in your own businesses or your own 

union, but really for our country. 

I am going to ask—I have heard Mr. Cohen speak any number 

of times, very convincingly, compellingly. I aspire to be more like 

you in the way that I speak. 

But I am going to ask our other three witnesses—I am going to 

make a statement, and then I want to ask our other three witnesses to reflect on what we just heard him say and to see where 

18 

you think there might be some areas for agreement. I think this 

is an important issue for us to push forward. We need trade. We 

need free, fair trade, and our economies grow when we have that 

free and fair trade. But I just want you to reflect on what he said 

and see where there might be some area for consensus. 

While you are thinking about that, I think I have shared this 

story once maybe with Mr. Cote, and it goes back—this is 12, 13, 

14 years ago—to the White House with President Clinton, Vice 

President Gore, the President’s cabinet, and 50 Governors from all 

over the country. 

I was privileged to be the chairman of the National Governors 

Association at the time. The President spoke, and then we had an 

opportunity just to have a conversation, and it was my job to call 

in people to ask questions. 

I asked the first question, and the question I asked of President 

Clinton was, I said, ‘‘Mr. President, over here to your right is Mel 

Carnahan from Missouri. He is going to run for the Senate next 

year,’’ being 2000. I said, ‘‘I am going to run for the Senate next 

year. We are both Democrats. One of the issues that will be raised 

with us is how we feel about NAFTA. How do you feel about 

NAFTA?’’ And I said, ‘‘Why should we support that?’’ 

And Bill Clinton, as you know, he is a pretty good communicator 

too. And he smiled, and he said—he went into his ‘‘ah shucks’’ 

mode, and he said, ‘‘Well, Tom,’’ he said, ‘‘You know, in Arkansas, 

we raise chickens, and in Delaware you raise chickens.’’ And he 

said, ‘‘There are a lot of countries around that don’t want to let us 

sell our chickens to them, and we would like to sell our chickens 

to those people.’’ 

He said, ‘‘We let them sell their stuff to us. We have forever. But 

there are countries around the world that put up these tariff barriers, these non-tariff barriers.’’ And he said, ‘‘The idea behind a 

free trade agreement is not so much to let other countries sell their 

goods and services to us; they’re already doing it.’’ He said, ‘‘The 

idea behind it is that we want to sell more of our stuff to them and 

to get them to take down their barriers, whether they are tariff 

barriers or non-tariff barriers.’’ 

I have never forgotten that conversation. Another thing I will not 

forget soon is a visit I had last Monday to Detroit with Debbie 

Stabenow. And it was the North American International Auto 

Show. I call it the Detroit Auto Show. 

If anybody has questions about whether or not the American 

auto industry is back, they are back. The top truck of the year, GM 

Silverado; top car of the year, Chevrolet Corvette. I mean, we are 

rolling, up from about 10 million units to 16 million unit sales this 

year, record profits, profit-sharing is up, as you probably heard. 

But we still have problems, and one of the problems we have is 

South Korea. Last year, they sold over 500,000 cars, trucks, and 

vans here. We sold fewer than 5,000 there. 

In the negotiations on the Trans-Pacific Partnership that are underway right now, one of our negotiating partners is Japan. Last 

year, God only knows how many cars, trucks, and vans they sold 

here. It was a lot. We sold just a fraction of that over there. 

They are still able to sell their stuff to us. We are not able to 

sell our stuff to them. And my hope is—with the South Korea free 

19 

trade agreement which we negotiated, supported by the UAW, as 

I recall, the idea was to be able to get our stuff sold in those markets, to open up those markets. 

Mr. Cote, just, if you can, give us a reflection on what Mr. Cohen 

has said that might help us find some consensus here. 

Mr. COTE. I see this TPA bill as an opportunity for us to raise 

standards around the world. So whether it is work standards, environmental standards, IP standards, this is an opportunity for us to 

engage and raise standards around the world and, at the same 

time, reduce the tariff barriers that we do confront. And I think 

Elena and Jim did a nice job of describing that. 

In any of these sort of discussions, it is not like we can unilaterally impose whatever it is that we want to do. The other side has 

cards also, and we have to deal with the world as it is, not with 

how we might wish it was. This is an important time for us to be 

thinking about how we work together to achieve an increase in 

standards around the world while reducing those tariff barriers. 

There is an old phrase that I like to use for a lot of things that 

says, we cannot let the perfect be the enemy of the good. And I 

think, as I take a look at what has been accomplished in this TPA, 

it is pretty substantial in terms of starting to advance standards 

around the world to more fairly level the playing field that all of 

us have to deal with. 

So I think it does a very good job of doing that and considers 

both sides of the argument. 

Mr. ALLEN. My comment would be that I represent food, apples, 

and there is nobody in the world that grows food as well as we do 

in the United States. That is why we are the number-one ag exporter. 

Senator CARPER. No one eats as well as we do, either, or as much 

of it. [Laughter.] 

Mr. ALLEN. That is true. And we grow it—— 

Senator CARPER. In fact, we would be better off if we ate more 

apples and maybe used our Apple devices a little less. 

Mr. ALLEN. That certainly works for me. 

Senator HATCH. We are all going to eat chicken, I will tell you 

that. [Laughter.] 

Mr. ALLEN. But with that in mind, we grow the safest food in 

the world, and I think that in itself will help raise the standards 

as we negotiate these agreements and get into new markets. Foreign products will not be able to come into this country if they do 

not meet our standards. And the new Food Safety Modernization 

Act that is going to be in force soon, that is going to make sure 

that happens. So I think, on food, that would be my response. 

Ms. STEGEMANN. I think that is a great question. And I agree 

with Mr. Cohen on certain points, that we have to be mindful of 

what kind of standards we are embracing and messages we are 

sending. But, as my colleagues have pointed out—and I think Senator Baucus has alluded to some of that in one of his questions— 

is this an opportunity for America to show leadership to the world 

in terms of standards? I think the answer is ‘‘yes.’’ 

As I reflect on some of our activities internationally, the fact that 

we have very high internal, almost self-imposed standards on how 

we build our products, how we comply with regulatory requireVerDate Mar 15 2010 20:59 Sep 02, 2014 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 R:\DOCS\89425.000 TIMD
20 

ments around the world, in a way, we are creating barriers for 

other companies from overseas that are not willing to hold themselves to the same standards, and that is reflected in their products. Once you start using them, you can tell that they are just not 

as well-made. They are not as well thought-out. They fall apart. 

They may be unsafe to use. 

So, again, I think it is an opportunity for us to show leadership 

and to set very high standards for the rest of the world to follow. 

Senator CARPER. My time has expired. Thank you all very, very 

much. 

The CHAIRMAN. Thank you very much, Senator. 

Senator Grassley? 

Senator GRASSLEY. Thank you, Mr. Chairman. 

Thank you, Mr. Allen, for being a voice for agriculture here. 

There is not a lot of voice for agriculture in Washington, and we 

need more of it. 

I noticed in your testimony that you mentioned the sanitary and 

phytosanitary issues that American agriculture products sometimes 

face unfairly in foreign countries. Are you satisfied with the provisions in the base text of the TPA bill on sanitary and phytosanitary 

issues? 

Mr. ALLEN. I do not know if I can answer. I am not sure if I understand the base text at this point in time, but I would be happy 

to look at it. 

Senator GRASSLEY. Well then, why don’t you answer that in writing for me? Would you, please? 

Mr. ALLEN. Sure. Absolutely. 

Senator GRASSLEY. Thank you. 

And I would like to ask Ms. Stegemann—and I thank you, also, 

for being here. Your testimony that I read—I was impressed with 

the success you have had taking NuStep products into the international market and doing it so quickly. 

You ended your testimony by stressing that trade agreements are 

not worth the paper they are written on if they are not enforced. 

I would like to have you give me a lot of examples, but I have a 

follow-up. I would like an example or two where you think that is 

not the case. 

But the most important part of my question is, are there specific 

areas that you are watching closely in the development of the TPP 

and TTIP agreements that you believe could have enforcement concerns? 

Ms. STEGEMANN. I thank you for the question, Senator Grassley. 

I would like to take this opportunity to say that one of the big concerns for us as a small company is intellectual property. 

I did mention that we are not a high-tech company, but at the 

same time, we have invested a lot of resources, time, and money 

to create a product that is very unique. It is a niche product. In 

fact, many of the countries where we have entered, the new markets that we have brought our product to, it is a new product category. So we are kind of leading in this health care segment, and 

a lot of people are beginning to take notice and are realizing that 

we have created a very attractive business segment for ourselves 

internationally. 

21 

But being a small company, we do not have an in-house legal 

team, certainly not anybody who is an expert in international law. 

So we rely on our government to negotiate for us trade agreements 

that do a very good job of protecting us in the IP area. 

Senator GRASSLEY. I think you are telling me that as far as these 

two negotiations going on, TPP and TTIP, you don’t have any particular enforcement concerns at this time. Is that right? I mean the 

way that it is being negotiated. 

Ms. STEGEMANN. Correct. 

Senator GRASSLEY. I would like to ask any or all of you my last 

question. And the chairman touched on this a little bit, but it is 

a new concern to me that has not been so much of a concern in 

previous TPA debates, and that is currency. 

The bill contains provisions related to currency manipulation for 

the first time. Like many of my colleagues, I believe this is an extremely important issue, and trade agreements might be one of the 

best means that we have of getting results. 

All of you represent different industries, but I am curious how 

important each of you believes addressing currency manipulation 

is, for your specific industry. Is it a top issue, is it part of the top 

five issues, or maybe it is not a worry to you at all? 

I would just like your opinion on that. 

Mr. COTE. Sure. With 54 percent of our sales outside the U.S., 

currency is something that obviously has an effect on us generally. 

And I would say I am always in favor of a more level playing field, 

no matter what it is we are dealing with. 

But I would also have to say that the whole issue of currency 

manipulation has not really affected any of our decisions as a company or affected our results in any way. So it is not even a top 10 

concern for me. 

Senator GRASSLEY. Mr. Allen? 

Mr. ALLEN. Again, I am not a finance expert as you folks are. 

Senator GRASSLEY. Then I will give you an opportunity to answer 

in writing. 

Mr. ALLEN. All right. That would be fine. 

Senator GRASSLEY. Ms. Stegemann? 

Ms. STEGEMANN. I would really echo the comments of Mr. Cote. 

While it is definitely a consideration—we understand that currency 

fluctuations can impact us either up or down, good or bad—overall, 

our approach is, we want to be able to export our products. That 

is our number-one priority. In my experience, the effects of currency fluctuations kind of even themselves out over time. Sometimes you are in the negative, sometimes you are in the positive. 

So, if you take a long-term approach to exporting, your numberone priority is to be able to participate in the markets, and the currency stuff, you just kind of deal with it as it comes. 

Senator GRASSLEY. Mr. Cohen? 

Mr. COHEN. I would say it is a huge consideration, has huge consequences in terms of jobs, where production occurs, the exporting 

of environmental issues to some other nation; we put it way at the 

top. The key is that it has to be enforceable with major consequences. 

I think it is good that it is mentioned in this legislation, but we 

believe the consequences of it have to be enforceable in the same 

22 

way that any other provision of a trade agreement would be enforced. 

Senator GRASSLEY. Thank you, Mr. Chairman. And thank you, 

panel. 

The CHAIRMAN. Thank you, Senator. 

Senator Thune, you are next. 

Senator THUNE. Thank you, Mr. Chairman. And thank you all 

for being here today. I appreciate the opportunity to hear from all 

of you about the importance of trade and the importance of TPA. 

I strongly support the push to get Trade Promotion Authority enacted as soon as possible. There are so many American manufacturers and farmers and service providers that can access and benefit from fast-growing economies around the world. 

TPA, at its core, is about building new trade relationships in a 

world where 95 percent of the population lives outside the United 

States and 80 percent of the purchasing power is outside the 

United States, and I use my own State of South Dakota as an example. Twenty years ago, 11 percent of the jobs in my State were 

related to exports and to trade, and now that is 22 percent. So it 

has literally doubled. One in five South Dakota jobs depends on 

international trade. 

So you consider a State like mine, which has a small population, 

we ranked 13th in terms of agricultural exports—and it is about 

$2 billion a year just in oil, seeds, and grain. So I see this as an 

opportunity to open even more market opportunities to our products and to grow those numbers, and I think this debate is long 

overdue. My only regret is that it has taken this long to get here. 

Every President literally since Franklin Roosevelt has had this 

authority, and I am glad that President Obama has chosen to request it, even though it has, unfortunately, in my view, been delayed now for 4 years. So, it is time to get it done. 

I wanted to mention one thing, and I guess I would direct this 

to you, Mr. Cote. One of the most important benefits of the TPA 

legislation that has been introduced by the chairman and Senator 

Hatch is the issue, I think, of digital trade. Last December, Senator 

Wyden and I introduced the Digital Trade Act, which modernizes, 

basically, our trade laws to reflect the Internet-enabled world in 

which we now live and do business. 

So I am very pleased that this TPA legislation that we are discussing today includes a robust section on digital trade, with provisions addressing nearly all of the issues that are included in my 

bill. 

I will just say, by way of example, that the TPA bill seeks to prohibit unjustified barriers to the free flow of data across borders, as 

well as forced localization policies that are designed to favor foreign 

businesses over U.S. businesses by compelling those businesses to 

use local infrastructure, such as data storage, Internet, or e-mail 

services. 

So I would say, just to you, Mr. Cote, as someone who is a CEO 

of a global company, can you comment on how important it is that 

we have provisions in our trade agreements that put American 

businesses on a level playing field as it relates to local businesses 

in foreign markets? 

23 

Mr. COTE. In general, I would have to say I am always in favor 

of a more level playing field so that we can compete effectively 

around the world. 

I am not completely conversant with the details of what you described in the bill, but I would say that I am in favor of free flow, 

generally, whether it is goods, services, or digital trade, on a level 

playing field, because that will increase trade and, I think, benefit 

everybody. 

Senator THUNE. Thanks. 

Mr. Allen—and I assume my colleague from Iowa, Senator Grassley, has probably already covered this to some extent—but in your 

testimony, you discuss barriers that are facing U.S. agriculture in 

foreign markets, such as unscientific sanitary and phytosanitary 

measures, or what we call SPS measures. 

As you may know, the TPA legislation includes provisions to ensure that SPS commitments by our trading partners will be enforceable, binding, and subject to effective dispute settlement. This 

is especially important in the context of trade agreements where 

our trading partners make commitments that go beyond WTO 

rules. 

So, could you just comment on this particular issue and how important it is that we have binding and enforceable rules to prevent 

unscientific barriers to American agriculture? 

Mr. ALLEN. It is absolutely important. We run into this scenario 

often in the apple industry based on insects and pests. We have an 

ongoing situation right now with Israel, which is a great trading 

partner for the United States and, specifically, New York State 

with apples, and we have been working under a protocol that has 

been accepted and documented, and research has proved it for decades. Yet, most recently, they have tried to change the protocol to 

make it much more difficult. 

I think under a trade agreement that was negotiated properly, 

we would avoid that, because we feel that they are using that as 

a barrier, because there is not a lot of data to reinforce the reasoning behind their request. 

Senator THUNE. Just very quickly, anybody who chooses to comment on this, maybe Mr. Cote. The three trade agreements that we 

got in 2011 were really important. There was a big push for a Russia PNTR in 2012. In both cases, it took the active involvement of 

the White House. And it has been pointed out that the trade rep 

is not here today, but could you just comment on how important 

White House involvement is going to be to enacting TPA? 

This is not something, obviously, that Congress, in my view, can 

do without active engagement from the executive branch. Would 

you care to comment on that? 

Mr. COTE. I would have to agree with you. But the executive 

branch, along with the Congress, is going to have to work together 

to get this done, and I think that is why the USTR has been very 

much involved in trying to get something done here, and we 

should. Everybody is going to have to work together. 

The CHAIRMAN. Thank you, Senator, very much. 

Senator THUNE. Mr. Chairman, I would say I hope they lean into 

it, and I really wish we had a trade rep here today. Thank you. 

The CHAIRMAN. Thank you, Senator. 

24 

Senator Cardin? 

Senator CARDIN. Thank you, Mr. Chairman. 

I want to agree with Senator Thune. This is a good first step, 

this hearing on Trade Promotion Authority, but we do need to hear 

from the administration, and we need to have them here. 

Let me make, first, a couple of comments. I want to ask a question about scope here. 

Trade is critically important. We are in a global economy. We 

need to participate in trade. It is impossible for Congress to negotiate trade agreements. Trade Promotion Authority is a reasonable 

request. 

But there are two areas here that need to be answered that a 

lot of us are uncomfortable with at this stage. One is the role that 

Congress plays, because we are delegating our authority. We have 

the authority, and we are giving up our rights to be able to make 

specific changes, and it is very important that there is a close 

working consultation process and that we do not get off track, and 

Senator Brown is going to be talking, I am sure, more about that. 

He has been our leader and is trying to bring us together on a reasonable proposal here. Times have changed, and I think it is important that we have a clear role that we play with the administration 

during trade agreements. 

The second is the scope of the expectations. And I have been in 

Congress long enough to see the resistance to expanding the scope. 

There was strong resistance for us dealing with labor and environment within a trade agreement, Mr. Chairman, and we finally got 

that changed, and now I think it is beyond question that we should 

have at least ILO standards in the countries that we deal with and 

that there should be enforceable provisions for labor and environment. 

But I raised the issue of, when we started, it was mostly tariffs. 

Then we got into non-tariff issues, such as intellectual property, 

and we now understand that labor and environment standards are 

important. Why? Because America has strong standards. 

I raise the issue that we need to do a better job on good governance. The countries that we are now entering into trade agreements with are countries that do not have good governance, which 

puts American companies at a strong disadvantage. 

And I appreciate the fact that the chairman’s bill mentions corruption and is trying to deal with corruption. I think we have to 

be bolder than that. We have been bold enough to include ILO in 

the objectives of our trade agreements. There are international 

human rights conventions adopted by the U.N. that deal with protecting the rights of citizens from being arbitrarily arrested, and 

the right of privacy, and those types of issues that are fundamental. 

So I would like to see support from particularly the business 

community to fight on behalf of American companies for a level 

playing field and say, let us be bold. Let us use trade as an opportunity to advance good governance in the countries where we want 

to see more open markets. 

So can I get your help to expand the scope of TPA to include 

those types of issues so that American companies can have a more 

level playing field, so at least our trade negotiators can attempt to 

25 

use trade as leverage to improve good governance, which is critically important if we are going to have open markets? 

I see everybody nodding ‘‘yes.’’ Mr. Chairman, I have full support. So when I offer the amendment I will be able to—— 

Mr. COTE. My nod meant I was listening. I would have to say, 

at the end of the day, I do not know that we can use trade as a 

weapon overall in terms of how we get something done, just because 80 percent of trade is occurring outside the U.S. 

I am really concerned sometimes about that. I have kind of likened this to the elephant who is taking a walk to go get a drink 

of water, and we kind of look at it and go, ‘‘Gee let’s put this on 

the elephant.’’ Well, you can get to a point where you put so much 

on the elephant, he never makes it to the water. 

I am not advocating against anything here. I would just be careful that if we put too much on something, we can kill it before it 

gets there. And, at the end of the day, I am very supportive of a 

level playing field, and I think corruption is one of the things that 

kills countries. 

Senator CARDIN. And all I am asking is that we try, that we 

make that part of our objectives. 

But I will point out that we heard similar arguments when the 

United States took the leadership to use trade to bring down the 

Apartheid government in South Africa. And it worked. Other countries followed our leadership. And I think the same thing is true 

in other areas of good governance, including anticorruption, which 

I think is critically important to trade. And I thank you for that. 

The CHAIRMAN. Thank you, Senator. 

Senator Toomey, you are next. 

Senator TOOMEY. Thank you very much, Mr. Chairman. And I 

just want to thank you directly—and Senator Hatch and Chairman 

Camp—for producing, I think, a very good product here. And I appreciate your having this hearing. 

I want to express my disappointment that the trade rep could not 

be here, but I know he has indicated his support for Trade Promotion Authority, and I do very much hope that the President will 

aggressively engage on this, because, as the chairman has pointed 

out, this is our lift. It is always difficult politically to get this done, 

and we know that the support with our friends on the other side 

is at a level which could use some encouragement, I think. 

So I hope the President will engage. I am thrilled that the Commerce Secretary, Secretary Pritzker, has been a very, very forceful, 

outspoken proponent of expanding trade, and I think that is a very 

encouraging sign. 

Before I get to a specific question, I think it is important to underscore a macro point here, and that is, over the last 100 years, 

America’s global leadership in expanding trade and opening markets has been profoundly and enormously beneficial for America 

and for the entire world. 

The result is, today we live in the freest trading environment in 

at least 100 years, maybe much longer than that. And the result 

is that countries around the world have been encouraged to develop 

market economies, rule of law, and more democratic societies. As 

a result of those things, we have lifted literally billions of people 

out of poverty, created opportunity, raised standards of living, and 

26 

nowhere more than in the United States of America, where we 

have benefitted enormously from this. 

One of the ways that we benefit that we sometimes overlook is, 

as we lower barriers to trade and lower the taxes that we impose 

on imports, we save our constituents, the consumers, money. So the 

single mom who is struggling to raise her kids and make ends meet 

benefits when she can go to a store and buy a product at a lower 

cost. That is helpful to her, and that is a direct result of negotiating trade agreements that lower tariffs. She also has more 

choices in the goods and services that are available to her. And 

there is no question that it results directly in more exports. We 

have seen that time and again, and that means more jobs. 

In Pennsylvania, 20 percent of our manufacturing jobs are tied 

directly to trade, and they are some of the best jobs we have in our 

country and in our State, whether it is making locomotives in the 

area at General Electric, or the chemicals and gases at Air Products, or the technology at Westinghouse, these are some of the bestpaying, most sought-after jobs we have. And if we lower barriers 

to trade elsewhere, we will have more of this growth. 

But that is my view of the history. I would like to pose my first 

question to Mr. Cote, and it is simply this: all else being equal, if 

we pass Trade Promotion Authority and that leads to completion 

of some of the big trade agreements that are currently under negotiation, all else being equal, do you think that would tend to result 

in you hiring more workers or fewer workers at your company? 

Mr. COTE. Well, first of all, I agree with the statements that you 

made up front, and I do think trade has been—and economics have 

been—a force for good, not just in the U.S., but in the world. And 

at the end of the day, to the extent that our sales increased for any 

reason, whether it is trade or something else, that is what causes 

me to add more employees. So the answer to that would be ‘‘yes.’’ 

I think you would also get another affect, and that is, this has 

the opportunity to increase foreign direct investment in the U.S., 

because when foreign companies can export more easily out of the 

biggest market in the world, with the energy advantage that we already have and the rule of law that you mentioned, I think it helps 

to encourage FDI into the country. 

Senator TOOMEY. I also think that it is very important, in the 

context of these agreements—and I appreciate that several of the 

witnesses have mentioned the importance of protection for intellectual property. That is absolutely essential. It is our great competitive advantage in the entire world, and it has to be an important 

part of all of our trade agreements. 

I am particularly concerned that the pharmaceutical industry be 

able to sell products that are enormously expensive to bring to 

market. The only way that model works and we get new generations of life-saving drugs, is if we do protect that. 

My last question is for Mr. Allen. Pennsylvania ranks fourth in 

apple production and apple exports. Of course, our apples are the 

best, but we rank fourth in total. 

We sent a letter, several of my colleagues and I, because there 

has been a significant decline in apple exports to Europe recently. 

If we are able to complete the trade agreement with the Europeans 

that is under consideration, do you think that would likely reverse 

27 

that or at least stop that decline and perhaps turn that around so 

that we could start exporting more apples to Europe? 

Mr. ALLEN. That is a very difficult question. Unfortunately, the 

European issue goes much deeper to Minimal Risk Levels and pesticide levels on certain chemicals. The European Union has very 

strict MRL levels, and a lot of them are very difficult to match. 

There is a material that we use extensively that, as of February 

1st, we will not be able to ship into the country. And it is a proven 

safe material used in the United States. 

So unless the TPA addresses the MRL levels, it probably will not 

help it. 

Senator TOOMEY. Well, maybe that is the kind of thing that the 

negotiations ought to address. I appreciate that. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. 

Senator Nelson? 

Senator NELSON. I had a conversation last year with the chief 

negotiator in Brussels for the European Union, and, at the time, 

he was cautiously optimistic that we could get an agreement. 

Reflect, any one of you, if you will, on the enormity of the importance of a European-U.S. agreement that would cover, in effect, 45 

percent of all the trade in the entire world and what that means 

to the U.S. 

Mr. COHEN. I would say that the negotiations with Europe are 

incredibly important. The question is, from the front end, can we 

state our objectives, frankly, to go up to the standards of the European Union on issues like the environment and workers’ rights and 

labor standards? 

So we would see it as an opportunity, actually, to set higher 

standards, if that is what our goals and objectives are, compared 

to TPP, where, if there are not those same kinds of standards, 

American workers will compete with an average wage in Vietnam 

of 75 cents an hour, no right of association. The Vietnamese government told our staff, the negotiators, ‘‘We have a communist government. We don’t need labor standards.’’ 

The question is, what kind of a democracy do we have, and do 

we move to higher standards, which still exist in the world now, 

or do we unravel what we have? 

Senator NELSON. Is there any other comment on that, just briefly? I have two other things I want to—— 

Mr. COTE. As you might imagine, I think it is a terrific thing for 

us to be doing. The two biggest trading blocs in the world reducing 

barriers and increasing the free flow of trade is, I think, a good 

thing for both of those trading blocs. 

Senator NELSON. Mr. Allen, you represent apples. I represent oranges. This is one of the few times that you can compare apples 

to oranges. 

Do you want to comment on all fruit, how it will be advantaged 

with such an agreement? 

Mr. ALLEN. Again, it is quite specific. Actually, Europe is a pretty large apple-producing group of their own. So the apple exports 

from the U.S. into Europe are not as high as many, many other 

countries. 

28 

We compete against their homegrown product, and sometimes 

that is rather difficult. And, again, I mentioned the E.U. has a very 

strict level of MRLs. It is becoming more and more of an issue. And 

perhaps the reason those levels are what they are is because they 

want to put that up as a barrier, because they certainly grow a lot 

of apples on their own. 

By the way, England, the U.K., is a little different, because that 

is a good trading partner with the United States, and especially 

New York, on apples. But we face the same issues in the U.K. as 

we do with the E.U. 

Senator NELSON. Mr. Cote, you represent an aerospace business. 

I have some passing interest in aerospace. Talk about the future 

of aerospace with regard to TPA. 

Mr. COTE. Aerospace is one of those industries that is going to 

continue to grow, I think, for a long time to come, because the 

world is becoming more wealthy on a per capita basis, and, as it 

does, more people travel. Businesses become more global. Families 

just become more dispersed. So that is going to continue to grow. 

To the extent that we can compete better because we can be in 

every single country, that will add to the capability in which I 

would say the U.S. far exceeds the rest of the world, and we would 

like to keep it that way. And our ability to be able to sell into these 

countries with the reduced barriers would be a wonderful thing for 

the aerospace industry. 

Senator NELSON. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. 

Senator Brown? 

Senator BROWN. Thank you, Mr. Chairman. 

Often, when we debate trade agreements, history is recalled, and 

revisionist history seems to come into play. 

Just a reminder, as my colleagues love to cite Smoot-Hawley and 

how that caused the Depression—and Senator Hatch did not exactly say that, I understand. But keep in mind, when SmootHawley was passed, we had a trade surplus in this country. And 

that is what angered the world so much, that we already were in 

a dominant position, then we passed Smoot-Hawley, not that we 

had the biggest trade deficit in the history of the world and then 

did something. 

This is for Mr. Cote, Mr. Allen, and Ms. Stegemann. If you would 

answer, then I will have another question for Mr. Cohen. 

The country of Australia, with which we have a bilateral trade 

agreement, passed a strong public health anti-tobacco law. Philip 

Morris, a company domiciled here but having, I assume, subsidiaries in different places, sued the Australian government, sued a 

government, a locally controlled, sovereign state, democratically 

elected, that passed a strong public health law to protect their citizens, particularly children, against tobacco. 

They went all the way to the Australian Supreme Court. The 

government of Australia spent a lot of money defending this 

against this large, rather profitable tobacco company. Ultimately, 

the Australian government won in Australian courts. But then, 

after the Supreme Court upheld that Australian public health law, 

Philip Morris then sued the Australian government pursuant to the 

investment treaty that they had with Hong Kong. 

29 

Now, here is my question. Since NAFTA, we have had in these 

agreements something called investor state, the first time I believe 

ever in trade policy where a company can sue a foreign government. The foreign government’s democratically attained rules or 

regulations—a company from outside sues them to overturn what 

that sovereign country has done. 

My question is this, to the three of you: do we want this kind 

of power where a company can go into another country and sue 

that country on a food safety or tobacco protection or a consumer 

law or a public health law like that? 

Are those provisions we want, both for companies in the U.S. to 

sue other countries or companies in other countries to sue us to 

weaken these laws that are democratically attained rules and regulations? 

Mr. Cote, if you would answer that first. 

Mr. COTE. I would say, even though I am not a lawyer, I generally do not mind opining on the law. But this time, that is a level 

of legal complexity that is beyond my capability. 

Senator BROWN. Well, it is really simple. It is not complex. 

Should a company like yours have the right to go into Guatemala 

and undertake litigation to weaken their public health laws, when, 

first of all, Guatemala probably does not have a whole lot of money 

to defend these kinds of rules? Should that be part of our international trade regiment generally? 

Mr. COTE. My apologies, but I just do not have an answer. I am 

not knowledgeable enough to even comment. 

Senator BROWN. Could you have someone in your corporation 

who—I assume you have a legal team that could answer that, then, 

please. 

Mr. COTE. Unfortunately, I have to have a very good legal team. 

Senator BROWN. And I understand that. 

Mr. Allen? 

Mr. ALLEN. My gut feeling would be ‘‘no.’’ That is only my personal opinion. 

Ms. Stegemann? 

Ms. STEGEMANN. Unfortunately, I do not have any experience 

with these matters, legal or tobacco. But you mentioned Australia, 

and I was just kind of getting excited because it is a market that 

we are beginning to get established in. It is a great opportunity. 

I would love to go and visit our distributor there. 

They actually have shown a lot of leadership in health care for 

seniors, and that is why it is an important market for us. They understand why it is important for people of all physical abilities or 

disabilities to exercise, and it is a very attractive market for us, 

and we are happy that we have a free trade agreement with them. 

Senator BROWN. You are a great advocate for your business, and 

thank you for that. 

Mr. Cohen, I have written two letters to Ambassador Froman, 

spoken to him personally, spoken to the President’s Chief of Staff 

about this, regarding my concerns related to tobacco and the TransPacific Partnership. I am concerned, from editorials written in the 

New York Times to the article you cited and the environmental 

issues, that TPP may allow private companies to undertake legal 

30 

action against common-sense tobacco regulations through investor 

state. 

Given past agreements, do you think the U.S. is able to effectively address labor, environmental, and public health standards in 

trade agreements? What standards do you think we need included, 

and how do we enforce them? 

Mr. COHEN. Well, again, there is a long answer to that, but the 

short answer is, we absolutely need them. I think it is clear what 

many of those standards are. We have covered many of them. 

There are key global standards on the environment, on workers’ 

rights, on investor state. And, if we are not careful, we are going 

to unravel all of those, not only in our own Nation, where, frankly, 

we are sinking on every one of those instead of rising up, but it 

will be the reverse of what we heard here, because we will help unravel them in the rest of the world as well, because of the so-called 

competition. 

We have to level that by looking at what is most important, what 

is most important for our children, what is most important for children in other nations as well. I think the examples you gave are 

right on target. 

And, no, corporations should not have the right to sue governments that provide consumer protection. Unfortunately, TPP and 

even this Trade Promotion Authority will not stop that, and TPP 

will actually encourage it by leveling up. 

I cannot help but say one more thing. The multinational corporation, like a Honeywell, can produce anywhere, and their challenge 

is to produce at the highest rate of profit. This is nothing about 

Honeywell. This is about any of them. And so, if we do not set 

standards, those corporations, in fact, can produce in Vietnam at 

a minimum wage of 25 cents an hour and actually make higher 

profits. 

So, if we do not look at those standards and have them as a basis 

for trade, we will continue to run downhill, as we have done 

since—and before even—but particularly since NAFTA, and the 

pay of all workers in this country is affected, not just those in 

tradable sectors, and the living standards of all of us are affected. 

And the environment—we have one atmosphere, and we have to 

move from the micro—yes, very important—and look at the macro: 

how are we all affected, what is the net result, as you said, of the 

worst trade deficit that the world has ever seen, and, actually, how 

does it affect the budget deficit? It is quite concrete. Yet, we seem 

to worry about the budget deficit and never the trade deficit. 

So we would say the trade deficit needs to be thought through 

as well when we are doing trade deals. 

The CHAIRMAN. Thank you, Senator. 

Senator Cantwell? 

Senator CANTWELL. Thank you, Mr. Chairman. 

The CHAIRMAN. Actually, Senator Casey was in earlier. 

Senator CANTWELL. Yes. Thank you. 

The CHAIRMAN. Senator Casey, you are next. 

Senator CASEY. Thank you, Mr. Chairman. 

Senator Cantwell, thank you very much for allowing the rules to 

be enforced. I did not realize that that was the case, and I am 

grateful. 

31 

How about if I give you like 3 more minutes of my time? Would 

that work? 

Senator CANTWELL. Take as much time as you need. 

Senator CASEY. But thanks very much. Allow me to do something 

which I try not to do, which is—I try to avoid this, but I do not 

always comply—to do a broader statement of kind of how I see 

some of these issues and then get to the questions. So I may be 

limiting my own question time by doing what I am about to do. 

I do not know all the panelists. I know Mr. Cohen, and I know 

Mr. Cote. But I am grateful for all of you being here today and for 

your testimony, because these are tough issues. 

Let me make a broader statement first and then get to Trade 

Promotion Authority. One of the reasons that I have a very substantial degree of skepticism when I approach these issues, trade 

agreements generally, Trade Promotion Authority in particular 

today, is because it seems to me, the way I view it and the way 

I view it from the perspective of what has happened to Pennsylvania and the country—but I will speak mostly from the vantage 

point of Pennsylvania—is we seem to get the short end of the stick 

or have gotten the short end of the stick on trade agreements spanning several administrations and, frankly, even a generation or 

two. 

It seems one of the reasons we get the short end of the stick, or 

our workers do, is because the United States of America, as I see 

it, does not have and has not ever had in recent history a trade 

policy. It is an area of our national focus where we deal with the 

rest of the world. It is unlike national defense, where there is no 

country in the world, unless they are really sleeping, that does not 

understand what our priorities are when it comes to national security. When we walk in the door to every meeting, every negotiation, 

they know exactly where we stand. We say we stand for freedom, 

we stand for democracy. We are going to not just fight against terrorism, we are going to find the terrorists before they get to us. So 

it is a very clear set of priorities. 

But on trade, we walk in the door, our negotiators, for years now, 

decades, have walked in the door and said, ‘‘Well, we don’t have a 

policy that we can tell you about,’’ unlike a company. In Honeywell, 

you could recite your mission statement in probably 30 seconds. I 

will not give you that chance today, Dave. You know what it is. 

But we walk in the door without a policy, number one, but sometimes a list of concerns: environmental standards, labor standards, 

the effect on jobs, as Mr. Cohen has pointed out. And yet, by the 

end of the negotiation, we say, that stuff is really important to us, 

these concerns are really important, but, if we want the deal, we 

will get the deal, and we will get to those priorities later. 

It seems, without a policy that has been arrived at, all you have 

are these trade battles when a trade agreement is on the agenda, 

and there is a big debate and there is a vote held and then people 

go back to their corners, and we have not resolved the basic issue, 

which was the lack of a policy. And I think it is a real failing. I 

think is a failing of both parties, and I think we have to try to address that. 

Then we come to Trade Promotion Authority, and we just have 

a number of concerns that Senator Brown raised with me in a letVerDate Mar 15 2010 20:59 Sep 02, 2014 Jkt 000000 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 R:\DOCS\89425.000 TIMD
32 

ter to Mr. Froman, along with Senator Cardin, Senator Menendez, 

and Senator Debbie Stabenow. I know these may have been alluded to earlier, but we say we are now prepared to support TPA, 

Trade Promotion Authority, legislation that resembles the current 

framework for consultations, and it goes on from there. So, obviously, anyone who wants to read that letter can see our concerns. 

Here is my question, in the 36 seconds I have left. Do you view 

that as a problem? And I will say, parenthetically, that I think Mr. 

Cohen’s test or set of priorities where we measure, on pages 2 and 

3 of his testimony, he has eight elements. I think we should try to 

arrive at some consensus. If it is not eight, it should be some other 

number. 

There is a lot we agree on, but we never seem to get to that foundation that will allow us to get a better result at the end. 

Now, we are down to ‘‘yes’’ or ‘‘no.’’ 

Mr. Cohen, do you think we need a policy? 

Mr. COHEN. Yes, absolutely. I think that is really the key. We 

need a policy and clear objectives, whether those eight, as you said, 

are modified, that the American people understand, that are totally 

transparent and are the basis for Trade Promotion Authority and, 

therefore, of our negotiations, and that those of us who care deeply 

about those priorities are involved in a similar way as, say, a multinational corporation that can produce anywhere in order to meet 

its mission, which is about maximizing its profits. 

There is no harm in that. It is a question of balancing that 

against the popular and public and social priorities that we would 

have on a macro basis, looking at the history of these trade deficits 

and the devastation that you talked about, not just at the successes 

on the export side. 

Senator CASEY. I know we are over time. Maybe do ‘‘yes’’ or ‘‘no,’’ 

and you can supplement it certainly with written testimony. 

Ms. STEGEMANN. We just want access to the new markets, and 

we will take it from there. 

Senator CASEY. Thank you. 

Mr. Allen? 

Mr. ALLEN. Agreed. We need policy so we can expand our markets. 

Senator CASEY. Mr. Cote? 

Mr. COTE. I like the idea of a policy, but given that it is a negotiation, it is always important to recognize the group that we are 

dealing with has policies also. So there is a reconciliation or negotiation that has to go on to achieve the best for both and get a deal 

that benefits both. 

Senator CASEY. Thanks very much. Sorry for the long prelude. 

The CHAIRMAN. Thank you, Senator, very much. 

Senator Cantwell? 

Senator CANTWELL. Thank you, Mr. Chairman. I thank the Senator from Pennsylvania for his comments and for his asking us to 

pull up a little bit and look at this, because I think that is what 

we need to do: to look at this from a comprehensive perspective and 

try to move forward. 

So I think people have said some very interesting things. 

33 

Mr. Cohen, you said we do need some form of a Trade Promotion 

Authority. I find that encouraging in the context of making sure we 

address all the issues. 

Obviously, Mr. Allen, I have certainly appreciated your focus 

here today on the apple industry, which employs about 59,000 people in Washington State. 

So when I look at this issue, I think about how many bilateral 

agreements have been done in the time that we have not had 

Trade Promotion Authority. It is something like 83 bilaterals. 

So, while we are not moving ahead on what we put on the table, 

everybody else is playing this game. It is like we are not even suited up. They are playing the game. And the end result has been 

that they do bilaterals and they reduce tariffs, which, on apples, 

can be as much as 10 percent. So China does a deal with Vietnam. 

The next thing you know, they are sending every shipment in for 

$2,000 to $4,000 less than what we are doing. 

While you can complain about that, and you can say, well, this 

agreement or that agreement will catch us up, to me, the real issue 

becomes market share, because once you start losing market share, 

once you have lost 30 percent market share, it is a problem. Apples 

may be one thing—I will say I have been to China, and I have definitely seen people steal the Fuji, Washington label and stick it on 

some other apple just to try to confuse the marketplace that somehow that quality apple is being produced by some other country, 

when it is not. 

It is a bigger issue when it comes to technology. 

So first, Mr. Allen, if you would comment on the market share 

issue and why, as these developing countries have enough resources to buy apples, we have to keep pace. Otherwise, we are just 

competing against a cheaper product and oftentimes an agreement 

that basically establishes the marketplace for that product. 

Mr. ALLEN. Absolutely. And I know you are aware that the 

emerging markets are where the growth is: India, Brazil, Russia, 

Asia. And one of the biggest concerns in the apple industry is not 

necessarily losing a customer in that market, but the concern is 

that the other countries are moving in and taking that market 

away because of those bilaterals. 

And we need to be equal to them, there is no question about it. 

Again, I keep going back to CAFTA, and I hope that is not a dirty 

word, but when we passed CAFTA, the Washington exports into 

that part of the world just multiplied unbelievably. And New York 

exports increased. So it was a win-win for the apple industry, and 

that is what we need in these new emerging markets. 

Senator CANTWELL. Well, I have certainly seen that, where I 

have gone on congressional delegation trips and, while there on 

military purposes or whatever, talked to them about one of our 

products, only to find out they already have a bilateral with somebody. Then the first thing that the country says to me is, ‘‘Oh, it 

is really going to be tough, because we have had a bilateral with 

so-and-so or so-and-so for so many years now, and you are never 

going to beat their price or their infiltration to the market.’’ 

So it is not just that we are getting beaten on price by bilaterals. 

It is the fact that, over time, that market share loss will really put 

us behind, and it will be harder to catch up. 

34 

So, Mr. Cote, when it comes to technology, it is a different story, 

because technology adoption can solidify even more someone’s 

usage. 

But back to Mr. Cohen’s point. To me, this issue is also about 

Trade Adjustment Authority. It is about better partnerships. It is 

about making a more robust system so that our workforce can be 

trained. I think one of the biggest opportunities for us on a global 

basis is going to be a smart-grid technology and the adoption of 

more energy efficient policies. 

But, if Mr. Cohen is losing workers because industry will not 

even bother to retrain them using TAA or apprentice programs— 

I mean, is that not right, Mr. Cohen? Have we not seen, at the 

same time we have seen this growth in opportunity, a lot of companies laying off? 

How could we be laying off electric workers when the biggest opportunity for us is smarter electrification? So I guess I would like 

to ask Mr. Cohen and Mr. Cote, quickly, their thoughts on just 

funding more apprentice programs, funding more training of American workers so that we can capture these opportunities. 

Mr. COHEN. Just in less than 1 minute, I think that that is critical, but I also think we have to block the low road. So you had 

workers at a new Samsung plant in Vietnam rioting this week because of their conditions there. That low road has to get blocked. 

They have to have rights. Otherwise, the American worker competing with that situation—it is gravity, as a top CEO said to me. 

The production will go there if that low road is not blocked, if we 

do not use trade as an opportunity to say, on a global basis, we 

have to have minimum standards. 

Senator CANTWELL. Mr. Cote? 

Mr. COTE. I mentioned earlier the need for a global competitiveness agenda for the country, and one of the fundamentals for that, 

for me, is training across the board, and specifically in math and 

science. 

If we believe that productivity comes from innovation, and innovation is going to continue to be significant for us, if we take a look 

and just compare ourselves with China, for example, in the year 

2007, we graduated about 450,000 engineers. China graduated 

about a million, and that is with only about a third of a percent 

of college-age eligible kids going on to college. So when that 

equates, it will be like 500,000 engineers a year to their 3 million. 

We need a much bigger focus on math and science across all our 

schools, from the time that kids start in Head Start all the way 

until the time they get to high school, whether it is apprentice programs, how do you just do more, work with software. It is going 

to be important across the board. 

Senator CANTWELL. Thank you. Thank you, Mr. Chairman. 

Senator HATCH. Mr. Chairman, can I just point out that half of 

our engineering students are foreign students? So we are really not 

producing that many engineers, and that is a big problem. 

The CHAIRMAN. Senator Menendez? 

Senator MENENDEZ. Thank you, Mr. Chairman. Thank you to all 

the panelists. I was in and out, because we had other hearings important to New Jersey. 

35 

Mr. Cote, thank you for being here today. Honeywell is a great 

American company. We are thrilled that it is headquartered in 

New Jersey, and I personally appreciate not only your corporate, 

but civic engagement in the State. 

Let me ask you this. One of the things I fight for on this committee and also as the chair of the Senate Foreign Relations Committee, with others in the world, is intellectual property rights, because it is no value to have great American ingenuity create a 

product and then have it arbitrarily and capriciously stolen globally 

and not be compensated for it. 

So do you think the intellectual property objectives, as delineated 

in the bill, would provide a type of adequate protection for companies like yours and other American companies as it relates to intellectual property? 

Mr. COTE. I cannot say I am expressly knowledgeable of exactly 

what the provisions are in the bill and what they do. But I would 

say, in general, I am very supportive of anything that increases IP 

compliance around the world. 

And, like the discussion we had on corruption, I think the lack 

of protection on IP hurts a country over time. And I can say that 

we are extremely careful about where we develop IP around the 

world, and the safer it is, the greater the chance that we can protect it. And we do now go to places that do not protect it. 

Senator MENENDEZ. I hear from many American companies and 

many New Jersey companies, which have an enormous innovative 

capacity, about the nature of how countries, many in trade agreements that we have—or on WTO and others—ultimately, still will 

rather arbitrarily and capriciously go ahead and constantly violate 

intellectual property rights. 

One of the concerns that I have is, what standards do we create 

and what enforcement mechanisms do we have, because, at the end 

of the day, regardless of what agreements we enter into, it is only 

the enforcement of those agreements that makes them valuable. 

Otherwise, as with any law, there is very little value to the agreement if you do not really seek enforcement. 

So that is one of the things I am going to be looking at here, because I think the distinguished chairman has been nominated to be 

the ambassador to China. There is a place that is probably at the 

top of the list in the number of entities that consistently take 

American products and innovation and just violate IP left and 

right. So that is a huge problem. 

I want to ask—I know this has been asked in general, and I 

think your answer was a consideration as a panel—but a recent 

study by the Peterson Institute of Economics estimates that currency manipulation has cost between $1 million and $5 million and 

increased the U.S. current account deficit by $200 billion to $500 

billion. And, given that currency manipulation has an impact at 

least as great as any provision of a trade agreement and that 

venues such as the IMF and the G–20 have failed to resolve this 

issue to date, would not any true, high standard, 21st-century 

agreement have to include some type of binding provision on currency manipulation to ensure that benefits from trade that should 

accrue to the United States are not undermined by a country’s effort to artificially weaken its currency? 

36 

Mr. COHEN. I would underscore that and say that currency manipulation in TPA, labor standards, environmental standards, and 

making it clear that our consumer rights at the Federal, State, and 

local level cannot be abridged are really the core for TPA, as well 

as the need to anticipate what are the likely results in terms of 

jobs, the standard of living, and the deficit itself that you mentioned for this Nation. 

Those should be the core priorities as we move forward. 

Senator MENENDEZ. Does anyone else have a view on that? 

Mr. COTE. From my perspective, I am all in favor of a level playing field, in general, on everything, because I really do believe that 

with market access and a level playing field, American companies 

do a very good job of winning. 

That being said, I can say that, while I have to be conscious of 

currency, as I mentioned earlier, I would be hard-pressed to point 

to a decision I have made or any results in the company that have 

been impacted by it. So it is not even on my, I would say, top 10 

worry list. 

Senator MENENDEZ. Maybe as an individualized company, I could 

understand that. But as a collective—when I see 1 to 5 million jobs, 

U.S. jobs, and $200 billion to $500 billion lost, it certainly, even in 

this town, raises a light for me. 

Finally, Mr. Chairman, if I may. 

What is the difference between the answer you gave earlier, Mr. 

Cote, about these trade opportunities being an opportunity to raise 

the standards across the board, including on labor, and the position 

that Mr. Cohen has that, yes, we support trade, but there should 

be ILO standards. Is there a difference between your two views? 

Mr. COTE. Well, it sounds to me like there is not that much of 

a difference in how we are saying it, but there is probably a difference in terms of how far we would go to implement it, because 

I do think it is important to try to raise the standards around the 

world. But I also think it is a question of degree and at what point 

do you look at something and say, ‘‘This is a walkaway,’’ versus, 

‘‘Okay, this is something that I have to work through, and this advances the world, advances the U.S., and this is as good as we can 

get at this point.’’ 

So I would say it is more a question of degree. 

Mr. COHEN. And I would say that, as important as it would be 

to raise standards, we are actually faced here with unraveling what 

we have done. So the race to the bottom, as I have said, gravity 

takes us there, because in an economic world workplace, if there 

are not minimum standards that are enforceable, that is where you 

lower production costs and create profits. 

So we must set those minimum standards, is our view. It does 

no good to have even a discussion about a higher minimum wage 

in this country to have production occur in the U.S., Honeywell or 

anything else. A decision is made. How much does it cost in Vietnam, and how much does it cost in Trenton or Camden? That does 

not do us any good if we are not establishing some kind of minimums about children doing it, about workers with no rights doing 

it. 

37 

So we would say, quite passionately, whether it is our environment, our workforce, or our rights as consumers, we must maintain 

and increase those standards or they will sink into oblivion. 

Senator MENENDEZ. Thank you, Mr. Chairman. That may be a 

little preview of some of the questions you might get when you go. 

The CHAIRMAN. I might have to leave pretty quickly. I would just 

put this out, just a reaction, because the legislation does include 

the core labor standards, and they are all enumerated, as you 

know. And it provides further that they must be enforced and in 

the same way that other provisions are enforced, that commercial 

provisions are also enforced. 

That is at a much higher level than it was in prior TPA. 

Mr. COHEN. The key would be those ILO conventions that we 

have not adopted or even discussed here, that they be as enforceable as anything else. 

The CHAIRMAN. They are in the agreement. 

Mr. COHEN. I think, again—I do not want to be disrespectful— 

but I think the question is, are they enforceable in a way that anything else in the agreement would be enforceable, even though we 

have not adopted them? That is the key. 

The CHAIRMAN. The provisions in the proposed legislation provide that they are as enforceable as any other provisions, which 

were previously more enforceable. 

Mr. COHEN. Even if we have not adopted them? So, if the U.S. 

has not adopted six of the eight core ILO standards—that is our 

concern. But I appreciate the effort, and we are happy to follow up. 

The CHAIRMAN. I am reminded of Dave Cote’s ‘‘you can’t let the 

perfect be enemy of the good’’ here, because it is a major advance, 

and I think, therefore, it should be treated as such. 

Senator Wyden? 

Senator WYDEN. Thank you very much, Mr. Chairman. And I am 

glad we have you here for an additional minute, because I wanted 

to take just a minute before talking to the panel to acknowledge 

your extraordinary record on the trade issue. 

The reality is that Chairman Baucus was talking about global economics long before it became cool. And you held the position that 

I hold now, chairman of the Trade Subcommittee, and you basically 

moved the entire committee to focus on East Asia, to focus on 

Japan. 

And in the tradition of your great mentor, Mike Mansfield, you 

led. And what has been especially striking is, you showed a lot of 

us how to look at the trade toolbox in a creative kind of way, and 

I still recall when you brought in U2’s Bono to help get AGOA 

unstuck and create economic opportunity in Africa. 

So your work is not going to end when you go to China. But I 

just want, as we move toward the end of this hearing, to make sure 

people are aware and take this opportunity to really celebrate your 

exceptional record and your leadership on the international trade 

issue. 

For the panel, my bottom line today is pretty straightforward. 

Democrats and Republicans need to write a TPA that leads to better trade agreements and, in effect, can expand the winner’s circle 

in the international trade area so that Senator Casey’s constituents 

in Pennsylvania do not feel that they are getting the short end of 

38 

the stick, and the agreement works for, for example Oregon, where 

one out of six jobs depends on international trade, and the trade 

jobs often pay better than do the non-trade jobs because they reflect the higher level of productivity. 

Now, going into this challenge, we must face the reality that the 

economic landscape in 2014 is very different than in 2002 when the 

last TPA was passed. 

Senator Thune talked about our work on digital goods. The Internet is now the shipping lane of the 21st century, and our workers 

and businesses face a whole array of new challenges, particularly 

in the rise of state-owned enterprises and aggressive currency manipulation. So TPA is going to have to reflect these changes and 

be written so that future trade agreements, particularly those with 

Europe and Asia, are well-shaped. 

Now, I heard you talk to Chairman Baucus—and I apologize for 

running in and out of the room. I chair the Energy Committee and 

had some business there. And I have not heard, for example, your 

thoughts with respect to the economic challenges for your companies in Europe, which is a very big market. You touched on the 

challenges with Asia with Chairman Baucus. 

But as we close on this, if you could just highlight—and let us 

start with Europe, because I have not heard that mentioned. What 

are the big challenges there? And for those of you who want to pick 

up again on the discussion with respect to the challenges in Asia, 

I would be interested in that. And I think I have almost enough 

time to get all four of you in. And I feel badly, again, for being in 

and out this morning. 

Mr. Cote? 

Mr. COTE. When it comes to Europe, I really do think they are 

going to have a tough economy for at least another 3 years, because 

they still have major issues that they need to address. 

And I can tell you the way that we have planned in our own company is to assume that Europe grows about zero to 1 percent a 

year, and I think, unfortunately, that is what they are going to be 

dealing with for a while. It is difficult, but that is what they are 

going to have to deal with. 

Something like this—the agreement that we have talked about 

with Europe—would benefit both Europe and the U.S. at a time 

when both of us are lagging economically, because we are also 

planning in our own company by looking at the U.S. as being more 

of a 2.5-percent-type growth country for the next 3 years. 

This would do something to elevate both of our economies as a 

result of that and be good for the two biggest trading blocs in the 

world. 

Senator WYDEN. Very good. 

Mr. Allen? Just go right down the row. 

Mr. ALLEN. Thank you, Senator. Again, with different items, different markets, there are different situations involved. For the 

apple industry nationally, the biggest export markets are Mexico, 

Canada, Thailand, Asia, Vietnam—a very emerging market—and 

India. 

Again, the European market is not that strong because of their 

production of apples. So it is tough to answer that question. It is 

39 

a market for us, but it is not the emerging and growing market as 

the other ones are. 

Senator WYDEN. Ms. Stegemann? 

Ms. STEGEMANN. In Europe, we see more in terms of opportunities than challenges. It is a relatively new market for us. We are 

entering into a lot of northern and western European countries. 

There are great opportunities there, very high standards. 

Of course, I guess one of the challenges for us is being able to 

produce a product that meets very high standards for people who 

are used to having locally made goods—Germans think of themselves as exporters, not as importers. So to convince them that we 

know how to make a good product in the U.S. takes a little bit of 

selling. 

I would say in terms of challenges, of course tariffs come to mind. 

We manufacture a product that is expensive for us to make. By the 

time our distributor buys it from us, they have paid a lot for it, and 

then they need to make some money when they resell it. So, by the 

time it reaches the end user and they have paid VAT and tariffs, 

it becomes much more difficult for us to get our product into the 

European market in greater quantities. 

Senator WYDEN. My time is up. Mr. Cohen? 

Mr. COHEN. I think there are great opportunities to look at sustainable production and trade based upon, again, leveling up to 

many European standards. 

It was fascinating to hear Chancellor Merkel, a conservative, talk 

about all renewables within 10 years. They have much higher labor 

standards than in the U.S. in terms of freedom of association, collective bargaining rights—obviously, much higher standards. 

They have adopted all eight core ILO standards. So, whether it 

is environment or workers’ rights, they have much higher standards. We need to promote those, and they need to be the goals we 

talk about in TPA. 

Senator WYDEN. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. 

Senator Portman? 

Senator PORTMAN. I thank the chairman. And I want to congratulate you and Senator Hatch and Chairman Camp and the administration for working together on putting together a good bill on 

Trade Promotion Authority. 

I know the White House is not here today, so I will speak for 

them in saying that they support moving ahead with Trade Promotion Authority. In fact, they say, in this release I have in front 

of me, ‘‘We look forward to working with Democrats and Republicans alike to pass Trade Promotion Authority as soon as possible.’’ 

Broad bipartisan support. 

So I wish they were here, because they are going to be needed 

in order to get this done. Having been a U.S. Trade Representative, 

I know that it is required that the executive branch get engaged, 

and I know that they are going to. And I know from talking to Ambassador Froman, he is already talking to folks on both sides of the 

aisle. 

We have to get this done for our country. It is sad to me that 

since 2007, we have not had the ability to open up markets for the 

workers, farmers, and service providers that I now represent in 

40 

Ohio and around this country. We may disagree on some of the 

specifics, but let us be honest: not having this authority has resulted in other countries completing agreements without us, sometimes regional, sometimes bilateral, taking away our market share, 

and this is a huge problem right now. We have enough problems 

in our economy not to have the ability for us to export the best 

products, the best services in the world. 

Interestingly, when you look at the United States compared to 

other countries—exports as a percentage of our GDP—we are now 

tied with Ethiopia. There are only 12 countries behind us in the 

entire world. We are not punching above our weight. We are 

punching below our weight, as they say. We can do a lot more. 

With more exports, we have more jobs. Over a quarter of the 

manufacturing jobs in my home State of Ohio are now export jobs. 

And we need to access the 95 percent of consumers who live outside of our borders, as has been said today many times. 

This is the first administration since Franklin Delano Roosevelt 

not to either have Trade Promotion Authority in place or some 

other equivalent prior to the Trade Promotion Authority being in 

place. And I was delighted when they asked for it last year. They 

were also the first administration in the history of the United 

States since FDR not to have asked for it until that point. They finally asked for it, thank goodness, again, for the sake of our economy and our workers. 

Now, we have to get it done. I was U.S. Trade Representative. 

I have spoken on the floor with Senator Baucus and Senator Hatch 

about this, but I will tell you, the last best offer will not be on the 

table to complete agreements unless other countries know that we 

have this ability. 

Our system works differently than the vast majority of other 

countries, and they need to know that we are not going to nickel 

and dime an agreement that is thought over and contested and 

carefully negotiated and, in your worlds, whether it is labor negotiations or whether it is business negotiations, you see this all the 

time. 

You have to be able to say, okay, this is it—at least to go to Congress for an up or down vote. Ultimately, Congress has the ability 

to turn these things down, and we have come very close to doing 

that many times, as you know, and that is fair. The people’s voice 

needs to be heard. But we cannot compete in this global marketplace without this authority, and I am really, again, interested in 

working closely with the chairman and the future chairman, who 

just left, and Senator Hatch and others, to try to get this done. 

There were comments made earlier about how, because we have 

a trade deficit, it means that this USTR stuff, the opening of markets, does not work. Here are the facts. Only 10 percent of the 

world’s economy is comprised of countries with which we have a 

trade agreement—10 percent, that is all—and yet we send 46 percent of our exports to those countries. 

Think about that. We do not have a trade agreement with China. 

The talk earlier was about how we have a trade deficit. Yes, our 

trade deficit is made up primarily of two things. One is exports to 

the United States of energy, and we need to have a new energy policy for that, which we are making progress on with domestic 

41 

sources. And second is trade with China, and it needs to be on a 

level playing field. 

I fought, with my colleague, Senator Brown, and others, to help 

ensure that. I will continue to do that. I believe in enforcement. I 

believe it needs to be fair. 

But, folks, we cannot say that these things do not work when you 

look at the fact that in 2012, we had a $58-billion manufacturing 

goods trade surplus with the 20 FTA partners we have—a $58- 

billion trade surplus. They purchased over 10 times more goods per 

capita from the U.S. than non-trade partners. 

So that information needs to be out there as we talk about this. 

I really appreciate your testimony today. All four of you made important points. 

To Dave Cote, because you have a lot of workers in Ohio, at 21 

facilities, I just have one question for you. Because you do travel 

the world, you talk to a lot of folks about this. As you are talking 

to government and business leaders in other countries, how big a 

concern is it that we have not been engaged in trade, and what impact does it have, as a matter of fact, with your business and the 

people whom you represent, your workers, your stakeholders? 

Mr. COTE. It is a huge concern, and it is an opportunity for us 

as a country, and I think you stated it very well up-front. 

As I said in my testimony, the global economy has changed significantly over the last 20 years and is going to change even more 

significantly in the next 20. And a lot of these countries that we 

refer to as developing countries or developing regions, in 20 years 

are going to represent almost half of the global economy. 

And, if we are not participating in free trade agreements with 

that half of the world economy, that puts us behind a lot of others 

who are moving in that direction. So it is important for our growth 

as a country and for the prosperity and jobs in the country for us 

to be out there doing this. I completely agree. 

Senator PORTMAN. It is an important point, and that is one reason we need to complete some agreements with some of those countries. 

We mentioned earlier that we do not have an agreement with 

China, or Brazil for that matter, or India, countries that are growing—Malaysia, Indonesia, and so on. So there is an opportunity 

here to do more. 

Specifically, Mr. Chairman, I do want to mention the health care 

tax credit issue. We talked about this when we were debating the 

SGR, and, at that time, you indicated that there would be an opportunity to discuss including this health coverage tax credit with 

an extension of TAA, which may well be part of a TPA discussion. 

I offered a bipartisan amendment, along with Senator Brown and 

Senator Stabenow, to extend this health care tax credit. The reason 

this is so important is that it is critical to thousands of workers 

whose pension plans were taken over by the PBGC, the Pension 

Benefit Guaranty Corporation, and are now struggling to pay their 

health bills, including thousands of retired Delphi workers in Ohio 

and across the country. 

So I would hope that we could have a commitment as we move 

forward with this that we do take the opportunity to also extend 

42 

the health care tax credit if we do move forward with TPA and the 

likelihood of TAA being involved with that in some respect. 

I know I am over time. I appreciate, again, your testimony here 

today and look forward to working with all of you on this going forward. 

Thank you, Senator Hatch. 

Senator HATCH [presiding]. Thank you, Senator Portman. 

I have to say, we are very lucky to have Senator Portman on this 

committee, with his experience as the Trade Representative of our 

country. He adds a great deal to this committee, and I am grateful 

to have him here. 

Let me just ask a couple more questions, and then we will finish 

up. 

Did you get enough time, Senator Portman? Did you have enough 

time? Did you have anything else you would like to ask? 

Senator PORTMAN. I am good. Thank you. 

Senator HATCH. Ms. Stegemann, let me just turn to you. The Finance Committee received written testimony from J&J, Johnson 

and Johnson, in strong favor of our bill. J&J is a member of the 

Alliance for Healthcare Competitiveness, AHC. 

A group of 19 leading firms and nonprofits involved in American 

health belong to that organization. In their written testimony, they 

note that health care is one of the largest and fastest-growing sectors of the world economy, currently valued at $6 trillion in 2010 

and likely to surpass $8.5 trillion by 2015. They also note that the 

United States is uniquely positioned to take advantage of this market if many of the trade objectives outlined in our bill become law, 

and it will be of great advantage to our country. 

Now, do you agree that health and rehabilitative services represent significant export opportunities for the United States, and 

do you agree that our bill will help not only large companies such 

as Johnson and Johnson, but also smaller companies such as yours, 

to access these growing opportunities? 

Ms. STEGEMANN. Absolutely. And thank you for the opportunity, 

Senator Hatch, to comment on this. 

Yes. Health care, particularly in terms of rehabilitation, is a 

growing field. In terms of just demographics, the world is aging everywhere, not just in the U.S. And so there are growing opportunities for big and small companies to participate in the commercial 

opportunities that this creates. 

I also would like to mention that in my experience—and I have 

traveled all over the world in the last 5 years with this job—over 

and over again, I see how American companies and the U.S., in 

general, are actually leaders in terms of addressing the needs of 

people with physical disabilities and the aging population. 

So our company is also kind of at the forefront of this. We have 

decided to focus on creating a product that addresses the needs of 

the aging population and people with special needs. And the world 

is looking to us. 

Many people whom I have talked to in hospitals and at trade 

shows around the world have said, ‘‘We are not like you in the 

U.S., where a person in a wheelchair feels comfortable going out 

and being seen.’’ In many parts of the world, people like that feel 

like they have to hide at home. 

43 

So we have an opportunity not only to act on the commercial opportunities that are out there, but also to show leadership to the 

rest of the world through the products and services, and even the 

legislation, that we have in the U.S. that address and protect the 

needs of people in that population. 

Senator HATCH. Thank you. I am very grateful to hear your testimony regarding the benefits international trade has brought to 

your company and to other companies of similar size. 

I hear a lot of similar stories from small and medium-sized businesses in my own home State of Utah, and one problem that many 

of them face, as you have mentioned, is trade secret theft. This is 

a growing problem around the world, and it is estimated to cost 

U.S. businesses literally billions of dollars every year. 

Now, our bill specifically addresses this problem by providing for 

high standards for the protection of intellectual property rights, including new objectives prohibiting foreign government involvement 

in the theft of trade secrets, limiting government’s ability to collect 

undisclosed proprietary information, and directing governments to 

protect any undisclosed information they do collect. 

So my question to you is: do you agree that it is important for 

TPA to address the problems of trade secret theft so that companies like yours can safely export your equipment overseas? 

Ms. STEGEMANN. Definitely. That is a definite ‘‘yes.’’ As I mentioned before, being a small company, we do not have our own legal 

staff. If we are ever faced with any kind of a threat, we have to 

go to a third party or to a consultant. 

So we really rely on our government and our negotiating team 

to look out for the interests of companies like ours that do not have 

a global staff. We do not have offices in other parts of the world 

with staff who can advise us on legal issues there. We very much 

look to our government to have a free trade agreement that looks 

out for us specifically in this field. 

Senator HATCH. Thank you. This has been a particularly good 

panel, as far as I am concerned. All of you contributed much to this 

hearing. 

Let me just ask one more question of you, Mr. Cohen. I have enjoyed your testimony, I enjoy you personally, and we do not agree 

on some things, but that is okay. But this is more of a comment 

than a question, I suppose. 

I read your testimony, and sometimes I feel like you and I are 

living in an alternate universe. Rather than trade agreements costing U.S. jobs, company after company comes to me and tells me 

that trade agreements helped them create and retain jobs, both 

here and abroad. 

In fact, I just received a letter from the Telecommunications Industry Association, where they write that, ‘‘Experience shows that 

the effects of prior trade agreements on telecommunications exports are both demonstrable and dramatic,’’ and that, ‘‘although 

countries having trade agreements with the United States currently represent only 10 percent of the overseas economy, they account for 35.7 percent of U.S. exports in telecommunications equipment.’’ 

Now, the National Association of Manufacturers tells a similar 

story, noting that, while the 20 countries with which the United 

44 

States has concluded trade agreements under TPA account for just 

9 percent of global GDP, they purchase nearly half of all manufacturing exports. 

These statistics clearly show we export more manufactured goods 

to our trade agreement partners than to non-trade agreement partners. These facts seem to fly in the face of your argument that 

trade costs jobs, and I simply disagree with your premise. I personally do not think that welding ourselves off from the global economy will help our economy grow, and I fear that if we do not act 

soon, the U.S. will fall further and further behind our competitors. 

Now, let me just say this. I am going to re-read your testimony, 

and I am going to look for what we can do, where we can find common ground. But I have to say, this agreement goes a long way toward, I think, creating jobs in America that you have every privilege in the world of unionizing, and many of which are unionized. 

So, I do not mean to lecture you. I am not trying to do that. I 

just want you to be aware that I feel really deeply about this, and 

yet I respect a number of the things that you said as well. And we 

also run into the risk of, can we impose our high standards on others, and, of course, the trade union movement would love to be able 

to do that, in many respects. But we would never get an agreement 

anywhere if we started doing that. 

The reason I mentioned Irving Brown is because he understood 

all that, and the whole world listened to him. 

Now, hardly anybody knows Irving Brown today, and it is a doggone crying shame. He was one of the greatest men I met in my 

whole time here. And he disagreed with me on a number of things, 

but we agreed on a lot too. In fact, because I went over to Geneva 

and helped him resolve a major problem that would have forced us 

to withdraw from the ILO, the largest labor organization in the 

world, the largest U.N.-affiliated organization, we were quite close. 

And I had done a number of other things internationally. I 

helped raise money—and helped raise paper, mimeograph machines, all kinds of things—for Solidarnosc over in Poland, when 

Lech Walesa was getting tarnished by the Soviet people, and 

helped to develop the National Endowment for Democracy. I was 

one of the key people who developed it, was on the board for the 

first 2 years, which is composed of three groups: business, labor, 

and government. 

I will never forget, Lane Kirkland, who was then the head of the 

AFL–CIO, said to me, he said, ‘‘Senator, if only you were as good 

in domestic policy as you are in foreign policy.’’ And I turned to 

him, and I said, ‘‘Lane, I was thinking precisely the same thing 

about you.’’ And he laughed. He caught himself, and then he got 

a big grin on his face. We had a great relationship in those years. 

He also was one of the great people on our foreign policy. 

So I would like you to take back to our friends in the labor movement—and by the way, I am one of the few guys in the whole Congress who actually earned an AFL–CIO union card in a skilled 

trade. So I will never forget that. But I would like you to take back 

to them that this is going to create jobs. This is going to help them. 

This is not going to hurt them. And I do admire, in many ways, 

their position, though it is very difficult to implement, of trying to 

45 

get other countries to be as fair to their labor employees as we are, 

and even trying to get us to be more fair, and I respect that. 

But I would like to see organized labor get a little bit more behind these international trade agreements, because I think they 

create more jobs. I do not just think so—I know it means more jobs. 

I can make a tremendous case for it. 

But just know that I respect you and respect the leadership, and 

I appreciate you coming here today and giving us your point of 

view. 

I particularly appreciate you others as well. I will tell you, Ms. 

Stegemann, you represent every small business in America today 

that has any chance of exporting. 

The apple industry, that is extremely important not just to New 

York, but so many other States on the west coast and east coast. 

And of course, for Honeywell, I just have nothing but admiration. 

So we appreciate all of you being here. I want to come down and 

shake hands with each of you, and thank you for being here. 

With that, we will end this hearing and hopefully get this bill to 

the floor. 

[Whereupon, at 12:25 p.m., the hearing was concluded.] 

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