```

[Senate Hearing 109-106]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 109-106
 
     NOMINATION OF CARLOS M. GUTIERREZ TO BE SECRETARY OF COMMERCE

=======================================================================

                                HEARING

                               before the

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                            JANUARY 5, 2005

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation

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22-734                      WASHINGTON : 2005
_____________________________________________________________________________
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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                     TED STEVENS, Alaska, Chairman
JOHN McCAIN, Arizona                 DANIEL K. INOUYE, Hawaii, Co-
CONRAD BURNS, Montana                    Chairman
TRENT LOTT, Mississippi              JOHN D. ROCKEFELLER IV, West 
KAY BAILEY HUTCHISON, Texas              Virginia
OLYMPIA J. SNOWE, Maine              JOHN F. KERRY, Massachusetts
GORDON H. SMITH, Oregon              BYRON L. DORGAN, North Dakota
JOHN ENSIGN, Nevada                  BARBARA BOXER, California
GEORGE ALLEN, Virginia               BILL NELSON, Florida
JOHN E. SUNUNU, New Hampshire        MARIA CANTWELL, Washington
JIM DeMint, South Carolina           FRANK R. LAUTENBERG, New Jersey
DAVID VITTER, Louisiana              E. BENJAMIN NELSON, Nebraska
                                     MARK PRYOR, Arkansas
             Lisa J. Sutherland, Republican Staff Director
        Christine Drager Kurth, Republican Deputy Staff Director
                David Russell, Republican Chief Counsel
   Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
   Samuel E. Whitehorn, Democratic Deputy Staff Director and General 
                                Counsel
             Lila Harper Helms, Democratic Policy Director

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on January 5, 2005..................................     1
Statement of Senator Allen.......................................    25
Statement of Senator DeMint......................................    20
Statement of Senator Dorgan......................................    21
Statement of Senator Inouye......................................    10
Statement of Senator Lautenberg..................................    16
    Prepared statement...........................................    17
Statement of Senator Lott........................................    31
    Prepared statement...........................................    32
Statement of Senator Bill Nelson.................................    33
Statement of Senator E. Benjamin Nelson..........................    34
Statement of Senator Pryor.......................................    11
    Prepared statement...........................................    12
Statement of Senator Rockefeller.................................    23
Statement of Senator Snowe.......................................    27
    Prepared statement...........................................    27
Statement of Senator Smith.......................................    14
    Prepared statement...........................................    15
Statement of Senator Stevens.....................................     1
Statement of Senator Vitter......................................    18

                               Witnesses

Gutierrez, Carlos M., Nominee to be Secretary of Commerce........     5
    Prepared statement...........................................     7
Levin, Hon. Carl, U.S. Senator from Michigan.....................     1
    Prepared statement...........................................     2
Stabenow, Hon. Debbie A., U.S. Senator from Michigan.............     3
    Prepared statement...........................................     4

                                Appendix

Response to written questions submitted to Carlos M. Gutierrez 
  by:
    Hon. George Allen............................................    49
    Hon. Conrad Burns............................................    42
    Hon. Maria Cantwell..........................................    61
    Hon. Daniel K. Inouye........................................    50
    Hon. Frank R. Lautenberg.....................................    68
    Hon. Trent Lott..............................................    45
    Hon. John McCain.............................................    41
    Hon. Mark Pryor..............................................    69
    Hon. John D. Rockefeller.....................................    56
    Hon. Gordon H. Smith.........................................    46
    Hon. Olympia J. Snowe........................................    45

     NOMINATION OF CARLOS M. GUTIERREZ TO BE SECRETARY OF COMMERCE

                              ----------                              

                       WEDNESDAY, JANUARY 5, 2005

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 4 p.m. in room 
SR-253, Russell Senate Office Building, Hon. Ted Stevens, 
Chairman of the Committee, presiding.

            OPENING STATEMENT OF HON. TED STEVENS, 
                    U.S. SENATOR FROM ALASKA

    The Chairman. The hearing on the nomination of Carlos 
Gutierrez to be the Secretary of Commerce will come to order. 
It's a pleasure to have some new Members. I'll welcome them 
later. We'll begin now, and in order that Senator Levin may 
return, Senator Inouye and I will make our statements after you 
make yours, Carl.
    I'm pleased to call the Senator from Michigan to introduce 
our nominee.

                 STATEMENT OF HON. CARL LEVIN, 
                   U.S. SENATOR FROM MICHIGAN

    Senator Levin. Well, I'm very grateful for that, Senator 
Stevens, Senator Inouye.
    Senator Pryor, I see you're in your traditional position on 
the Committee. We lost Senator Pryor to the Armed Services 
Committee, where he was sitting in a very similar position; 
and, therefore, we were unable to retain him. But he'll make a 
terrific contribution to this Committee.
    But, Mr. Chairman, congratulations to you on your new 
duties here. And, Senator Inouye, it's always great to see you.
    And it's particularly a pleasure for me to be with Carlos 
Gutierrez here this afternoon. He is somebody that we're very, 
very proud of in Michigan, as CEO and president of the Kellogg 
Company. He has done wonderful things with that company. It's 
on a very strong financial footing, for many reasons; 
particularly, the community that it is centralized and 
localized in, but also because of his leadership.
    His experience in running various parts of the Kellogg 
Company across this globe will help him to be a tremendous 
Secretary of Commerce. He worked, really, up from the bottom 
rung of the Kellogg ladder. He came to the United States when 
he was 7 years old, and his first job with Kellogg's was 
delivering cereal from a van, stocking the shelves, I believe, 
in Mexico, and working himself up from there so that, during 
his career with Kellogg's, he has managed several international 
divisions, including general manager of Kellogg of Mexico, 
president and CEO of Kellogg Canada, president of Kellogg Asia 
Pacific. And this vast business experience in the United States 
and abroad has given him a unique understanding of our 
country's role and the challenges that we face in the global 
marketplace.
    We need greater access to foreign markets; he knows that 
firsthand. We need to address the soaring trade deficit; he 
understands that firsthand. And he also, in addition to coming 
from mid-America, the Heartland of America, in a mid-sized 
town, Battle Creek, he understands the values of mid-America 
and the value of hard work. He also understands some of the 
challenges that we face in the manufacturing sectors of 
America, because--Kellogg being, of course, a major 
manufacturer.
    Mr. Gutierrez also represents the quintessential American 
dream--as I said, emigrating to America when he was 7 years 
old, from Cuba, and then working himself up the ranks of 
Kellogg.
    His story is as American as cornflakes and baseball, and 
he's a fan of both. Of course, being born in Cuba, I think he 
probably had that love of baseball even before he reached here, 
but it's been emphasized, I'm sure, significantly as an 
American.
    His home, in Battle Creek, Michigan--again, a medium-sized 
mid-western city in our heartland--he's got a very firm 
grounding in the values and strengths that make our country 
great, and he's got a firm grasp of the challenges that face 
American manufacturers in the global economy that we are in.
    So I know this Committee will address this nomination 
speedily, as well as thoroughly. I couldn't be more pleased 
than to be here for just these few minutes to introduce Carlos 
Gutierrez to our colleagues. And I see Senator Stabenow is now 
at my side. So for both of us, representing Michigan, it is a 
real privilege and an honor to represent a man who stands for 
so many of the values that we believe in here in this country, 
and that we represent in the U.S. Senate.
    And, again, I thank you very much, Mr. Chairman, for 
allowing me to go first so that I could return to the Armed 
Services Committee.
    [The prepared statement of Senator Levin follows:]

   Prepared Statement of Hon. Carl Levin, U.S. Senator from Michigan

    Mr. Chairman and Members of the Committee, it is my 
privilege to introduce President Bush's Commerce secretary 
nominee, Carlos Gutierrez, Chairman of the Board and CEO of 
Michigan's Kellogg Company.
    I am delighted with this choice and heartily support the 
nomination of Mr. Gutierrez to be Secretary of Commerce. Mr. 
Gutierrez has vast business experience in the United States and 
abroad, which gives him a unique understanding of our country's 
role and challenges in the global marketplace.
    During his time at Kellogg, Mr. Gutierrez managed several 
of the company's international divisions, including serving as 
the general manager of Kellogg of Mexico, the president and CEO 
of Kellogg Canada Inc., and the president of Kellogg Asia-
Pacific. These experiences provide him with the expertise 
needed to address our soaring trade deficit and create a 
climate where U.S. products have the same access to foreign 
markets as we give in this county to foreign products.
    Mr. Gutierrez represents the quintessential American dream, 
emigrating to this country with his parents at the age of 7 
from Cuba and working his way up the ranks of the Kellogg 
company, starting with selling Kellogg cereal from a van, 
stocking the shelves of his customers, to becoming the highly 
respected President and CEO of a top American Fortune 500 
Company. His story is as American as Corn Flakes and baseball, 
of both of which he is a passionate fan.
    Mr. Gutierrez's home is in Battle Creek, Michigan, a 
medium-sized, mid-western city in America's heartland. Mr. 
Gutierrez has a firm grounding in many of the values and 
strengths that make this country great. He also has a firm 
grasp of some of the challenges facing American manufacturers.
    The U.S. has battled for decades to open foreign markets to 
U.S. goods. Carlos Gutierrez knows the ropes of those markets 
and can provide this nation with that invaluable experience. I 
have confidence that he will recommend firm action both to pry 
open foreign markets now closed or partially closed to American 
goods as well as to reinvigorate America's manufacturing base.
    I urge the Committee to report Mr. Gutierrez's nomination 
favorably as soon as possible and I look forward to working 
with him in this new and important role as Secretary of 
Commerce.

    The Chairman. Thank you, Senator Levin. We're delighted to 
have you come.
    Senator Stabenow, we'd be pleased to have your remarks 
concerning the nominee.

             STATEMENT OF HON. DEBBIE A. STABENOW, 
                   U.S. SENATOR FROM MICHIGAN

    Senator Stabenow. Thank you, Mr. Chairman and Ranking 
Member Inouye.
    I'm very pleased to be here today with all of you. And I do 
also want to clarify--when Senator Levin talks about 
``cornflakes,'' it is ``Kellogg Corn Flakes'' that we are 
speaking about here. That's important.
    But I am very pleased to be here to support the nomination 
and present to you a fellow Michiganian as our next Secretary 
of Commerce. Carlos Gutierrez is a man with a remarkable story. 
As you have heard on many occasions, his impressive background 
reveals a shining example of an individual who came to America, 
to our nation of immigrants, and enjoyed a very real 
opportunity to pursue the American Dream, which he continues to 
pursue today.
    Mr. Gutierrez was born in Havana, Cuba. His father was a 
pineapple merchant in Havana before he brought his family to 
the United States. From this humble beginning, Mr. Gutierrez 
has risen to become one of the most respected and influential 
Latino leaders in American business today, and, I would say, 
most respected leaders in business today, as well.
    Our Secretary-designate first joined Kellogg in Mexico City 
at age 20, with an entry-level sales and delivery job. And by 
age 30, Mr. Gutierrez was general manager of Kellogg's Mexican 
operations, truly an impressive story.
    In 1982, Kellogg promoted and transferred him to the 
corporate headquarters in Battle Creek, Michigan. There, he 
continued to rise through the executive ranks to become 
Kellogg's president and chief executive officer in April 1999.
    Mr. Gutierrez has been an effective and visionary leader at 
Kellogg. When he began his leadership, sales were flagging. He 
turned things around, he reduced the company's debt--we could 
use your help--and increased net sales by 43 percent, helping 
to make Kellogg the number-one cereal-maker in the United 
States.
    Now, more than ever, our nation needs a strong leader to 
create jobs here at home. The loss of 2.8 million manufacturing 
jobs, and increased outsourcing, continues to hurt millions of 
American families. And we need his help in Michigan, as well, 
where we've lost over 225,000 jobs over the last 4 years. That 
number puts Michigan near the top of the list of states in the 
country with the highest number of recent job losses. And I'm 
so appreciative of his insight, coming from Michigan.
    With his experience, Mr. Gutierrez is, without a doubt, the 
right man for the job. His journey from the bottom of the 
corporate ladder to the top shows how big dreams can triumph 
over traditional barriers, and he draws on the lessons of his 
journey to help create new opportunities for America's next 
generation of leaders.
    Mr. Gutierrez is co-trustee of the W.K. Kellogg Foundation, 
which is such an important source of investment and--creating 
opportunities in Michigan, as well as around the world. In 
1997, the Foundation launched one of the single largest 
philanthropic efforts in the country to increase educational 
opportunities for Latinos, a group with one of the top high 
school dropout rates in the United States.
    That's one of many, many reasons that I am pleased that 
Carlos Gutierrez will be a member of the President's Cabinet. I 
wish him the best as he takes on the challenges of this new 
assignment, working on business and commerce issues that affect 
families in Michigan, across the country, and around the world.
    Mr. Chairman, I am pleased to be here to support the 
nomination of Carlos Gutierrez, and I hope the Committee and 
the full Senate will confirm him as soon as possible.
    [The prepared statement of Senator Stabenow follows:]

   Prepared Statement of Hon. Debbie A. Stabenow, U.S. Senator from 
                                Michigan

    Thank you Mr. Chairman and Ranking Member Inouye. I am very pleased 
to be here today with all of you, and I do also want to clarify that 
when Senator Levin talks about corn flakes, it is Kellogg's Corn Flakes 
that we are speaking about here. That's important.
    But I am very pleased to be here to support the nomination and 
present to you a fellow Michiganian as our next Secretary of Commerce.
    Carlos Gutierrez is a man with a remarkable story, as you have 
heard on many occasions. His impressive background reveals a shining 
example of an individual who came to America--to our nation of 
immigrants--and enjoyed a very real opportunity to pursue the American 
dream, which he continues to pursue today.
    Mr. Gutierrez was born in Havana, Cuba. His father was a pineapple 
merchant in Havana before he brought his family to the United States. 
From this humble beginning, Mr. Gutierrez has risen to become one of 
the most respected and influential Latino leaders in American business 
today--and I would say, most respected leaders in business today as 
well.
    Our Secretary designate first joined Kellogg in Mexico City at age 
20 with an entry-level sales and delivery job. And by age 30, Mr. 
Gutierrez was general manager of Kellogg's Mexican operations.
    Truly an impressive story.
    In 1982, Kellogg promoted and transferred him to the corporate 
headquarters in Battle Creek, Michigan. There, he continued to rise 
through the executive ranks to become Kellogg's president and chief 
executive officer in April of 1999.
    Mr. Gutierrez has been an effective and visionary leader at 
Kellogg. When he began his leadership, sales were flagging. He turned 
things around. He reduced the company's debt. We could use your help . 
. . and increased net sales by 43 percent--helping to make Kellogg the 
number-one cereal maker in the United States.
    Now more than ever, our nation needs a strong leader to create jobs 
here at home. The loss of 2.8 million manufacturing jobs and increased 
outsourcing continues to hurt millions of American families.
    And we need his help in Michigan as well, where we've lost over 
225,000 jobs over the last four years. That number puts Michigan near 
the top of the list of states in the country with the highest number of 
recent job losses.
    And I'm so appreciative of his insight, coming from Michigan.
    With his experience, Mr. Gutierrez is without a doubt the right man 
for the job.
    His journey from the bottom of the corporate ladder to the top 
shows how big dreams can triumph over traditional barriers. And he 
draws on the lessons of his journey to help create new opportunities 
for America's next generation of leaders.
    Mr. Gutierrez is co-trustee of the W.K. Kellogg Foundation, which 
is such an important source of investment and creating opportunities in 
Michigan as well as around the world.
    In 1997, the foundation launched one of the single largest 
philanthropic efforts in the country to increase educational 
opportunities for Latinos--a group with one of the top high-school 
dropout rates in the United States.
    That's one of many, many reasons that I am pleased that Carlos 
Gutierrez will be a member of the President's Cabinet. I wish him the 
best as he takes on the challenges of this new assignment, working on 
business and commerce issues that affect families in Michigan, across 
the country, and around the world.
    Mr. Chairman, I am pleased to be here to support the nomination of 
Carlos Gutierrez. And I hope the Committee and the full Senate will 
confirm him as soon as possible.
    Thank you.

    The Chairman. Thank you very much, Senator.
    Mr. Gutierrez, you come very well recommended by your 
state's Senators, and I'm delighted that this first hearing of 
this Congress starts off on a truly bipartisan basis, with the 
Senators endorsing the President's nomination that you take the 
position of Secretary of Commerce.
    This is, sort of, a different Committee. Senator Inouye and 
I have served together now for 3\1/2\ decades or more, and we 
have formed a partnership, really, in many ways, and conduct 
our business in a different way. So I will be greeting the new 
Members here soon, and make some comments. But we hope that we 
can start off listening to witnesses. We'd like to hear your 
statement first, and then we'll make our comments.
    Mr. Gutierrez. Thank you, Mr. Chairman.
    The Chairman. Mr. Secretary?

 STATEMENT OF CARLOS M. GUTIERREZ, NOMINEE TO BE SECRETARY OF 
                            COMMERCE

    Mr. Gutierrez. Thank you, Mr. Chairman.
    If I may, sir, I would like to briefly introduce my family, 
who's with me today. Sitting behind me is my wife Edilia, of 25 
years. We met in Mexico, at the time when I was there with 
Kellogg. To her left is our youngest daughter, Karina, who is 
18 and currently lives in Florida. And to her left, is Erica, 
21, a resident of Michigan. And then, to her left, is my son, 
Carlos, Jr., who is 24. And thank you for allowing me to 
introduce them.
    The Chairman. Well, we're delighted to have you with us, as 
members of the future Secretary's family, and we note the 
beautiful daughters, Mr. Secretary.
    [Laughter.]
    Mr. Gutierrez. Thank you, sir. Thank you. I think they've 
been harder to manage than the Kellogg Company, sir.
    [Laughter.]
    Mr. Gutierrez. Thank you, Mr. Chairman.
    Mr. Chairman, Senator Inouye, and Members of the Committee, 
I thank you very much for the opportunity to appear before you 
today. I also want to thank Senators Levin and Stabenow for 
those very kind and generous introductions. I'm grateful for 
your courtesy and support, and I'm very grateful for the 
kindness shown to me by Members of Congress during this 
process. I have welcomed the advice--it's been very helpful--
and the views that many of you have shared with me, in person 
or by phone.
    Before proceeding, if I may, I would like to acknowledge 
how humbled and honored I am that President Bush would ask me 
to work in his Cabinet. If confirmed, I will be proud to work 
under his leadership.
    I am especially appreciative of the tremendous opportunity 
to build on the accomplishments achieved at the Commerce 
Department under Secretary Evans' distinguished and exemplary 
leadership, as well as those of his predecessors.
    Today, I would like to give you a better sense, briefly, of 
who I am and what I believe I can do for our country as 
Secretary of Commerce, if given that opportunity. Most of all, 
I hope to leave you with a clear understanding of my commitment 
to the ideals of our country, and of my strong support for the 
Commerce Department's mission of creating conditions for 
economic growth and opportunity by promoting innovation, 
entrepreneurship, competitiveness, and environmental 
stewardship.
    My passion for this country is rooted in the opportunities 
I received after coming to America as a young Cuban refugee 
with my family. We arrived with few material possessions, but 
we had many dreams at that time.
    My parents instilled in me a belief that, in the United 
States, one could achieve almost anything through hard work, 
determination, and the hunger and the humility to learn. They 
taught me the noble American values of personal liberty and 
personal responsibility, and the importance of both to our 
democratic and free-enterprise system.
    When my parents and my brother and I became U.S. citizens, 
in a Brooklyn, New York, courtroom, in 1965, I can assure you, 
I believe it was one of my father's proudest moments, as it was 
when my whole family and children became U.S. citizens.
    After I joined the Kellogg Company, in 1975, I focused on 
doing my very best at each job, as a way of preparing myself 
for the opportunities that may arise in the future. This 
approach served me well, leading to wonderful experiences in 
Kellogg, including important managerial assignments on four 
continents. Ultimately, I assumed the roles of Chairman and 
Chief Executive Officer. But little did I imagine--little did I 
imagine--that I would be preparing for the challenges of public 
service as Secretary of Commerce.
    I welcome the prospect of this new challenge and the 
opportunity to give back something to the country that has 
provided us with so much. My journey, from young refugee to the 
leadership of a great American company, has prepared me to do 
so by engraining in me a deep appreciation of the individual 
contributions made by--and the challenges facing--employees at 
all levels of American industry. I also developed a keen sense 
of the forces of global competition that will continue to 
reshape our business environment in the years to come.
    Drawing on these experiences, Mr. Chairman, I would hope to 
pursue several goals as Secretary of Commerce, including, one, 
fostering the environment in which our free-enterprise system 
will flourish by serving as an advocate for reducing trade and 
regulatory barriers that unreasonably burden our businesses and 
their workers; two, collaborating with the U.S. Trade 
Representative both in the negotiation of sound trade 
agreements that will open markets to U.S. exports and in 
vigorous challenges to policies and practices abroad that 
violate those agreements; three, enhancing management of our 
marine resources, especially our marine fisheries and 
threatened marine ecosystems; and, finally, developing greater 
analytical and predictive capabilities concerning the global 
climate system, including an enhanced forecasting capability 
with regard to potentially hazardous weather and maritime 
conditions. And I know this is a subject that is very much top-
of-mind, given the recent tragedies in several countries off 
the Indian Ocean.
    I recognize that the continued success of the Commerce 
Department will require collaboration across all departments of 
the U.S. Government and with Congress. If confirmed, I would 
serve as a committed and inclusive leader that builds bridges 
across boundaries, whether it be political, cultural, economic, 
or geographic. I would work with all stakeholders to generate 
effective ideas and actions. And just as I have insisted at the 
Kellogg Company, I pledge to maintain the highest standards of 
integrity in the manner in which the Department conducts its 
business.
    I have been blessed with the rewards of American freedom, 
and I have a great confidence in the direction of the country 
and the prosperity of this great country. I am eager to work 
with the Members of this Committee and other Members of 
Congress to find ways to help our fellow Americans realize 
their dreams, as well.
    In closing, I wish to thank my family for their support in 
this new endeavor. I believe if we--if confirmed, Mr. Chairman, 
and we move to Washington, that would be about our 15th move 
since my wife and I were married. They have supported me in all 
others, and we have undertaken this whole journey together.
    I would also be remiss if I did not recognize and thank the 
25,000 employees of the Kellogg Company who have had a great 
deal to do with my personal success.
    I thank this Committee, again, for the time provided to 
address you today. And I also want to thank President Bush for 
the confidence that he has expressed in me.
    That concludes my statement. Thank you, again. And I would 
be pleased to address any of your questions at this point in 
time.
    [The prepared statement of Mr. Gutierrez follows:]

 Prepared Statement of Carlos M. Gutierrez, Nominee to be Secretary of 
                                Commerce

    Mr. Chairman, Senator Inouye, and Members of the Committee:
    Thank you very much for the opportunity to appear before you this 
morning. And thank you, Senator Levin and Senator Stabenow, for those 
kind and generous introductions. I am grateful for your courtesy and 
support, as I am for the kindness shown to me by all Members of 
Congress so far in this process. I have welcomed the helpful advice and 
views many of you have shared with me, in person or by phone.
    Hearing your perspectives and your ideas has given me an even 
greater appreciation for the significant responsibilities of the 
Secretary of Commerce, and for the important work that lies ahead. 
There clearly is a shared understanding of the economic challenges that 
our nation faces, both at home and abroad; and just as important, a 
sincere commitment to work together to create an even more robust 
economy, one in which all of our fellow Americans fully share. If 
confirmed, I very much hope to work closely with the Members of this 
Committee to advance the best interests of our country.
    Before proceeding, if I may, I would like to acknowledge how 
humbled and honored I am that President Bush would ask me to work in 
his Cabinet. If confirmed, I would be proud to work under his 
leadership. And I am especially appreciative of the tremendous 
opportunity to build on the accomplishments achieved at the Commerce 
Department under Secretary Evans' distinguished and exemplary 
leadership, as well as those of his predecessors.
    Today, I would like to briefly give you a better sense of who I am 
and what I believe I can do for our country as Secretary of Commerce if 
given that opportunity. Most of all, I hope to leave you with a clear 
understanding of my commitment to the ideals of our country and of my 
strong support for the Commerce Department's mission of creating 
conditions for economic growth and opportunity by promoting innovation, 
entrepreneurship, competitiveness, and environmental stewardship.
    My passion for this country is rooted in the opportunities I 
received after coming to America as a young Cuban refugee with my 
family. We arrived with few material possessions, but we had many 
dreams. My parents instilled in me the belief that in the United 
States, one could achieve almost anything through hard work, 
determination, and the hunger and the humility to learn. They taught me 
the noble American values of personal liberty and personal 
responsibility, and the importance of both to our democratic and free 
enterprise system. When my parents and their two sons became U.S. 
citizens in a Brooklyn, NY courtroom in 1965, it was one of my father's 
proudest moments.
    After I joined the Kellogg Company in 1975, I focused on doing my 
very best at each job, as a way of preparing for whatever the next 
opportunity would be. This approach served me well, leading to 
wonderful experiences in Kellogg, including important managerial 
assignments on four continents. Ultimately, I assumed the roles of 
Chairman and Chief Executive Officer--but my approach remained the 
same. I've worked hard at my current positions. But little did I 
imagine that I might be preparing for the challenges of public service, 
as Secretary of Commerce!
    I welcome the prospect of this newest challenge, and the 
opportunity to give back something to the country that has provided me 
with so much. My journey from young refugee to the leadership of a 
great American company has prepared me to do so, by engraining in me a 
deep appreciation of the individual contributions made by--and the 
challenges facing--employees at all levels of American industry. I also 
developed a keen sense of the forces of global competition that will 
continue to reshape our business environment in the years to come.
    Drawing on my experiences, I thus hope to pursue several goals as 
Secretary of Commerce, including:

        1) Fostering the environment in which our free enterprise 
        system will flourish, by serving as an advocate for reducing 
        trade and regulatory barriers that unreasonably burden our 
        businesses and their workers;

        2) Collaborating with the U.S. Trade Representative both in the 
        negotiation of sound trade agreements that will open markets to 
        U.S. exports, and in vigorous challenges to policies and 
        practices abroad that violate those agreements;

        3) Enhancing management of our marine resources, especially our 
        marine fisheries and threatened marine ecosystems; and

        4) Finally, developing greater analytical and predictive 
        capabilities concerning the global climate system, including an 
        enhanced forecasting capability with regard to potentially 
        hazardous weather and maritime conditions.

    I recognize that the continued success of the Commerce Department 
will require collaboration across all departments of the United States 
Government and with the Congress. If confirmed, I would serve as a 
committed and inclusive leader that builds bridges across boundaries--
whether it be political, cultural, economic, or geographic. I would 
work with all stakeholders to generate effective ideas and actions. And 
just as I have insisted at the Kellogg company, I pledge to maintain 
the highest standard of ethics in the manner in which the Department 
conducts its business.
    I have been blessed with the rewards of America's freedoms, and I 
have great confidence in our nation's direction and future prosperity. 
I am eager to work with the Members of this Committee, and other 
Members of Congress, to find ways to help our fellow Americans realize 
their dreams as well.
    In closing, I wish to thank my family for their support in this new 
endeavor, as they have supported me in all others we previously have 
undertaken together. I would also be remiss if I did not recognize and 
thank the 25,000 employees of the Kellogg Company who have had a great 
deal to do with my success. I thank this Committee again for the time 
provided to address you today. And I thank President Bush for the 
confidence that he has expressed in me.
    That concludes my statement. I would be pleased to address your 
questions at this time.

    The Chairman. Thank you very much, Mr. Gutierrez. Yours is 
an inspiring story, and----
    Mr. Gutierrez. Yes, sir.
    The Chairman.--we all share your feelings about the 
opportunity you now have at this magnificent Department. As I 
said before the hearing, you'll see much more of us than you 
really want to see of us; but it will be a working partnership, 
we assure you. And we're very pleased that you have brought 
your wife and children along with you today to be with you.
    You come before us at a time when there's been significant 
change to the American economy. The shock of September 11th, 
the series of corporate scandals, and the pressures of spending 
on the wars in Afghanistan and Iraq and the war against terror 
generally really are taking their toll, as far as our national 
scene is concerned. The President's economic stimulus program 
and tax relief that we put into effect are helping. There are a 
whole series of issues we'll face as we go forward. We'll be 
guided by your advice, in terms of changes for the future.
    You will find most of your budget is devoted to the 
National Oceanic and Atmospheric Administration. NOAA's 
programs will be a major focus of this Committee's efforts. 
We'll seek to reauthorize the Magnuson-Stevens Act, the Marine 
Mammal Protection Act, the Coastal Zone Management Act, and 
other laws affecting the use of the marine environment. And 
we'll review the report of the U.S. Commission on Ocean Policy. 
We have a whole series of other issues before us, from all 
forms of transportation, communication, science, and space. 
This Committee's jurisdiction is extremely broad, and we intend 
to pursue all of these areas to the utmost during this period 
of time.
    As I said, Senator Inouye and I have worked together now 
for so many years. We have never found an issue we couldn't 
resolve amicably. I don't think we've ever had an argument and 
we don't intend to break that record. So I commend the 
Committee to work with us on a bipartisan basis to try to 
resolve some of the issues that will come before us.
    And I want to take the time, before I recognize my 
colleague, to recognize Senator Ben Nelson, and Senator Pryor 
and Senator DeMint and Senator Vitter, who are new Members. 
They will be confirmed in those roles tomorrow, but we're 
meeting today with the idea that we'll probably meet off the 
floor, after the first vote, to vote on the nomination, because 
I don't think we'll have a full quorum here today.
    We have a little problem: Our colleagues have not been 
confirmed as Members of the Committee yet, and we haven't been 
confirmed as chairmen yet. It's one of those things.
    [Laughter.]
    The Chairman. I just want to close, before I introduce my 
colleague and ask him for his comments, we'll go through a 
round of 5 minutes each. Members can make a statement or ask 
questions. After the first round, we'll go back through again, 
if that's necessary. But I do hope that Members will keep in 
mind, as we go through these hearings, that we want full 
participation, and we will recognize Members based on the time 
that they come to the hearing, at this and all hearings. It's 
the early bird rule, which I think is the fairest way to handle 
matters. And Senator Inouye and I have followed that procedure 
in other areas, and we intend to follow it now.
    So, let me call on my colleague, Senator Inouye, at this 
time.

              STATEMENT OF HON. DANIEL K. INOUYE, 
                    U.S. SENATOR FROM HAWAII

    Senator Inouye. I thank you very much, Mr. Chairman.
    I wish to join my Chairman in welcoming you, Mr. Gutierrez, 
to your first appearance before this Committee. You may not be 
aware of this, but it's through sheer determination that we're 
meeting today. As you noted, we're not technically confirmed to 
do this, but that's how we do business.
    [Laughter.]
    Senator Inouye. Mr. Chairman, when Mr. Gutierrez and I met 
in December, we discussed many things. As he noted in his 
opening statement, he said that it is critical that the 
Department play an active role in linking businesses with 
market opportunities throughout the world, supporting our 
companies where needed, and, I think, ensuring that the 
Department's role in our embassies is expanded. And I look 
forward to working with you on these and many other important 
matters within the Department's jurisdiction.
    As you've noted, Mr. Gutierrez, in the past 2 weeks we've 
seen photos after photos of devastation, death, and misery 
throughout the Indian Ocean area. The unprecedented loss of 
life and devastation is beyond comprehension. And living in an 
island state in the midst of volcanic activity, such as Hawaii, 
the people of Hawaii are very well aware of the destructive 
power of tsunamis. And the Chairman, who is from Alaska, is 
also familiar with the threats posed by earthquakes and 
tsunamis to our coastal communities. And that's why we have 
worked together very closely, throughout the many years, to 
increase our support for the funding of NOAA's tsunami warning 
program, including warning sensors in Hawaii and Alaska.
    Despite our efforts, much more must be done. And, as you 
are well aware, 85 percent of all the tsunamis occur in the 
Pacific Ocean area, and we spend about $10 million annually for 
the Pacific system. We have only six buoys deployed; we need at 
least 12 more. And I'm assured that the expansion will be 
completed, not next year, but in the next 7 years, and I think 
that is not acceptable, with what is happening out there. We 
have the technology, we have the system in place. All we need 
is the commitment to carry this out. And I think with your 
commitment, we can do this.
    So I look forward to working with you, Mr. Gutierrez----
    Mr. Gutierrez. Thank you, Senator.
    Senator Inouye.--to assure that our Department has adequate 
resources to address this matter and fulfil your many other 
important responsibilities.
    And I'll wait for my second turn.
    Mr. Gutierrez. Thank you, Senator.
    The Chairman. Well, let me just take this occasion, Mr. 
Secretary, if you will--I'd like to introduce the Chief of 
Staff of the Committee now, Lisa Sutherland, who's been with me 
for many years, and General Counsel of this Committee will be 
David Russell. The Deputy Chief of Staff will be Christine 
Drager. The Press Secretary will be Melanie Alvord.
    I only have one question to ask before we yield under the 
early-bird rule.
    I noticed a report yesterday that the board of Kellogg has 
granted you special consideration on the pension plan, based 
upon a determination that you had not quite reached 30 years. 
It's my understanding the board will compensate you beginning, 
I guess, when you leave government, or 2009, on a basis that 
you had completed the full 30 years. How far were you from 
reaching 30 years, Mr. Gutierrez?
    Mr. Gutierrez. Yes, Mr. Chairman, I will--I would have my 
30-year anniversary on September 1st, 2005.
    The Chairman. And this determination, as I understand it, 
was filed with the SEC?
    Mr. Gutierrez. Yes, sir, it was filed through an 8-K 
report, and it was a determination made by the board of 
directors, which is a body, in our company, made up of all 
independent directors, with the exception of myself.
    The Chairman. And that compensation is roughly equivalent 
to what it would have been if you had served the full 30 years?
    Mr. Gutierrez. Yes, sir. Yes, Mr. Chairman.
    The Chairman. Thank you very much.
    Under the early-bird rule, I now recognize Senator Pryor.

                 STATEMENT OF HON. MARK PRYOR, 
                   U.S. SENATOR FROM ARKANSAS

    Senator Pryor. Thank you, Mr. Chairman. And in lieu of 
making an opening statement, I would just like to submit my 
prepared statement for the record. I would also like to say 
thank you for welcoming me to this Committee. I look forward to 
working with you and Senator Inouye and everybody on this 
Committee. I look forward to really diving into these issues. I 
know we have a lot of challenges, and I just look forward to 
your leadership.
    And, Mr. Secretary-designee, thank you for being here 
today. It's nice to meet you today.
    I have, really, basically two questions. One is about 
broadband, specifically about broadband, getting broadband out 
into rural America. And, of course, that impacts my state and a 
number of other states here. And I'd just like to get your 
thoughts on any plans or proposals or ideas you have to try to 
get broadband out into rural America.
    [The prepared statement of Senator Pryor follows:]

   Prepared Statement of Hon. Mark Pryor, U.S. Senator from Arkansas

    Mr. Chairman, Senator Inouye, I am delighted to be joining the 
Commerce Committee and look forward to working with my colleagues. Mr. 
Gutierrez, good afternoon, I am pleased to meet you.
    This is truly a Committee that impacts much of Arkansas as well as 
the Nation. In that light, I wanted to take a moment to highlight for 
the Committee--and for Mr Gutierrez--some key areas within the U.S. 
Department of Commerce that are important to Arkansas.

International Trade Administration
    Arkansas is home to a diverse and vibrant business community, one 
that depends on fair and transparent trade laws. From Wal-Mart, to 
Tyson Food, Riceland Rice, Producer's Rice Mill, Stevens, Aciom or 
Nucor Steel, Arkansans care about international trade and the actions 
of the International Trade Administration.
    Arkansans welcome fair competition. Arkansans also expect trade 
rules to be transparent and for all countries to play by the rules. 
During times of economic struggles for much of the globe, this goal can 
be very difficult.
    I look forward to working with the Committee and you, Mr. 
Gutierrez, in strengthening the international trade and investment 
position of the United States.
Minority Business Development Agency
    I am also keenly devoted to minority business development and, 
therefore, I hope to work with you on empowering the Minority Business 
Development Agency. I extend the offer to my colleagues and to you, Mr. 
Gutierrez, to join me in Arkansas and meet with the many industrious 
men and women from our African-American and Hispanic communities who 
could be our next generation of great entrepreneurs but are daunted by 
economic disadvantages.
    Mr. Gutierrez, Arkansas has a population consisting of 15.58 
percent African-Americans and 3.25 percent Hispanics. The growth rate 
in the Arkansas Hispanic population is the second highest in the 
country.
    We must ensure that all Americans have the opportunity to reach 
their full potential and I urge you to join me in reaching out to these 
communities.

Economic Development Administration
    I am a strong supporter of the Economic Development Administration 
(EDA). EDA has provided essential assistance to economically distressed 
communities in Arkansas, especially in the Delta. EDA is an important 
tool to ensure that the vast wealth of this great nation provides 
opportunities for all.

Technology Administration
    With regard to the Department of Commerce's Technology 
Administration, you might be interested to learn that Arkansas is at 
the forefront of important technological advancement for enhanced 
commercialization, including logistics and nanotechnology.
    The University of Arkansas and Arkansas State University have 
developed and continue to work on initiatives that support real 
commerce opportunities for Arkansas businesses such as agriculture, 
oil, timber, cotton and advanced manufacturing.

National Telecommunications and Information Administration
    Finally, the National Telecommunications and Information 
Administration has and will continue to change the landscape of 
Arkansas. Arkansas has a strong telecommunications industry. If fact, 
ALLTEL Corporation, an integrated telecommunications provider with 
almost 13 million consumers and over $8 billion in annual revenues, is 
headquartered in Little Rock, Arkansas.
    The future of telecommunications could offer vast opportunities for 
rural America and especially its children. We must do more to provide 
broadband to our smaller communities at a reasonable cost. We must do 
more to ensure that the benefits of telecommunications are within reach 
of more of our population.
    Thank you for this time to speak Mr. Chairman. I look forward to 
working with you and the other Committee members.

    Mr. Gutierrez. Yes, Senator Pryor, thank you.
    I hope to have a lot more knowledge of the subject, if 
confirmed, and elaborate a little bit more in the future. My 
understanding is that the President has set a goal to provide 
accessible and affordable broadband for all Americans, and, of 
course, including rural America, which is an important 
objective. I think that is a very powerful goal, both on a 
global scale, competitively for the nation, and it's one that 
I--it's one that I totally endorse and totally support, sir.
    Senator Pryor. Great. And the second question I have, 
again, relates to one of the President's policies--and one of 
your predecessor, Don Evans, policies--about the steel 
industry. There's been a steel monitoring--import monitoring 
program in place since 2002. In December of 2003, President 
Bush made the determination to extend that program--along with 
Secretary Evans. But, as I understand it, as of today, the 
Commerce Department has not adopted regulations to extend the 
program. And I don't know if you're familiar with that, but I'd 
ask you to please look into it. And that's an important 
industry to a lot of different states in the United States, but 
I think it's an important industry to the American economy. Do 
you know anything about that?
    Mr. Gutierrez. Not enough, as I should, Senator Pryor. I 
have not been involved in the budgetary process. I will do so, 
if confirmed. And I know that is important to you; I know it's 
important to many Members of the Committee. That was a program 
that was mentioned to me quite frequently during the courtesy 
visit. So I will definitely keep that in mind and remember your 
commitment to that, as well.
    Senator Pryor. Great. Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    We have enough people here--if you listen to me just a 
minute, will you please?
    [Laughter.]
    The Chairman. Based on the fact that we will be confirmed 
by the time we vote on this nomination on the floor, and we 
will vote off the floor on reporting the nominee, I want to put 
in the record now a motion that the Secretary--that the 
nomination be recommended to the floor for confirmation. We 
will vote on that after the first vote on the floor. Is there 
objection?
    Senator Smith. Is that tomorrow?
    The Chairman. I believe it will be tomorrow.
    Senator Rockefeller. Mr. Chairman?
    The Chairman. Yes.
    Senator Rockefeller. I have a whole series of written 
questions, which I wish to submit, as well as the ones that 
I'll ask today. And I didn't know that this was going to 
happen, until last night. And, you know, people who have not 
been sworn in as Committee Members, or whatever, the--approved 
by the Senate as Committee Members--can't vote. I suppose 
that'll happen tomorrow, but I doubt that I'll get the answers 
to my questions tomorrow, and I've never been through a 
hearing, that I can remember, where I've voted in favor of 
somebody who hasn't responded to written questions. And so, my 
approach would be that I would have to vote no in Committee, if 
you're going to do that today, and then hopefully wait until 
the Secretary-designate answered the questions.
    I mean, I'm a United States Senator. I represent the people 
from West Virginia. I have a right to get the answers to my 
questions.
    The Chairman. The Senator is correct. I asked if there's 
any objection. You've objected. I'll withdraw the request. 
We'll take care of it at the proper time.
    As for the qualifications, they will be qualified by the 
time they vote. As for your questions, we intend to vote on 
this on January 20th. And it's my understanding that we'll not 
be here after Friday, and the first time we'll be back will be 
January 20th. I hope you get your questions by that time, 
because we'll vote after the first vote on the floor. I will 
make the motion at that time.
    I Recognize Senator Smith.

              STATEMENT OF HON. GORDON H. SMITH, 
                    U.S. SENATOR FROM OREGON

    Senator Smith. Thank you, Mr. Chairman.
    Mr. Gutierrez, it's a pleasure to see you here.
    Mr. Gutierrez. Thank you, Senator.
    Senator Smith. I enjoyed our visit. I want to re-emphasize 
what I told you in private--is that, before this job is over 
for you, you will know more about fish than cornflakes.
    [Laughter.]
    Senator Smith. And I look forward to working with you on 
those issues.
    As you're aware, I think, from our conversation, the 
largest trade case in American history is between the United 
States and Canada on the soft wood lumber issue. Currently, the 
Department of Commerce is collecting duties on that. I'm hoping 
that you will tell me that those duties will not be surrendered 
until they are part of a negotiated settlement. And that is 
very important in my part of the world. Do you have a position 
on that, at this point?
    Mr. Gutierrez. Senator, I--just in deference of this 
Committee and yourself, I would like to commit to things that I 
know I can deliver on, and I'd like to delve into this matter a 
little bit before expressing any commitment. I do know that the 
lumber issue is one that has come up. You are very strong on 
it. I believe just about every Member of the Committee was very 
forceful on this issue. It is a serious matter. It's been 
lingering for quite awhile, and it is something that I will 
definitely pursue.
    Senator Smith. It's very important, and it's in the 
interest of Canada and the United States that we negotiate a 
settlement so that this industry, on both sides of the border, 
can survive. And these duties that are being collected are an 
important--a very important part of that negotiated settlement.
    On the issue of piracy, Mr. Gutierrez, America's copyright 
industry generates some 12 percent of American GDP, and account 
for over 8 percent of the total U.S. employment. Specifically, 
the four copyright categories are movies, music, publishing, 
and software--computer software. They account for over $90 
billion in foreign sales and exports--more than agriculture, 
more than automobiles, and more than aircraft. And there are 
just untold numbers of people whose jobs are in jeopardy 
because of the amount of theft that is occurring overseas on 
American copyrighted materials. And so, I don't know if you 
have a comment on that, but I raise this issue, because I think 
it's so important to highlight to the Department of Commerce 
that we vigorously pursue piracy issues, specifically with 
China, specifically with Russia, where we have lost billions. 
Pretty soon our entertainers are going to be on street corners 
with monkey-grinders, trying to get people to pay them. But, 
ultimately, if we lose copyright issues, we're going to lose a 
great and valuable part of the American economy.
    Mr. Gutierrez. Senator, I agree. And I agree with the 
passion with which you state the problem. We actually lived 
through this, as a food company, ironically, where we had--we 
found that our brand was actually being copied and used in some 
markets, and obviously without any authorization. And one of 
the great assets that we have as a country are our brands, our 
technology.
    So I agree, I think this is a matter to focus on. I think 
it is a big issue, and I know it's a matter of great concern to 
you, as it is for me, Senator.
    Senator Smith. Finally, Mr. Chairman--Mr. Gutierrez, I 
understand that China is on the verge of releasing government 
procurement regulations for China that will have the effect of 
barring most U.S. soft-wood products from being sold in China. 
I don't know if you're aware of that. I want to make you aware 
of that. It's obviously an issue of real importance to timber 
workers in the State of Oregon. So, I don't know if you've 
heard of it, or will focus on it, but I sure hope you will.
    Mr. Gutierrez. Senator, I will focus on it. I know it's of 
importance to you and the Committee, and I will focus on that.
    Senator Smith. Thank you, Mr. Chairman. If I may, for the 
record, I'll put my opening statement in the record.
    The Chairman. Without objection.
    [The prepared statement of Senator Smith follows:]

    Prepared Statement of Gordon H. Smith, U.S. Senator from Oregon

    Thank you Mr. Chairman. I want to first congratulate you on your 
election as our new Chairman of the Senate Commerce Committee. I look 
forward to working with you and all our colleagues on the many 
difficult issues the Committee will be tackling this year.
    Mr. Gutierrez, I want to welcome you to today's confirmation 
hearing and want to congratulate you for being nominated as our next 
Secretary of Commerce. Your success story will continue to be an 
encouragement to many young entrepreneurs in America. I would like to 
invite you to Oregon to see the new and emerging technologies in my 
state. Oregon continues to have economic development needs and, 
unfortunately, leads the country in unemployment.
    On a more specific issue, it is my understanding that Oregon has 
not been able to receive any assistance from the Minority Business 
Development Agency for at least 10 years because the agency has focused 
its efforts primarily on larger states and cities. I would like to ask 
for your assistance to investigate this issue at the MBDA, so that all 
minority-owned businesses can benefit from this agency. I look forward 
to working with you to develop and coordinate policies that will 
provide spur growth and jobs for our nation.
    On the issue relating to the wake of the recent tsunami, we 
continue to mourn the enormous loss of life in southeast Asia. As 
policymakers, we must look for lessons we can learn from this tragedy 
and what steps we can take to help prevent such devastation should a 
similar event occur in the future. I have no doubt that in the coming 
months and years this panel will spend a great deal of time evaluating 
the strengths and weaknesses of our current ocean monitoring and 
research systems. As a Senator from a coastal state, I have a very 
obvious and personal interest in this debate. I look forward to working 
with you, the Administration, and those in our coastal communities to 
address these and other issues.
    Mr. Gutierrez, thank you for your appearance today. Thank you, Mr. 
Chairman.

    The Chairman. Next, I'll recognize Senator Lautenberg.

            STATEMENT OF HON. FRANK R. LAUTENBERG, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Lautenberg. Thank you, Mr. Chairman, and welcome, 
Mr. Gutierrez.
    You're here at a historic moment, not only for you, but for 
this Committee, as well, because it is a--I don't want to use 
the term ``reformed''--restructured Committee. And I welcome 
our new colleagues, not as joyously as I might have had if they 
were sitting on this side of the aisle----
    [Laughter.]
    Senator Lautenberg.--but, nevertheless, I look forward to 
working with you.
    And, Mr. Gutierrez, I would think that you'd have to note 
that Senator Inouye, Senator Stevens, and I are among the more 
mature Members here, and we, the three of us, served in World 
War II. We are, I think, the last ones to have been active 
during the period in the--in this Senate. And, therefore, you 
have some idea of our age; we're all over 60. And----
    [Laughter.]
    Senator Lautenberg. I hear a snicker go through the crowd.
    [Laughter.]
    Senator Lautenberg. But----
    The Chairman. For some of us, it's not that apparent.
    [Laughter.]
    Senator Lautenberg. Well, you know why, Mr. Gutierrez. It's 
that Special K and Corn Flakes and Rice Krispies.
    [Laughter.]
    Senator Lautenberg. That's what did it.
    [Laughter.]
    Senator Lott. Salmon is what did it.
    [Laughter.]
    Senator Lautenberg. Oh, salmon, I'm sorry.
    [Laughter.]
    Senator Lautenberg. And if we continue like this, we'll 
never get to talk about the serious subject.
    But we do welcome you and really look at your history as a 
quintessential American story. And it's wonderful to be 
repeated. In many instances through this body, we've met people 
who similarly--I was born of immigrant parents, and had a 
fortunate and somewhat lucky business career before coming 
here, so I respect greatly what you've accomplished, from the--
where you started to where you are today. And we're going to 
look to you, Mr. Gutierrez, for a response that I noted in your 
comments, and that was that you hoped to bridge the boundaries, 
and you included, in there, political, economic, et cetera. And 
I urge you to do that. We sometimes have disagreements that 
ought to be able to be dealt with in a more comprehensive 
fashion, and I hope that you'll help us.
    This department, this Committee, has an enormous array of 
items that we work with, and you'll have a chance to hear about 
them and learn about them, and going from the communications 
side to the marine side to the trade and business side. And 
when I look at where we are, Mr. Gutierrez, I don't understand 
what it is that has us with a dollar that's so cheap compared 
to other currencies. And yet, our trade balance is still in the 
negative column. What has to happen with our products that are 
sold at these very relatively low prices and still don't enable 
us to gain a favorable trade balance?
    So those are among the things that--and, Mr. Chairman, I 
would ask that my full statement be included in the record.
    [The prepared statement of Senator Lautenberg follows:]

            Prepared Statement of Hon. Frank R. Lautenberg, 
                      U.S. Senator from New Jersey

    Mr. Chairman:
    I want to commend our outgoing Chairman, Senator McCain, and 
congratulate him for the Committee's accomplishments during his tenure. 
I think I can speak for all of the Committee Members on this side of 
the dais when I say that he has been very fair to the minority.
    I also want to note how much we will miss Senator Hollings.
    And I want to take this opportunity to congratulate our incoming 
Chairman and Ranking Member, Senator Stevens and Senator Inouye. The 
Committee will be in good hands with these two men at the helm. Between 
them, they have nearly 80 years of Senate service.
    Today's hearing is on the nomination of Carlos Gutierrez to be 
Secretary of Commerce. I welcome the nominee and look forward to 
hearing his views on how he will promote American business interests in 
a way that creates jobs. There are still fewer jobs today than there 
were four years ago; meanwhile, the labor force keeps getting bigger.
    Mr. Gutierrez's story is an inspirational one--he came to America 
as a six-year old immigrant from Cuba, he worked hard, and he became 
the CEO of a well-known American company, Kellogg, at the age of 45.
    Mr. Gutierrez, your story is the quintessential ``American Dream.'' 
I know about the American Dream because I have lived it, too. My 
parents arrived here as immigrants and I was able to rise to the top of 
the business world as you have, so I can appreciate your success.
    Mr. Gutierrez, at the outset, let me alert you of my concern over 
this administration's budget and trade policies. We are currently 
running the biggest budget and trade deficits in history. We need to 
borrow 2.5 billion dollars from foreign sources each and every day to 
finance our current consumption. As a businessman, you should know 
that's just not sustainable.
    I also want to apprise you of my strong support of the 
Manufacturing Extension Program (MEP), which helps thousands of small 
manufacturers to increase their productivity and create and retain 
high-skilled American jobs.
    In Fiscal Year 2003, because of the assistance they received, MEP 
clients:

   saved 681 million dollars in operating/production costs;
   invested 940 million dollars in new plant and equipment;
   retained or created 35,000 jobs; and
   reported sales of 1.84 billion dollars.

    I hope that you will work to preserve Commerce Department programs 
like the Manufacturing Extension Program.
    Thank you, Mr. Chairman.

    Senator Lautenberg. And I would just ask this one question 
of Mr. Gutierrez, and that is, If the dollar continues to fall, 
would it be your view that it's either good or bad for the 
economy? What would your perspective be, sir?
    Mr. Gutierrez. Senator, thank you.
    Senator, I have a lot to learn about Washington and about 
how our business is conducted here. One thing I have learned is 
that the only two people who speak on behalf of the currency, 
or about the currency, are the Secretary of the Treasury and 
the President. So if you'll forgive me, I will refrain from 
answering that specifically. I would hate to get myself in 
trouble before I even start this mission, sir.
    Senator Lautenberg. Think about it. The question----
    Mr. Gutierrez. Yes, sir.
    Senator Lautenberg.--could come up again.
    Mr. Gutierrez. Thank you.
    Senator Lautenberg. Thank you----
    [Laughter.]
    Senator Lautenberg.--very much, Mr. Chairman.
    The Chairman. Well, thank you very much.
    We will now recognize Senator Vitter.

                STATEMENT OF HON. DAVID VITTER, 
                  U.S. SENATOR FROM LOUISIANA

    Senator Vitter. Thank you, Mr. Chairman and Ranking Member, 
and thank you for the warm welcome to the Committee.
    Mr. Gutierrez, good to have you, and congratulations on a 
splendid career, as well as your appointment.
    I have just a couple of quick areas of interest. One of 
them is trade. I'm a strong supporter of free and fair trade. 
In a lot of cases, a lot of trade cases, I think the great 
frustration among a lot of Americans is that we don't have 
reasonable or quick-enough relief when there are trade 
violations by our trading partners. And so, even when we have a 
trade agreement, when the other side breaks the rules, they 
often do it with relative impunity, at least for a good amount 
of time. And for a lot of small business, justice delayed is 
justice denied. Louisiana, I'm thinking of seafood, shrimp, and 
crayfish, and some other things.
    What can we do, both with our bureaucracy and the 
international bureaucracy, so we can respond more effectively 
and more quickly to trade violations?
    Mr. Gutierrez. Senator Vitter, this is something that I 
have had brief discussions on, and it concerns me, as well. As 
someone who does business in a way where we like to follow the 
rules, it is sometimes extremely frustrating when we find that 
our partners overseas aren't following the same rules. I share 
that sentiment. And if there's something that we can do in 
terms of speed, something that we can do in terms of being more 
efficient and effective about that, please be assured that that 
will be high on my agenda, Senator.
    Senator Vitter. Well, great.
    Let me mention a couple of examples that are, again, 
important to Louisiana. I----
    Mr. Gutierrez. Yes, sir.
    Senator Vitter.--mentioned crayfish. There are tariffs on 
certain foreign crayfish. One of the problems has been that, 
within our own bureaucracy, the rate of properly imposing those 
is under 20 percent; whereas, the overall rate, in terms of 
proper tariff enforcement by our own people--I'm talking about 
our government--is over 95 percent. And we've been pushing and 
pushing and pushing Customs and others to get our act together 
to fix that. So I'd commend that to you.
    Mr. Gutierrez. Yes, sir.
    Senator Vitter. Also, another case affects Louisiana's 
shrimp. There have been recent decisions that have confirmed 
that there's dumping--illegal dumping of foreign shrimp, and 
we're moving to respond to that. But, again, some of this 
process takes so long that if you're a small business, which 
every Louisiana shrimper is, it doesn't matter if it happens 5 
years from now. It's too late. It's way too late. So I'd 
commend that situation----
    Mr. Gutierrez. Yes, sir.
    Senator Vitter.--to you, too.
    Mr. Gutierrez. Yes, Senator, thank you.
    Senator Vitter. I'd also like to touch on NOAA, which is 
very important to my part of the world, in the Gulf of Mexico. 
I'm a strong supporter of NOAA, and it does a lot of important 
things, including pure science and research, but it also does 
some very applied things, which are important, like survey work 
in Alaska, in the Gulf of Mexico, elsewhere. I'm a big 
supporter of making sure we get that survey work done, because 
it's not several steps removed from commerce; it is directly 
related to commerce, certainly in the Gulf. And I'd just like 
your reaction to that, and your thoughts on that end of, sort 
of, the NOAA spectrum of work.
    Mr. Gutierrez. Well, NOAA, from what I have seen, is a 
tremendous part of the budget of the Commerce Department. It is 
a big part of what we do, and it is something that is a 
priority because it is a priority for this Committee, because 
it is right, and because it is something with which the 
Commerce Department has been charged. So I can't claim to be an 
expert on NOAA, Senator, but I can promise you that this is 
going to be one of my biggest areas of focus.
    Senator Vitter. Great. Well, I appreciate that.
    Mr. Gutierrez. It has to be. And I----
    Senator Vitter. And I'd offer two thoughts. One is that, in 
the NOAA scheme of things, my observation is that the pure-
science end is often the, sort of, ``sexy'' end that gets 
attention and money, and the applied end sometimes gets short 
shrift. And that is often the end that has the most immediate 
impact on commerce. And things like routine updating of surveys 
of the Gulf and the waters off Alaska and elsewhere is very 
important for maritime commerce.
    Also, I'm a strong supporter of getting the most bang for 
the buck for that sort of work, however the chips may fall, 
whether it's a government-owned vessel or whether it's 
contracting out to private firms. And I would encourage you to 
use no test, other than what is going to get the taxpayer the 
most bang for the buck. In survey work, it's pretty simple, in 
terms of, you know, How much surveying are you going to be able 
to do for X amount of dollars? And I hope we can do that, in 
the future.
    Mr. Gutierrez. Thank you. I appreciate the pragmatism, 
Senator, and I will definitely keep that in mind.
    I also want to say, I think it's very insightful, the 
comment about small businesses, that they are in a hurry, they 
do want to get their matters solved. They are worried about 
cash-flow. They can't wait as long as sometimes we'd like them 
to. And I understand that urgency, and I understand that that 
is the reality that they live. So I just want to say, I agree 
with that, and I share that concern.
    Senator Vitter. Thank you. And that also translates, 
ultimately, into how much political support we have for trade, 
because if we don't have reasonable enforcement in a reasonable 
amount of time, and small business is hurt every step of the 
way, obviously----
    Mr. Gutierrez. Right.
    Senator Vitter.--that erodes support for the whole policy.
    The Chairman. The Senator's time is expired.
    Senator Vitter is recognized--or Senator DeMint is 
recognized, pardon me.

                 STATEMENT OF HON. JIM DeMint, 
                U.S. SENATOR FROM SOUTH CAROLINA

    Senator DeMint. Thank you, Mr. Chairman. And I, too, am 
appreciative of the warm welcome. I'm honored to serve on the 
Committee. As you know, my predecessor, Senator Hollings, from 
South Carolina, served many years, and I don't know if I can 
serve as many, but I look forward to serving with all of you.
    As I understand the protocol from your opening statement, 
you have to still approve me as a--or confirm me as a Member 
before we confirm you as Chairman before we confirm Mr. 
Gutierrez----
    [Laughter.]
    The Chairman. You've got that right, but it will all happen 
after the first vote.
    Senator DeMint. OK, good deal.
    [Laughter.]
    Senator DeMint. All right. Well, we can still ask 
questions.
    And I want to thank Mr. Gutierrez for being here, being 
willing to serve. And I liked a lot of the things you said, 
particularly about fostering a better business environment in 
this country. As I visit businesses all over the country, 
particularly in South Carolina, I hear more and more about the 
burden of costs and regulation and taxes and liability that 
comes from being a U.S.-based manufacturer, particularly. And 
as a producer, yourself, for many years, doing business 
internationally, I'd just like to hear you talk a little bit 
about how we can make American business more competitive, and 
cut the costs of doing business in this country, and make this 
the best place in the world to do business. And I'm sure, in 
your role at Kellogg, many times you've said, ``If I was in 
Washington, this is what I would do, this is what I would 
change.'' And I'd just love to hear you just talk a few 
minutes, generally, about what you think we need to focus on 
here in the Senate, in the Congress, the President, and what 
you would do, in the Department of Commerce, to make America 
the best place in the world to do business.
    Mr. Gutierrez. Thank you, Senator.
    I would say, first of all, that throughout the last 
century, I believe, American business has led the way, and it 
has done so through, I think, the spirit of free enterprise, 
innovation, investment, just being able to be the engine for 
growth around the world. I understand the need for regulation. 
And as a businessperson, I understood the need for certain 
regulations that, perhaps, were not evident or were not in 
place. I think we have to be careful that we do not make 
business risk almost a liability, or business risk almost a 
crime. I think what has driven our economy is, over time--our 
country--is the idea that someone can take a risk, they can 
have an idea, and they can strive and dream to make their 
business larger and prosperous.
    And we do have to be careful. Sitting on the other side, it 
is--it can become a point where businesspeople become a little 
bit paranoid, where businesspeople become a little fearful to 
do their job. And that notion frightens me, just the idea that 
we are not promoting risk-taking, we are not promoting 
innovation, entrepreneurship in the future. And I'm not 
suggesting that that is the case today, but that is a notion 
that does give me some nightmares sometimes, Senator.
    Senator DeMint. And if I could just echo some of the things 
we've heard, as far as trade, I'm from a textile-producing 
state. I'm very much a free-trader myself. But the political 
support and just the pragmatism of trade really only exists if 
we're going to enforce our agreements, if we're going to 
protect our copyrights and our patents. And I think if there's 
one thing we need from the Commerce Department more than 
anything else, is a level, balanced playing field around the 
world, and just good enforcement, so we can do business 
everywhere in the world with--and on a fair basis. So I would 
hope that would be a priority of yours.
    Mr. Gutierrez. Yes, sir, it is. And I share that same 
concern. And it is an evolutionary process, and I think every 
time we have an agreement, every time we have a new agreement 
with a country, or with a set of countries, it is an 
opportunity to evolve, to make progress toward the kind of 
world we'd like to see. But I share your concern. I think the 
rest of the world has to understand what ``fair and free 
trade'' means to us. And I am as concerned as you are, Senator.
    Senator DeMint. Yes.
    Mr. Gutierrez. Thank you.
    Senator DeMint. Thank you, sir. And thank you, Mr. 
Chairman. I yield back.
    The Chairman. Thank you very much.
    I Recognize Senator Dorgan.

              STATEMENT OF HON. BYRON L. DORGAN, 
                 U.S. SENATOR FROM NORTH DAKOTA

    Senator Dorgan. Mr. Chairman, thank you.
    Mr. Gutierrez, thank you very much. I have, kind of, a 
foghorn voice today. Excuse me for that.
    You have a very compelling life story, and I'm really 
pleased that you're willing to provide public service to your 
country.
    Unless I hear something startling from you, it's my 
expectation I will support your nomination. But I am going to 
precede your nomination vote on the floor with about a 1-hour 
speech on trade, and I'm only going to ask you about trade 
today.
    You began your statement with trade. And the reason I'm 
only going to ask you about trade is, I think we have a growing 
and dangerous trade deficit. And it's not just this 
Administration, although--I mean, it started 15, 20 years ago. 
It has grown and grown and grown. It's the highest in the 
history of the world. It is dangerous. And this Congress and 
this Administration, and previous Administrations, seem willing 
to snore through it by chanting about free trade.
    Let me show you a chart that shows the red ink on trade 
deficits. I mean, you don't need a lot of understanding to 
understand that bar chart. These trade deficits are dramatic 
and, I think, reckless and dangerous.
    Now, let me ask you about a couple of specific things. 
First of all, I have to ask you about sugar, as you might well 
expect.
    You were CEO of an excellent company, but you lobbied very 
hard in Congress to kill the sugar program, with that company. 
And the Mexico Economy Minister, Fernando Canales, has said 
that you and he have spoken about the sweetener dispute in 
NAFTA, and that you and he have established a work plan for 
when you take office. Obviously, I have a lot of constituents--
probably Mr. Vitter does, as well, and some others--about the 
sugar program, who are concerned about the sugar program. I 
don't know whether you will have decision points in the 
Commerce Department on this issue, but, if you do, how will you 
deal with them? Will you recuse yourself on those issues? Do 
you intend--some have suggested that you will come to 
Washington to lobby to kill the sugar program. That was in a 
couple of press reports. Give me your assessment of what all 
that is.
    Mr. Gutierrez. Senator, thank you.
    A couple of things on the sugar program. And I should say 
that, as a manufacturer and business which relies on sugar, I 
had to see the world in a certain way, I was paid to do that, 
that was in the best interest of the owners of the company. But 
I fully understand that the scope of my responsibilities will 
be a lot greater than just having one set of share owners who 
are interested in the price of sugar. So, I fully recognize 
that I would have to expand my scope and realize that I am no 
longer the Chairman and CEO of the Kellogg Company, but the 
Commerce Secretary.
    Senator Dorgan. Have you determined whether you would 
recuse yourself on sugar issues if, in fact, you had a 
decisionmaking authority there?
    Mr. Gutierrez. Senator, if it is deemed, for the purpose of 
ethics or even optics, that I not participate, and this 
Committee feels that way, I would be very comfortable in 
recusing myself. I believe I can be very objective. I believe I 
can avoid the conflict, but I'd be willing to do so, sir, if 
that's the----
    Senator Dorgan. Mr. Gutierrez, thank you.
    On another issue, then--Senator Ashcroft and I passed a 
piece of legislation, that has become law, that allows, for the 
first time in 40-some years, us to sell agricultural products 
into the Cuban marketplace for cash. We have sold nearly $1 
billion worth of agricultural products to Cuba for cash. The 
Department of the Treasury is now taking an exceptional and 
unusual interpretation of the language of the law, and trying 
to do everything they can to impede and stop the legitimate 
sale, under current law, of agricultural commodities to Cuba. 
You and I spoke about that just briefly. You talked about 
wanting to reduce the barriers and burdens of our ability to 
sell overseas. Would that include in the market of Cuba, since 
it is now legal?
    Mr. Gutierrez. Senator, you mentioned this during our 
visit, and I understand you feel very strongly about this. I am 
aware of the subject of the payment or the cash in advance, and 
the interpretation of that. I know that is a matter to be 
resolved by the Treasury Department. I have not gotten into 
that, obviously. But I understand that you are worried about 
that and you think that that is a different interpretation than 
what it should be. And I will certainly look into that.
    I should say, Senator, as well, as I mentioned to you, I 
support the President's policy on Cuba. I'm very concerned 
about doing anything that would prolong the current status. 
And, most of all, I believe very firmly in the objective of 
bringing democracy to Cuba, which I know is what drives the 
policy.
    But I know where you stand, and I know your concern on the 
payments issue, and I will look into that. And I would be glad 
to discuss that in the future, although, from a Commerce 
standpoint, that is a little bit outside our purview.
    Senator Dorgan. Well, I see my time is about up. I'll stay 
for a second round, I guess. But let me just ask one other 
question, if I might, under the yellow light.
    There are proposals by the USTR, that we would be willing 
to negotiate away our anti-dumping provisions. I'm very 
concerned about trade remedies. We don't have the backbone or 
the will or the steel to employ them hardly at all, ever, but 
negotiating them away is fundamentally folly, in my judgment, 
for this country. What's your position on that?
    Mr. Gutierrez. Well, I think we absolutely need--remedies, 
and trade agreements without some sort of remedy, without some 
sort of course of action, would make them somewhat feeble. So I 
share the concern and the belief that we need a way to enforce 
our laws in a way that our partners understand.
    Senator, may I go--I'm sorry, I just wanted to address 
something you said earlier.
    I did receive a call from Mr. Canales, who, I believe, 
would be my counterpart in Mexico if I am confirmed and sworn 
in. I believe the conversation was one of, ``Look forward to 
working with you. Thank you very much.'' But I can assure you I 
did not make any commitments on behalf of the Administration or 
the U.S. Government, knowing that I have not been confirmed as 
Secretary of Commerce.
    Senator Dorgan. So you have not established a work plan 
with him, as he alleges.
    Mr. Gutierrez. No, Senator.
    The Chairman. The Senator's time has expired.
    Senator Rockefeller is recognized.

           STATEMENT OF HON. JOHN D. ROCKEFELLER IV, 
                U.S. SENATOR FROM WEST VIRGINIA

    Senator Rockefeller. Thank you, Mr. Chairman.
    Mr. Gutierrez, I, also, very, very much admire--it was very 
interesting the way the press just fastened right on the story 
of how you came up and just did things that are possible in 
America, but which rarely happen. And you, sort of, captivated 
a nation, really, before anybody knew anything about you.
    I've spent 20 years here trying to convince Byron Dorgan 
and others that I, sort of, came up the same way, but I haven't 
made much progress.
    [Laughter.]
    Senator Rockefeller. But it does give me a chance to really 
pay honor to that. I mean, that is--that's very, very--it's a 
marvelous thing, an emotional, marvelous tribute to, obviously, 
a strong man.
    I don't mean to hold anything up, and it would--I will 
probably end up voting for you, but I do want to get the 
answers to some questions that I will submit to you, and 
they're--and they won't be, I don't think, particularly 
difficult. But I do want to get answers to them, because they--
I come from the State of West Virginia, which is the second-
poorest state in the country--I think I can say that safely. 
Can I, Mark? All right.
    And steel--there's a big question there--and steel, to some 
people, is, kind of, a subject which has passed us by. I 
remember talking with a former--member of a former 
Administration, a Democratic Administration, and I talked about 
the fact that free-trade--I mean, you made mention that you've 
got to have good trade-remedy laws, in an answer to Senator 
Dorgan. And somehow, free trade and free-trade remedies and the 
holding on to--not weakening the laws at Doha, et cetera, which 
our current USTR Ambassador promised me, and then, within 3 
months, was giving them away, negotiating them away--that's 
very, very serious in West Virginia, where our unemployment is 
very high, and where only 4 percent of the land is flat, and 
where life is constantly hard. There are many rural states 
here, and that's why you're hearing about individual problems. 
There are very few, sort of, states that have all kinds of 
opportunities, economic opportunities.
    The Doha package is very important to me, and I want to 
know--although--that you will do everything in your power, as 
Secretary of Commerce, which I think you will become, to not 
negotiate any further trade-remedy laws away. We're hurting.
    Mr. Gutierrez. Yes, Senator. First of all, I'm----
    Senator Rockefeller. I understand it's under USTR, but 
you'll be a part of that----
    Mr. Gutierrez. Yes.
    Senator Rockefeller.--Cabinet.
    Mr. Gutierrez. Yes, Senator.
    First of all, I just want to recognize the seriousness of 
the steel matter and the--and acknowledge the importance to you 
and your state. And I--that is something that I was aware of, 
just as--reading the papers before this process got started. 
And it worries me, and I agree with you that steel is as much a 
part of our future as it's been part of our past, and there is 
room for us to be a power in steel, and to continue to grow. 
And I just pledge to you, sir, to keep your concern very much 
in mind and do what I can to make sure that our workers are 
protected.
    Senator Rockefeller. It's not a high-tech, in the usual 
sense--you know, the Silicon Valley sense--but, oh, there are 
so many people that work for it for generations, and then they 
come out, and their retirement is gone, their pension is gone, 
their health benefits, gone, everything is gone. And that, of 
course, is the point of trade-adjustment assistance. And when 
that was--when some of these changes were made, in 2002, the 
Congress passed a TAA, which--a reform act, which said that up 
to 65 percent of the cost of health insurance would be borne 
and available to the employees.
    Now, what's interesting is that only 6 percent of the 
employees that this affects have taken advantage of that, which 
is shocking, in a sense, but it means that the 65 percent 
doesn't do the job. And the thinking, generally around here is, 
it's got to be 95 percent if it's going to do the job. But the 
6 percent thing, I wish you would look into why--why is it so 
little, when healthcare costs--these, of course, are much older 
people, people who have been injured, et cetera, and I would 
like to hear, at some point, your thoughts on that question.
    Mr. Gutierrez. I will----
    Senator Rockefeller. You may not have had a chance to study 
it yet.
    Mr. Gutierrez.--I will, Senator, as soon as I can, yes, 
sir.
    Senator Rockefeller. I appreciate that.
    Also--and my time is about up--when the President put in 
the existing Steel Import Monitoring Program, there was a--that 
was also, at the same time, a Section 201 pass, which was 
temporary relief for steel. And, at that time, Secretary Evans, 
your predecessor, stated, unequivocally, that the existing 
program would be expanded to additional steel products, and 
made indefinite in duration. Now, that program is about to run 
out, in fact; it's about to expire. And I would hope that you 
would commit yourself, to the extent that you can, that this 
program would continue.
    Mr. Gutierrez. Senator, my commitment to you is that I will 
give it the attention that it warrants, and I will heed your 
advice on that. And once I've had some time to even go through 
our budget and where our funds are being allocated, I would 
like to get back to you and discuss that with you.
    Senator Rockefeller. I thank you very much, sir.
    Thank you, Mr. Chairman.
    Mr. Gutierrez. Thank you.
    The Chairman. Senator Allen is recognized.

                STATEMENT OF HON. GEORGE ALLEN, 
                   U.S. SENATOR FROM VIRGINIA

    Senator Allen. Thank you, Mr. Chairman. And I welcome our 
new Members to the Committee, and thank Mr. Gutierrez for being 
here, and, moreover, thank him for the service that he will be 
performing for our country. It's no easy task to be a Cabinet 
Secretary. Secretary of Commerce is an important position. So 
thank you and your family for your patriotism and your service 
and leadership and insights you'll be providing to us and, 
obviously, the President and, ultimately, benefiting the 
American people.
    Mr. Gutierrez. Thank you. Thank you, Senator.
    Senator Allen. I'm one, Mr. Gutierrez, that believes that 
we need to do everything we can to make sure that this country 
is more competitive, more desirable for investment and job 
creation. That means our tax policies, regulatory policies, 
research, education--all need to make sure that every American 
has a better ability to compete and succeed internationally. 
And so, many of the issues that have been brought up here by 
some of my colleagues are important in that regard.
    Trade agreements are important, but they need to be 
enforced, So I'm glad to hear your comments. It'll be important 
that you work with our trade representatives to enforce when 
China is cheating in a variety of areas, whether it's 
intellectual property, whether that's software or other 
matters, furniture, textiles, or semiconductor chips. If we're 
going to have trade agreements, those contracts need to be 
enforced, and enforced quickly. This will be necessary if we're 
going to continue to try to have the support of the American 
people for trade agreements as a net-plus.
    Trade adjustment assistance is important, understanding 
that there are some folks that are hurt by international 
treaties, trade agreements. And I'm one who's been advocating 
making sure that folks don't lose their homes, have a 
transition for mortgages for 12 months so they don't lose their 
homes as they're retraining and finding another job.
    One thing we've done on the Foreign Relations Committee, to 
Senator Smith's comments on intellectual property and piracy, 
is provided $5 million to help train and enforce copyright or 
intellectual property rights, and make sure those countries are 
enforcing them, because it's pretty hard for us to do it in 
another country if they don't care about it there.
    Senator Pryor, on the issue of broadband--and I do think 
broadband is important. And one issue we're going to bring up 
here is the whole Telecommunications Act and getting that thing 
up to date so that broadband will be available. It is the way 
that small businesses in small towns and rural areas can 
communicate, conduct business, get education and information.
    Your predecessor was helpful in my efforts to make sure 
that the Internet was not taxed with access taxes--on average 
of about 18 percent, if the state and local commissars have 
their way. Can you give us assurance that you'll continue to be 
in favor of keeping the Internet free of Internet access taxes, 
no matter which platform one receives broadband, whether it's 
by DSL, satellite, over power lines, or wireless?
    Mr. Gutierrez. Senator, I'm very much in favor of the 
current status and the fact that we are not taxing the 
Internet. And it is a source of competitive advantage. It is 
something that we cannot afford to fall behind on. I sometimes 
read about some countries which are making great progress on 
the Internet, and I don't think we can afford to fall behind. 
So I share that concern, and I share that vision for the 
future, as well.
    Senator Allen. Good, because I think the people who would 
be hurt the most by taxes on broadband would be, clearly, those 
of lower income, as well as smaller jurisdictions.
    One other measure--that I've worked on--and this Committee 
has passed, for the knowledge of some of the new Members--is a 
measure to upgrade the technology capabilities at minority-
serving institutions, higher education--whether they're 
historically black colleges and universities, tribal 
universities, or Hispanic-serving institutions--to upgrade 
their technology so those students have the faculty, the 
training, the education to get the good jobs, 60 percent of 
which require technological proficiency. And so, I'm going to 
keep working on that. We got it through the Senate; we've got 
to get it through the House and get the Administration onboard.
    But could you share with me any experiences that you've had 
as a leader of the Kellogg Company, insofar as working with 
minority-serving institutions?
    Mr. Gutierrez. Yes, Senator. We--several years ago, we 
joined a partnership--in a partnership with Tom Joyner, who is 
a radio broadcaster--and, as a company, we made donations to 
him which were earmarked for historically black universities. 
And, as you talk about bringing technology for everyone and 
making sure that everyone has access and making sure that our 
Internet and our technology is a sign of our freedom and our 
democracy, I was very proud, as a business leader, to be able 
to contribute. And that's been my experience. There are ways of 
being able to do that. Our experience was with historically 
black universities, but I understand that there are others. So 
I appreciate your bringing that up.
    Senator Allen. Is your wonderful bride, Edilia, and your 
children going to be moving with you, if you are so-confirmed?
    Mr. Gutierrez. Well, we are--we have just experienced the 
transition to empty-nesters, although we'll try to convince 
some of our children to study here in Washington, Senator.
    Senator Allen. Well, I hope you will reside in Virginia. 
Choose Virginia, in this region.
    [Laughter.]
    Senator Allen. You'll find that sales taxes on your cereals 
are less than in the other jurisdictions.
    [Laughter.]
    Senator Allen. Thank you, sir.
    The Chairman. Thank you very much.
    Senator Snowe is recognized.

              STATEMENT OF HON. OLYMPIA J. SNOWE, 
                    U.S. SENATOR FROM MAINE

    Senator Snowe. And I ask unanimous consent to include my 
entire statement in the record.
    [The prepared statement of Senator Snowe follows:]

  Prepared Statement of Hon. Olympia J. Snowe, U.S. Senator from Maine

    Mr. Chairman, thank you for calling today's hearing concerning the 
President's nominee for Secretary of Commerce, Carlos M. Gutierrez.
    Mr. Gutierrez, welcome to the Senate Commerce Committee and 
congratulations on your nomination. Let me begin by saying how 
impressed I am with your personal history and experience. As a 
corporate leader, you have proven yourself a skilled executive and 
innovative leader who understands what it takes to create jobs and 
build a business--and you will certainly need that entrepreneurial 
know-how writ large as you take the helm from Secretary Don Evans, who 
has served our country so effectively over the past four years.
    Your nomination comes at a time of monumental challenges for our 
economy, as unfair trade practices and currency manipulation deepen our 
nation's $535 billion, record-high trade deficit, and continue to 
threaten U.S. manufacturing jobs. Our trade relationship with China is 
particularly troublesome, with a $158 billion trade deficit, and is 
only exacerbated by a barrage of product dumping and the end of textile 
export quotas just last week. On that count, I urge you to review and 
act upon recommendations from the U.S.-China Economic and Security 
Review Commission's 2004 Report to Congress. That examination revealed 
that the U.S. is failing to vigilantly protect intellectual property 
rights, and pointed out that we are not properly addressing China's 
illegal trade subsidies and unfair manipulation of the yuan.
    We will look to you to help American businesses overcome these and 
other trade obstacles by aggressively enforcing our trade laws, 
standing up to violations and insisting that WTO members abide by their 
own commitments. It is my hope that you will draw upon your 
international trade expertise as you fight to help our American workers 
and businesses compete and win on a level playing field.
    Because no industry has paid a steeper price for unfair trade than 
domestic manufacturing, which lost nearly 2.7 million jobs from January 
2001 through August 2004--and 17,600 in my home State of Maine. I 
applaud the President for recognizing the critical need for government 
to be a partner with domestic manufacturers by appointing the first 
ever Assistant Secretary of Manufacturing and Services--a post to which 
he named Albert Frink, Jr. It is imperative that you work closely with 
Mr. Frink to promote open markets and a level playing field, as well as 
developing strategies to lower the structural costs for U.S. 
manufacturers and help those firms remain competitive. As we take those 
steps forward, let us also understand that it is counter-intuitive to 
take any leaps backward by reducing programs like the Manufacturing 
Extension Partnership. I was pleased to help lead efforts in the Senate 
to restore the MEP to a funding level of $109 million for FY 2005, and 
I am troubled by suggestions that the Administration's budget may 
severely reduce funding for this invaluable program. So that is 
certainly one issue I hope we can come together on.
    Shifting from land to sea, as a Senator from a state with a three 
quarter billion dollar fishing industry, I am acutely concerned with 
the stewardship of our oceans. And as Chair of the Commerce 
Subcommittee on Oceans, Fisheries, and Coast Guard, I am responsible 
for overseeing the National Oceanic and Atmospheric Administration--
which comprises 59 percent of the Department of Commerce's budget.
    In that oversight role, I have seen both the opportunity and dire 
need for enhancing NOAA--and the time for action is now. A clear 
starting point is the U.S. Commission on Ocean Policy's final report--
which includes 212 recommendations. One pressing priority among the 
recommendations is establishing a global ocean and coastal observation 
system. And indeed, the urgency of such action was underscored by the 
unfathomable toll of the Indian Ocean tsunami--about which NOAA alerted 
only two of eleven affected countries. That narrow warning demonstrates 
the current observation system limitations, but also raises questions 
about the unresponsiveness of the NOAA bureaucracy in apparently not 
having the ability to contact all vulnerable nations. Sadly, another 
case of bureaucratic paralysis contributed to tragedy last month, as 
five fisherman died while scalloping--trying to avoid ill-conceived 
NMFS penalties that encourage fisherman to remain at sea even under 
dangerous weather conditions. So recognizing the grave challenges 
facing the agency, I look forward to working with you to make NOAA as 
responsive and effective as possible, as quickly as possible.
    As Secretary you will also help develop the Administration's 
telecom policy, just as Congress embarks on anticipated reform of the 
Telecom Act of 1996. The President has called for universal affordable 
access to broadband technology by the year 2007, and recently-passed 
spectrum relocation legislation will help make next generation wireless 
telephone technologies a reality. I could not be more supportive of 
these initiatives that promise to bridge the economic and technological 
divide between urban and rural areas. Also critical is strengthening 
Universal Service, as the Universal Service High Cost Fund and the E-
Rate Program guarantee affordable access to phone and Internet service 
for all segments of our society. And that's why, when an arbitrary 
application of new accounting rules prevented the issuance of $400 
million in E-Rate funding to schools and libraries, Senator Rockefeller 
and I fought successfully to exempt the Universal Service Fund from 
those accounting rules--an exemption that should be made permanent this 
year.
    Again, Mr. Gutierrez, I welcome you to the Commerce Committee and 
thank you for your willingness to serve our country. Thank you, Mr. 
Chairman.

    Senator Snowe. And I also want to welcome our new 
colleagues, here on the Committee, as well.
    I want to welcome you, Mr. Gutierrez, and am looking 
forward to working with you in the future. Certainly, the 
Commerce Department has a number of issues that are vital, not 
only to my own constituency in Maine, but throughout this 
country.
    And, first and foremost, I know that many have raised the 
issue of trade. And, certainly, that is--been one of my major 
areas of concern for some time, since I've been in both the 
House and Senate, particularly from the standpoint that our 
government has failed to aggressively enforce our trade laws. 
And you're in a prime position, given your very impressive 
personal history and your entrepreneurial abilities, and being 
a skilled leader and corporate executive, in how to create jobs 
and to build a business, and I think that entrepreneurial 
spirit will be absolutely vital at a time when we're 
confronting monumental change in our own economy.
    As others have mentioned here, you know, we have had, 
obviously, huge disparities with respect to trade, unfair trade 
subsidies. We've had currency manipulation, certainly by China. 
And that has certainly aggravated the domestic manufacturing 
sector. Certainly the case in Maine, and it's true across 
America.
    Whereas, you probably know, there are more than 2.7 million 
jobs that have been lost in the manufacturing segment of our 
economy; and, in Maine over the last 4 years, 17,600 jobs. And 
so, it is vital that we aggressively pursue the tools to 
enforce our agreements.
    And I would encourage you to review the--Congress created a 
commission, the U.S.-China Economic and Security Review 
Commission, and it recently issued a report. And it was--that 
examination indicated, very specifically and explicitly, that 
the U.S. was failing to vigilantly protect intellectual 
property rights. And it also said that we were not properly 
addressing China's illegal trade subsidies, and, of course, the 
unfair manipulation of its currency, the yuan. And I know 
that's not your area. But it's all, I think, intertwined to the 
problems that we're facing that has undermined our 
manufacturing sector unfairly.
    So, I would hope you would use your leadership and your 
abilities and your knowledge to fight these issues and to 
challenge our trading partners, where they are trading 
illegally, unfairly, and also holding our WTO members 
accountable to the commitments that they're required to make. 
And, certainly, that has been the case with China in the past, 
and that's why we've got this enormous record-high trade 
deficit.
    It all goes back to the domestic manufacturing sector that 
has paid a very steep price for this unfairness. And so, you 
really have a prime opportunity. And I urge you, and I 
encourage you, to use it, to fight on behalf of our industry.
    You know, the President created, for the first time ever, a 
manufacturing czar, an Assistant Secretary for Manufacturing, 
and that was recently filled as a position, and I would hope 
that you would work with the Assistant Secretary, Mr. Frink, to 
work on these issues, to open up markets, to help, as others 
have indicated here, to reduce the structural costs to 
manufacturers so that they can remain competitive and to keep 
that competitive edge.
    So, I would hope that you would use the auspices of this 
position to do all that you can to enforce these agreements. 
And I hope we can work, in the future, in that area.
    Mr. Gutierrez. Thank you, Senator. I appreciate the 
encouragement. And, as a manufacturer and someone who has 
worked in manufacturing for all my life, I believe that 
manufacturing is a competitive advantage. I believe we have 
some of the best factories in the world, and the technologies 
and the supply chain systems and just the ability to use 
manufacturing to make us more efficient than our competition 
abroad. So I share that, and I thank you, Senator, for that.
    Senator Snowe. I appreciate that. And I also would 
certainly point out that one program within the Commerce 
Department is the Manufacturing Extension Partnership Program--
it's now the Hollings Manufacturing Extension Partnership--and 
that program is vital to manufacturers. And I was very 
concerned that that program was cut--in fact, from, like, 106 
million in 2004, to 39 million. It's sort of counterintuitive, 
at a time in which we're creating a new position for Assistant 
Secretary for Manufacturing, we were cutting the program that 
provides the very tools and expertise to manufacturers in our 
country. We now have restored it to its proper funding level, 
but I understand the Administration's budget might contain 
another severe cut, and I think that's the wrong direction, the 
wrong message at a time in which our manufacturers have been 
hurting as a result of all the issues that I have raised. So, I 
hope you will be very supportive of that program.
    Mr. Gutierrez. I will look into that as soon as I get into 
the budget, Senator Snowe.
    Senator Snowe. OK.
    Mr. Gutierrez. And I will----
    Senator Snowe. Great. I hope so.
    Mr. Gutierrez. Yes.
    Senator Snowe. And I would like to talk to you further 
about that, as well.
    Mr. Gutierrez. I would look forward to that.
    Senator Snowe. Another area--because I know my time will be 
expiring, so can I shift from land to sea--I have chaired the 
Ocean, Fisheries, and Coast Guard Subcommittee. And, as the 
Chairman indicated, NOAA represents about 59 percent of the 
Commerce budget. So it's a critical program. And the 
stewardship to the ocean is absolutely vital. And I would 
commend you, as well, to the U.S. Commission on Ocean Policy 
and the 212 recommendations that they have made. And to use 
your leadership to begin to work with the Committee and the 
Congress to systematically implement those recommendations, 
where we can, to find the funding on those critical issues, 
because it is evermore important. In fact, I do believe that we 
should create a national global warning system, ocean observing 
and warning system. And I have established one in the State of 
Maine, and I have recommended, and the Commission has 
recommended, creating a national system. And we can tie it to 
the tsunami warning system. I know there's a Pacific warning 
system, and I've had concerns about NOAA, and I have expressed 
that recently, after the devastating tsunami, where they did 
not contact officials in other countries. They did contact 
Australia, and Australia contacted Indonesia when there were 
signs of this impending tsunami in the Indian Ocean. I realize 
it's a Pacific warning system, but I think we have to work 
through those issues to see how we can set up an observation 
system that will work.
    And this global warning system can work in that regard, not 
only for monitoring the sea, but also to provide these 
indications.
    The Chairman. Thank you, Senator.
    Senator Snowe. I guess my time is up. Thank you.
    The Chairman. Senator Lott is recognized.

                 STATEMENT OF HON. TRENT LOTT, 
                 U.S. SENATOR FROM MISSISSIPPI

    Senator Lott. Well, thank you, Mr. Chairman. And I'm 
delighted to be here this afternoon, with you presiding for the 
first time over this Committee. I'm looking forward to an 
exciting 2 years under your leadership.
    I want to say how proud I am to have the new Members, and 
I've already been visiting, on both sides of the aisle, and 
I've been assured that the gentleman from Arkansas is going to 
be voting with me more over the next 2 years than he did the 
previous years. And I'll get around to Nelson next.
    And I want to say, Mr. Gutierrez, that we're very proud of 
you. Like others, we know of your history and what a 
magnificent life you've lived. And we congratulate you on your 
nomination, and we extend to your family, sitting behind you, 
our thanks for their willingness to sacrifice so that you can 
do this job. So, to you, congratulations; to them, 
commiserations.
    [Laughter.]
    Senator Lott. We understand that there's a certain loss of 
funds involved in this process.
    [Laughter.]
    Senator Lott. But we're so proud that you're willing to do 
it. We're looking forward to working with you.
    Mr. Gutierrez. Thank you, Senator.
    Senator Lott. Mr. Secretary-designee, do you remember the 
picture I drew for you----
    Mr. Gutierrez. Yes, sir.
    Senator Lott.--when you visited? What was that?
    Mr. Gutierrez. I still have it.
    Senator Lott. What----
    Mr. Gutierrez. It's a picture of a fish.
    Senator Lott. Very good. Very good.
    [Laughter.]
    Senator Lott. You're going to be fine.
    Mr. Gutierrez. If confirmed, I would like to get it framed, 
Senator.
    Senator Lott. Well, you can feel free to do so. And with 
your predecessor, every time I got a letter from him, or sent 
one, there was always a fish drawn at the bottom of the letter. 
But the problem is, at Commerce, you've got so many things 
you're going to be dealing with, important issues, that 
sometimes fisheries sort of fall off the end of the table. And 
that's unfortunate, because this is a--it's a tremendous 
industry. It creates jobs, produces revenue. I commend the new 
Senator from Louisiana. I was afraid we wouldn't hear any more 
about Gulf shrimp, but--with John Breaux gone--but I'm 
reassured that I've got an ally here, and am making the point 
to you that fisheries are in the Gulf, not just in the 
Northeast and the Northwest. And we'll look forward to working 
with you on that.
    I also join my colleagues, on both sides of the aisle, and 
particularly the new Senator from South Carolina, on the trade 
issue. Like most of them, I have voted consistently for all the 
trade agreements--GATT, NAFTA, China agreement, all of them--
but I do think that we've got to also use common sense, and 
we've got to make sure that they are--our trading partners are 
fair in their treatment and dealings with us. They have not 
been.
    I was pleased to see the rulings with regard to shrimp. I 
thought that the Administration has done some good work in the 
timber area. But don't let it slip away. And not good enough 
yet. And I could just go down the list.
    I just hope that you will continue to push for trade and--
Americans can compete as long as they don't cheat on the other 
side. So I won't repeat all of that.
    And, Mr. Chairman, I ask consent that my entire statement 
be made a part of the record.
    The Chairman. It will be.
    [The prepared statement of Senator Lott follows:]

  Prepared Statement of Hon. Trent Lott, U.S. Senator from Mississippi

    Thank you Mr. Chairman, and congratulations on holding your first 
hearing as Chairman of the Committee on Commerce, Science and 
Transportation. I met with Mr. Gutierrez last month and am impressed 
with his personal story and his business background. I look forward to 
moving his nomination through this Committee and the Senate as soon as 
possible.
    The Department of Commerce has a diverse collection of agencies 
with a variety of missions, but I would like Mr. Gutierrez to focus on 
three specific areas: oceans and fisheries; trade enforcement; and 
automotive manufacturing.
    My interest in Gulf of Mexico fisheries is well known to his 
predecessors, as I'm sure it will be with him. It is important that he 
understand that fisheries issues in the Gulf are often different from 
those in the Chairman's home State of Alaska, or from those in New 
England, but no less important. The Gulf commercial fishing industry 
has been the subject of intensive regulation by the Gulf of Mexico 
Fisheries Management Council without adequate representation on that 
Council and Gulf fisheries have not received adequate support from the 
Department and its agencies. I hope that Mr. Gutierrez will improve on 
that record.
    While I am a supporter of expanded international trade, I also 
insist that it be conducted fairly. The Department of Commerce has a 
vital role in protecting U.S. industries against unfair dumping by 
other countries. I believe the Department has made a good effort to 
address this problem with respect to imported shrimp and Canadian 
softwood lumber. I hope Mr. Gutierrez will ensure that the Department 
strongly enforces U.S. laws against unfair trade actions by other 
countries. This will make our current and future trade agreements more 
effective.
    I note that last month the Department of Commerce announced a new 
partnership, called the U.S. A-TEAM, directed at improving the 
competitiveness of the U.S. automotive industry. However, I am 
concerned that this partnership includes one foreign-owned company, 
DaimlerChrysler, but excludes others with a significant manufacturing 
and R&D presence in the United States, especially Nissan North America. 
I call on Mr. Gutierrez to recognize that the U.S. automotive industry 
is much broader than Ford, GM, and DaimlerChrysler by expanding the 
U.S. A-TEAM partnership to companies such as Nissan that are growing 
the automotive industry here in America.
    I thank the Chairman and ask that my statement be included in the 
record.

    Senator Lott. One point, though, that I don't believe has 
been raised, and that's with regard to the new partnership 
called the U.S. A-Team. Has anybody asked about that? This is 
directed at improving competitiveness of the U.S. automotive 
industry, and it--but it only includes--it includes just--
basically, Ford, General Motors, and DaimlerChrysler, but not 
other foreign companies that have significant domestic 
activity. And that could--you know, that includes, obviously, 
Nissan and Honda and Toyota and--well, Mercedes is 
DaimlerChrysler.
    I'd like you to take a look at this and make sure that we 
are approaching this right, that we don't penalize companies 
that are creating jobs and doing significant business in this 
country. To include one foreign company, but not others that 
are doing this domestic work, I believe is a mistake, and I 
hope that you will look at that. And I'd appreciate a response 
from you when--once you get settled in. It's an issue that, 
obviously, I'm not going to use in any way to delay.
    I look forward to voting for your nomination and 
confirmation, and to working with you in the next 4 years.
    Mr. Gutierrez. Thank you, Senator Lott.
    Senator Lott. Thank you.
    Mr. Gutierrez. Appreciate it. Thank you.
    Senator Lott. Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    Let me recognize Senator Nelson.

                STATEMENT OF HON. BILL NELSON, 
                   U.S. SENATOR FROM FLORIDA

    Senator Bill Nelson. Thank you, Mr. Chairman.
    Mr. Gutierrez, a lot of my constituents are very proud of 
you. We have a very large Cuban-American community, as you 
know. Bienvenido al Senado.
    Mr. Gutierrez. Gracias. Gracias.
    Senator Bill Nelson. We've talked, already, about a number 
of issues, when you and I had the opportunity to sit down. I 
just want to underscore. Because since we had our personal 
visit, and I told you about the fact that Brazil, if it were to 
have the tariff eliminated on Florida citrus, would not become 
free trade; it would become monopoly trade. They would have 100 
percent of the world market. But since then, in late December, 
as reported by the Wall Street Journal, the Brazilians are 
still up to no good. They are dumping, on the market, both 
frozen concentrate, at 37 percent less than production costs, 
and selling pasteurized not-from-concentrate juice at 78 
percent lower than production costs. The Commerce Department is 
going to weigh in on these kinds of things, and I just want to 
underscore to you what we had talked about before.
    I flew on one of your hurricane hunters. And, as a matter 
of fact, I was flying off the southern coast of Cuba, as we had 
surrounded Hurricane Charley, as it was moving to the 
northwest, dropping those instruments that gave realtime data 
that, then, we collected on the airplane and beamed it by 
satellite back to the National Hurricane Center, and has given 
us the opportunity for very accurate forecasting. And then, lo 
and behold, we end up getting hit by four hurricanes within a 
6-week period. Some of your equipment is getting old. Those 
aircraft that are like the Navy P-3s, and they need a 
replacement. NOAA is a big part of your Department.
    I think Senator Snowe mentioned that it was actually the 
NOAA Pacific Tsunami Warning Center in Hawaii that picked up 
the earthquake off Indonesia, but they didn't have the buoys 
out there to know where the tsunami was going. But they alerted 
people that there was a 9.0 earthquake. And with a little-
better warning system, we can be a little more accurate.
    And then, in your Department, you have the National 
Telecommunications and Information Administration that oversees 
Federal Government spectrum usage of the electromagnetic 
spectrum. We simply need to relieve some of the spectrum that 
now, with digital, can be combined and--do what with it? To 
give it to first-responders. And that was one of the 
recommendations of the 9/11 Commission.
    We have battled here on this Committee, because there are 
powerful entities that we are battling. And yet, for the good 
of the country, we're going to have to do that, and we're going 
to have to accommodate all these people in the 
telecommunications industry.
    So, Mr. Chairman, I'll leave it at that.
    Eventually, we're going to have to address the intellectual 
property issue with regard to other countries, particularly 
China. That means a great deal to our country and to its 
ability to compete in the world, and that's going to be in your 
sphere of influence, as well.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator.
    Mr. Gutierrez. Thank you, Senator.
    The Chairman. Senator Nelson?

             STATEMENT OF HON. E. BENJAMIN NELSON, 
                   U.S. SENATOR FROM NEBRASKA

    Senator Ben Nelson. Thank you, Mr. Chairman.
    And thank you, Mr. Gutierrez, for being here today. I 
enjoyed our brief conversation the other evening, and I look 
forward to working with you.
    Mr. Gutierrez. Thank you, Senator.
    Senator Ben Nelson. Nebraska's economy, as is the case with 
many economies in the Midwest, is driven by agricultural and 
non-agricultural trade, especially as it pertains to exports to 
other parts of the world. I doubt that you expected to talk as 
much about trade today as, perhaps, you have, given the fact 
that Ambassador Zoellick gets an earful, as well, about the 
challenges we have with trade, the growing deficit that we have 
in so many parts of the world, particularly with the People's 
Republic of China; the weak dollar and how that is supposed to 
work to our benefit, but it gets pegged by other currency and, 
therefore, there is no major advantage; the European barriers, 
which I suspect you may know first hand, coming from the food-
processing and packaging and distribution industry, as it 
relates to the genetically modified organisms and all the other 
ways that the Europeans seem to have not to import our 
agricultural products. And you probably have received an earful 
about the importance of free trade combined with fair trade, so 
that we do have the ability to throw a flag when there's a--
where there's an infraction, to try to get something resolved 
as quickly as we possibly can.
    Having set that up as a background, without setting you up, 
do you have any particular thoughts about what you might do to 
work with Ambassador Zoellick, within the Administration, and 
with this Committee and others, to try to resolve some of the 
major disputes, such as with the European trading partners, 
perhaps with Canada and some of the areas that we challenge 
there. You understand the sugar challenges that we've had there 
in the past. Nebraska is also a sugar state, as well. So maybe 
you have some thoughts, just general thoughts that you have. 
One big idea or something that might be able to give us some 
idea of what you have in mind.
    Mr. Gutierrez. Well, Senator, one of the things that you 
mentioned, the whole subject of non-tariff barriers, is 
something that I have personally lived through over----
    Senator Ben Nelson. Yes.
    Mr. Gutierrez.--you know, 29 years.
    Senator Ben Nelson. Yes, you have.
    Mr. Gutierrez. Little things like the vitamin fortification 
that we have in the U.S. is not accepted in Canada, so, 
therefore, our products, if they're going to be exported, they 
have to be re-manufactured, which adds some cost. We have the 
same problem across the European Union, where some countries 
will just say, ``We don't want fortification.'' So, therefore, 
we have to manufacture specially for them, which raises our 
costs. And I think that is something that, perhaps, is a little 
bit under the radar, but it's there.
    Senator Ben Nelson. It's there.
    Mr. Gutierrez. It's there, and our products have been held 
up, in many countries, in many markets, because of these hard-
to-explain non-tariff barriers. And it's something that I would 
like to work with the U.S. Trade Representative to try to put 
the issue on the table and begin to address it, because it is 
as impactful as a tariff. It impedes us from actually competing 
in those markets.
    Senator Ben Nelson. As it relates to the currency, I 
suspect that Secretary Snow has some interest in that, and 
you'll have the opportunity to work with him. But we were all 
told that a weak dollar would be good for exports from America, 
because the high value of the other currency should be able to 
buy more. We haven't seen that occur. Do you have any thoughts 
about that?
    Mr. Gutierrez. Senator, respectfully, I will refrain from 
having any thoughts on the currency, if you'll allow me.
    [Laughter.]
    Senator Ben Nelson. Well, can you assure me that you'll 
talk to Secretary Snow about it? Because I intend to----
    Mr. Gutierrez. Yes, sir.
    Senator Ben Nelson.--as well.
    Mr. Gutierrez. Yes, Senator.
    Senator Ben Nelson. As it relates to balance of trade, as 
you look to the future, because of the importance of exports 
from America, particularly as it relates to manufactured goods, 
do you have any thoughts about steel prices? You've said, 
``Steel has been part of our past, and will be part of our 
future.'' But the challenge that we have right now with the 
steel prices in the U.S. versus steel prices elsewhere, and the 
outsourcing and the offshoring of jobs----
    Mr. Gutierrez. Senator, I'm aware that steel is a major 
concern and a major problem. I am not aware of the intricacies 
of the price differences and subsidies that foreign countries 
may be receiving at our expense. But, as I mentioned to Senator 
Rockefeller, that is something that I want to look into, and it 
concerns me, as well.
    Senator Ben Nelson. Thank you, Mr. Gutierrez.
    Mr. Gutierrez. Thank you, sir.
    Senator Ben Nelson. Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    Mr. Gutierrez, we'll start a second round if anyone wants 
to ask questions. I've neglected to go through my usual 
procedure of explaining to you the state that I represent, Mr. 
Gutierrez. We have half the coastline of the United States. We 
are one-fifth the size of the lower 48. We have very few roads, 
and we depend primarily upon aviation. But we use the oceans a 
lot. We are involved with your people, with EDA, with tourism, 
with trade, with science, and with NOAA, but there's only one 
way to really understand Alaska, and that's to come see us. So 
you have my invitation, when----
    Mr. Gutierrez. Thank you, Senator.
    The Chairman.--you're the Secretary, to come soon, and 
we'll have a little side venture, which should be a little bit 
of exploration to see how we recover from the oceans some of 
the creatures of the deep. Some people call it ``fishing.''
    [Laughter.]
    The Chairman. I look forward to introducing you to my 
state, and hopefully we'll take the whole Committee up there 
sometime. But I do encourage you, at your first opportunity, to 
come visit us. Have you ever been to Alaska?
    Mr. Gutierrez. Senator, I have not, and--actually, I just 
spoke with someone who was on a terrific tour of Alaska, one of 
these cruise tours, and they said it was the most incredible 
thing they've ever seen in their life. So I don't know what my 
travel schedule is--I haven't seen a travel schedule--but I 
make a commitment to be in Alaska as soon as possible, sir.
    The Chairman. The President, by executive order, recently 
created a new Oceans Commission--it's really a committee on 
ocean policy, as I understand it--within the White House. This 
is primarily the jurisdiction of your Department, but we're 
going to take that initiative and try to work with the new 
Committee. And we would encourage you to join us--get your 
people from NOAA--so that we can work in partnership and not 
end up in crossed purposes, as far as this new initiative is 
concerned.
    I think we will have a Subcommittee that addresses the 
ocean policy. I want to reconstruct--really, call back into 
existence--the National Ocean Policy Study, which was 
authorized by Congress several Congresses ago. It, sort of, was 
ignored for a couple of Congresses, but we're going to put it 
back into being. So, it will be another function of this 
Committee that I would urge you to become familiar with.
    This Committee also started an initiative on tourism. And 
we believe that the tourism portion of our trade is extremely 
important. And the Congress passed a bill that we initiated 
here, and we look forward to working with you on that. The 
funding----
    Mr. Gutierrez. Thank you, Mr. Chairman.
    The Chairman.--on that is very small.
    But I do want to tell you that--I don't have any more 
questions--I think your willingness to serve this nation, that 
has served you so well for your own career--and the freedoms of 
this country are demonstrated by your being here, as you stated 
yourself. We look forward to trying to work with you to develop 
a strong relationship with your Department, so that we don't 
have investigations; we have active participation, on a 
bipartisan basis, on legislation, or amendments to legislation, 
that are necessary to make the programs that you administer 
function, and function as best as we possibly can arrange for 
them to do so.
    I do thank you, again, for agreeing to meet with us here 
this afternoon.
    Mr. Gutierrez. Thank you, Mr. Chairman.
    The Chairman. We'll do our best to get this nomination to 
the floor and voted on after the first vote that the Senate 
will make. It may be tomorrow. We're not sure.
    I would yield to my good friend and colleague--we call each 
other ``co-chairman.'' We also call each other ``brother.'' So, 
we look forward to working with you in tandem.
    Mr. Gutierrez. Thank you, Mr. Chairman.
    Mr. Chairman, I look forward to working with the Committee, 
and I commit to you to working in partnership with this 
Committee, sir.
    Senator Inouye. Mr. Chairman, before proceeding with my 
questions, I'd like to, most respectfully, suggest to the 
Secretary-designee that when Chairman Stevens invites you to 
Alaska, there's only one answer:----
    Mr. Gutierrez. Yes.
    Senator Inouye.--``Yes.''
    [Laughter.]
    Senator Lott. Could I inquire of the Senator from Hawaii, 
maybe a trip with the Secretary to your state would be in 
order.
    [Laughter.]
    Senator Inouye. My only problem is, they all want to go 
there.
    [Laughter.]
    Senator Inouye. Mr. Chairman, I'd like to submit questions 
for the record.
    The Chairman. Without objection, that will be submitted.
    The Chairman. And we would ask that you respond, to the 
questions that have been submitted to you, by Friday, if it's 
possible, Mr. Secretary.
    Mr. Gutierrez. Yes, Mr. Chairman, I will do everything 
possible----
    Senator Inouye. Mr. Gutierrez, I've had the high privilege 
and the great honor of serving in the Congress for--since 
1949--1959, I'm sorry--and in the Senate for 42 years. And in 
that period, I've had the opportunity to work with Cabinet 
Secretaries, appointees of several Presidents. And all of them 
would have resumes speaking highly of their academic 
accomplishments, doctorate from Harvard, or a Ph.D. from some 
other place, Oxford and all of this. And all the appointees 
that I've sat through on their hearings of this nature, you're 
the only appointee that I know of who has no college degree. 
And the job that you're about to undertake is a highly 
technical one. What makes your background such that you believe 
would well serve the country as Secretary of Commerce?
    Mr. Gutierrez. Thank you, Senator.
    I would like to say, first of all, that, although you're 
right, I don't possess a college degree, I have never ceased to 
be a student, and I have been a student of business for 30 
years. And I will be a student of--if confirmed--of the 
Commerce Department, as I have been of business. And perhaps 
the fact that I did not have a college degree, working my way 
up the system, forced me to work, sometimes, harder; to work 
sometimes smarter. But I always knew that perhaps I had a 
handicap that I had to confront.
    I have been able to work around the world, which I consider 
a great fortune, being able to work with different cultures, 
being able to understand the nuances of how to deal with people 
of other countries, the minor nuances of the difference between 
an Argentinian and a Chilean, the difference between Korea and 
China and Japan, which, as you know, are very marked. And I 
think that is something that I can bring to this job--very 
practical experience and knowledge of dealing with foreign 
cultures and understanding how to get the best of our foreign 
partners.
    Also, growing up in the system--and, as you've mentioned, 
I've had many MBAs reporting to me over my career. If it's--one 
thing that it has done is taught me the value of having the 
best people you can, and that, really, a team is only as good 
as its people, and a good leader surrounds himself or herself 
with the best people, and hopefully would have the self-
confidence to do so. I have been able to do that. I think 
that's a big part of why I am where I am. I am very pleased 
that, in my few weeks in Washington, I have met some of the 
brightest people I've ever met in my life. And that is a great 
source of motivation, a great source of inspiration for me.
    So I hope to bring those things, I hope to add value. That 
is my prime objective, Senators--to bring something to the 
party, to add value, to deliver results, which is really what I 
have been trained to do throughout my 30-year career. And, 
hopefully, maybe even, one day, as I have told my wife, just go 
back and pick up on that one piece of my life and get a college 
degree.
    [Laughter.]
    Senator Inouye. Well, yours is an extraordinary American 
success story. And I know that it's quite un-senatorial to 
announce your decision before decision-time, but I'm prepared 
to cast my vote in your favor at this moment.
    Mr. Gutierrez. Thank you, Senator.
    Senator Inouye. I think America is fortunate to have you, 
sir.
    Mr. Gutierrez. Thank you, Senator.
    Senator Inouye. Thank you.
    The Chairman. Does any Senator wish anything further?
    [No response.]
    The Chairman. We really do commend you for coming here on 
such short notice. I want to tell you that I served as an 
assistant to a Cabinet Officer, Secretary of the Interior Fred 
Seaton, who had no college degree. One of the finest men I ever 
worked with, and probably the brightest. So I feel sorry for 
your assistants, because I think you know how to work, and 
you'll work the people around you as they should work.
    Mr. Gutierrez. Thank you, Mr. Chairman.
    The Chairman. And we're happy to have you, and I'll join my 
colleague in voting for your confirmation and bring it before 
the Senate as rapidly as possible.
    Mr. Gutierrez. Thank you, Mr. Chairman.
    The Chairman. Thank you very much for taking on the 
challenge of this job.
    Mr. Gutierrez. Thank you very much. Thank you, Mr. 
Chairman.
    The Chairman. We will adjourn, and request, again, that the 
answers to the questions submitted be filed by Friday.
    Mr. Gutierrez. Thank you, Mr. Chairman.
    [Whereupon, at 5:45 p.m., the hearing was adjourned.]

                            A P P E N D I X

    Response to Written Questions Submitted by Hon. John McCain to 
                          Carlos M. Gutierrez

    Question 1. In 2001, the National Academy of Sciences (NAS) 
reported the following: ``Greenhouse gases are accumulating in the 
Earth's atmosphere as a result of human activities, causing surface air 
temperatures and subsurface ocean temperatures to rise. Temperatures 
are, in fact, rising. The changes observed over the last several 
decades are likely mostly due to human activities, but we cannot rule 
out that some significant part of these changes is also a reflection of 
natural variability.'' Do you agree with the NAS's assessment?
    Answer. I do not know whether NAS's assessment is correct. While I 
am not an expert on climate change, I will work closely with the Under 
Secretary for Oceans and Atmosphere, Conrad Lautenbacher, and the 
National Oceanic & Atmospheric Administration (NOAA) to increase my 
understanding of this important issue. The NAS question points to 
significant uncertainties in the field of climate change science. I 
understand that the Climate Change Science Program, an interagency 
research effort led by the Department of Commerce and NOAA, is working 
on the key uncertainties in climate change science in order to provide 
the federal, state, and local officials and the private sector with the 
most up-to-date information products to support decision-making 
concerning climate change issues. I intend to continue Secretary Evans' 
support for these efforts, as well as the parallel interagency Climate 
Change Technology Program, led by the Department of Energy, which is 
directing substantial research and development work on new technologies 
intended to reduce, avoid, or capture greenhouse gases.

    Question 2. In a December 2004 report issued by the Council on 
Competitiveness on Innovation (Council), the Council stated that where, 
how, and why innovation occurs are in flux and that the barriers to 
innovation are falling. The Council's report further asserts that for 
innovation in the United States to thrive it will not be enough--in 
fact, it could be counterproductive--simply to intensify current 
stimuli, policies, and management strategies, and to make incremental 
improvements to organizational structures and curricula. As a former 
CEO of a major international corporation, what changes do you believe 
are necessary in our nation's innovation system to ensure continued 
leadership in this area?
    Answer. While I am not in a position to discuss changes to the 
Nation's innovation system at the present time, I know firsthand that 
innovation is the key to our economic future. I am pleased that 
virtually the entire Department has been playing a leading role in 
advancing innovation. Innovation makes our nation more competitive and 
is necessary to maintain our technological preeminence. It is critical 
that both our public and business leaders focus on developing America's 
innovative capacity. It is also critical that the Federal Government 
support America's innovative capacity. The Federal Government can help 
ensure that the United States maintains the intellectual capital that 
catalyzes innovation, encourages workforce flexibility and life-long 
learning, and supports entrepreneurship.

    Question 3. The Kyoto Protocol will become effective in February 
2005. Pursuant to the treaty, many countries around the world will be 
required to reduce their greenhouse gas emissions. The United States is 
not a signatory to the protocol. What impact do you believe this treaty 
will have on the competitiveness of U.S. industry?
    Answer. I do not have sufficient information on which to make an 
informed judgment about the relative impact, if any, of the Kyoto 
Protocol on the competitiveness of U.S. industry. I have been advised, 
however, that the Bush Administration's approach to greenhouse gas 
reduction is to decrease emission intensity--emissions of greenhouse 
gas per unit of economic productivity--by 18 percent by 2010. The 
Administration has challenged U.S. businesses and industries to develop 
new technologies to meet this goal, and is supporting such efforts 
through the Climate Change Technology Program and other means. I agree 
with President Bush's view that a healthy economy--one in which 
investments in research and development can thrive--is central to any 
successful emissions reduction strategy. I expect that American 
businesses utilizing cutting-edge technologies to reduce greenhouse 
gases and boost energy efficiency will have a competitive edge in the 
world market.

    Question 4. Last fall, SpaceShipOne won the $10 million Ansari X-
Prize competition for the first privately funded group to send three 
people on a suborbital flight and repeat the feat within two weeks 
using the same vehicle. Some believe that this event will open a new 
area of space commerce for suborbital space flights. Also last year, 
Congress passed legislation authorizing the Federal Aviation 
Administration to regulate these suborbital space launches. What are 
your plans for the Department of Commerce's Office of Space 
Commercialization?
    Answer. I expect that the Department will continue to play an 
important role in the development of U.S. Government policies that 
foster the growth and competitiveness of the U.S. commercial space 
industry. I understand that several DOC bureaus (NOAA, ITA, TA, NTIA, 
BIS) are and will remain engaged in commercial space issues ranging 
from GPS to commercial remote sensing, fair trade and exports, space 
transportation, protection of space frequencies, and protection of the 
U.S. industrial base. I am advised that pursuant to the FY05 
appropriations bill, the Department intends to integrate the Office of 
Space Commercialization functions into NOAA.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Conrad Burns to 
                          Carlos M. Gutierrez

Timber Industry
    Question 1. [Submitted on behalf of Senators Burns and Snowe] U.S. 
timber industry jobs and operations, including small mill operators in 
Montana, rely on effective enforcement of U.S. trade laws, particularly 
against unfair Canadian lumber imports. In evaluating the extent of 
Canadian timber subsidies, for example, it is imperative that the 
Commerce Department ascertain the true market value of Canadian timber 
in comparison to timber pricing data that reflects full value. Will you 
ensure full enforcement of the trade laws in the softwood lumber 
sector, including selection of accurate subsidy-measurement benchmarks?
    Question 1a. [Submitted on behalf of Senators Burns and Snowe] The 
unfair trade determinations under review by NAFTA panels are the 
original Commerce Department and International Trade Commission final 
determinations issued at the end of countervailing duty and antidumping 
duty investigations in 2002. I understand that under U.S. law, the 
decisions of these NAFTA panels can only have prospective effect. That 
is, their only impact can be to change the rates at which duty deposits 
are collected on imports entering the United States after publication 
of notice of the NAFTA panel decisions. The outcomes of these appeals 
could not result in the U.S. Government returning cash deposits already 
paid on Canadian lumber imports or, for that matter, collection of 
additional deposits on those imports. Can you confirm that this is your 
understanding as well? Furthermore, can you confirm my understanding 
that the U.S. Government would be legally forbidden to return duty 
deposits in response to these NAFTA panel decisions (apart from special 
authority that would be available to allocate deposits in the context 
of settlement of the Canadian lumber dispute)?
    Answer. Yes, I will ensure full enforcement of the trade laws in 
all respects and in all sectors, including the softwood lumber sector.
    Regarding the impact of NAFTA litigation, I understand that the 
Department's position is that the general rule is that NAFTA decisions 
only apply prospectively. There is an exception to that general rule, 
but it only applies with respect to NAFTA decisions regarding a review 
of an existing antidumping or countervailing duty order, not the 
original investigation. I have been advised that, because that 
exception does not apply to investigations, the Department's position 
is that the current litigation will not impact pre-judgment imports of 
lumber. Any assessments or refunds of antidumping and countervailing 
duties on the pre-judgment imports will be decided in subsequent 
administrative reviews by the Department.

Broadband Deployment
    Question. Last year the Administration came out with a goal of 
universal broadband deployment by 2007, and I applaud that. I wanted to 
ask if you've had an opportunity to look at the broadband expensing 
legislation that Senator Rockefeller and I have pushed for several 
years now. I think it could really help us meet the 2007 goal. We have 
passed it through the Senate twice now, but it's always gotten hung up 
in the House. I think your support would make all the difference in 
getting that legislation through the House. I know tax legislation is 
not your bailiwick, but broadband deployment is, so I would like to ask 
if you and the Administration in general would reconsider this bill and 
see if you can support it.
    Answer. As you note in your question, President Bush has 
articulated a bold new vision for broadband in America by setting a 
national goal for universal and affordable access to broadband by 2007. 
I think that this is a very important goal, both for the Nation and on 
a global scale, in terms of our nation's competitiveness and it is one 
that I wholeheartedly endorse and fully support.
    I have been advised that although the recently enacted American 
Jobs Creation Act of 2004 did not include the broadband provision that 
you and Senator Rockefeller sponsored, the President signed the Jobs 
and Growth Tax Reconciliation Act of 2003, which included provisions 
that allow companies to accelerate depreciation of capital-intensive 
broadband equipment. I have also been informed that the Administration 
has championed making the research and experimentation tax credit 
permanent, and the President has signed into law an 18-month extension 
of this credit. The President has also supported dramatic increases in 
funding for research and development initiatives.
    I believe that President Bush is dedicated to keeping our nation on 
the leading edge of progress in the 21st century by encouraging 
entrepreneurship and making the best technology available to our 
citizens. If confirmed, I hope to join him in helping to achieve his 
goal of universal and affordable access to broadband for all Americans. 
I will look forward to working with you and other members of the 
Committee and the Congress on achieving the President's goal, and I 
would be willing to look at your bill and other relevant legislation 
introduced in the 109th Congress. I would also consult with other 
members of the Administration on this issue which crosses a number of 
departments.

Agriculture Safeguards
    Question. Perishable and cyclical agricultural products face 
special needs because of the perishability of the product. One of the 
negotiating objectives in the Trade Act of 2002 was for the U.S. to 
ensure that special rules were negotiated to address the needs of this 
sector. The Australian Free Trade Agreement represented a positive 
commitment to this objective by including safeguards for beef. Please 
indicate your views on special rules for perishable products and their 
role in future trade negotiations.
    Answer. I appreciate the importance the agriculture community 
attaches to the special issues associated with perishable products, and 
the role of such issues in future trade negotiations. I also understand 
that specific agriculture safeguard measures with respect to imports of 
beef and horticultural goods have been included in our trade 
agreements. Since this is an issue that falls primarily under the 
purview of the Department of Agriculture and the U.S. Trade 
Representative, I will be pleased to discuss this issue with my 
colleagues in those agencies if I am confirmed.

Manufacturing Extension Partnership (MEP)
    Question. One program I have been supportive of over the years, 
within the Department of Commerce is the Manufacturing Extension 
Partnership (MEP) program. Congress appropriated $109 million for this 
program in FY 2005 and it is doing important work in Montana where we 
have over 2,000 manufacturing firms. We are a rural state but we have 
needs and opportunities that MEP has addressed. For example, our MEP 
Center helps companies understand costs, implement Lean Manufacturing. 
I would like to hear your thoughts on the program and get some 
assurance your office will work with this Committee and my colleagues 
on the Appropriations Committee to address the yearly funding struggles 
we face with the program.
    Answer. As someone who has spent his professional career with a 
U.S. manufacturer, I can assure you that I know how vital a role 
manufacturers large and small play in our economy. The national 
manufacturing network of the Hollings Manufacturing Extension 
Partnership is assisting our nation's small manufacturers and seeks to 
contribute to a strong economy. I will work with the members of the 
Commerce and Appropriations Committees to ensure that small 
manufacturers have access to technical and information resources to 
allow them to remain competitive.

ICANN and Internet Domain Name Security
    Question 1. What is your view on ICANN as an institution, and how 
do you think its functioning could be improved, if at all? Is it 
currently responsive enough to all Internet stakeholders?

    Question 1a. What is your assessment of the White Paper/Green Paper 
processes that were initiated under former Clinton Administration 
official Ira Magaziner in the mid-1990s? Do you feel that there was 
sufficient consultation at that time with the Congress regarding the 
major commitments that were made?

    Question 1b. What is the current number of full-time equivalent 
employees in the NTIA who monitor and participate in ICANN activities? 
Given the broad scope of ICANN's authority over the Internet and the 
direct impact its actions could have on Internet users and businesses, 
both in the U.S. and abroad, do you feel that this is sufficient?

    Question 1c. ICANN currently sends regular reports to NTIA in which 
it outlines its progress toward certain ``milestones'', which are set 
in ICANN's MOU with the Commerce Department and which were initially 
outlined by the Magaziner task force. If NTIA feels all these 
milestones have been met, according to my understanding, the MOU will 
be allowed to expire next year and the USG will have no more role in 
ICANN than any other government. Given the USG's historic role in 
developing, funding, and overseeing the Internet, do you feel the USG 
should have no oversight role at all over the future development and 
security of the DNS? If not, what specific role and/or authority should 
the USG retain into the future?

    Question 1d. What is your view on the proper use of the WHOIS 
databases, and what is your assessment of current ICANN processes 
underway regarding WHOIS?

    Answer. I have not had the opportunity to study the history of the 
Internet Corporation for Assigned Names and Numbers (ICANN) or its 
current operations. I understand that the Department, through its 
Memorandum of Understanding with ICANN, has closely monitored and 
assessed ICANN's evolution since its inception. If confirmed, I expect 
to be briefed more fully and would be pleased to discuss ICANN issues 
with you and the Committee.

    With regard to the second part of your question, I do not have 
enough information to comment on actions taken by officials in the 
previous Administration. I do believe the Bush Administration has 
valued its opportunities to consult with Congress, and will continue to 
do so in its second term.

    I am not aware of the exact staffing levels devoted to ICANN 
activities, but understand the Department believes that it devotes 
sufficient resources within the Department to monitoring and 
participating in ICANN-related activities. If confirmed, I am committed 
to ensuring that the Department's resources are appropriately focused 
on priority issues of importance to the Administration, the Congress, 
and the economy as a whole.

    I have been advised that the underlying premise for the creation of 
ICANN is the privatization of the management of the domain name system, 
and that the MOU between the Department and ICANN is structured to meet 
that goal. If I am confirmed, I expect to be more fully briefed on this 
important issue, as well as the many other issues related to ICANN and 
the management of the domain name system, including the WHOIS database, 
and will be pleased to hold further exchanges with you and the 
Committee at a later time.

Implementation of New E-911 Law
    Question 1. What unobligated or carry-forward balances exist that 
would permit the Department to immediately activate the newly 
authorized E-911 office?

    Question 1a. How soon does the Department plan to have the Office 
staffed and operational?

    Question 1b. How does the Administration envision the Office 
operating and reporting within the Department?

    Answer. I view the recently enacted ``Enhance 911 Act of 2004'' as 
an important piece of legislation intended to move forward the 
availability of critical E-911 services. I have been informed that 
appropriate Departmental personnel are currently reviewing the 
requirements under the legislation and evaluating ways to best 
implement them. It is my understanding that there were no funds 
appropriated. I understand that Department of Commerce officials will 
be working closely with the Department of Transportation to develop an 
approach to fulfill the statutory obligations of the legislation.

International Digital Television Outreach
    Question 1. What can the Commerce Department do to assist the FCC, 
industry groups and consumers to make the transition to terrestrial 
digital TV (DTV) broadcasting more successful in the United States?

    Question 1a. The U.S. has adopted one DTV standard (ATSC) and the 
European Union and several other countries around the world have 
adopted a different, incompatible standard (DVB). Japan has a third DTV 
standard still in development, but many developing countries are soon 
expected to choose between the U.S. and European standards. At stake is 
the technology for many millions of future DTV sets and broadcasting 
equipment around the world, and the corresponding possible sales for 
many of the firms who have been implementing DTV in the U.S. What will 
the Commerce Department do under your leadership to advocate for the 
ATSC standard in the near future? What kinds of resources can you 
devote to supporting and complementing U.S. industry outreach, 
particularly in Latin America?

    Answer. I have been advised that the President's Fiscal Year 2005 
budget included a proposal that would require television broadcasters 
to begin paying an annual fee for the continued use of analog broadcast 
spectrum beyond the initial deadline. I support this proposal and 
believe that it is a necessary tool to encourage broadcasters to 
transition to digital broadcasting so that recovered analog spectrum 
can be used for a number of new wireless and public safety services. If 
confirmed, I would look forward to continuing this and other efforts to 
hasten the transition to digital television.
    The Administration supports the Advanced Television Systems 
Committee (ATSC) standard and has repeatedly advocated its adoption in 
bilateral dialogs with a number of nations, including those in Latin 
America. If confirmed, I would continue to promote this standard 
through discussions with my foreign counterparts. Additionally, if 
confirmed, I will review the Department's budget to ensure that 
adequate resources are being brought to bear to support the adoption of 
this standard in the global marketplace.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Trent Lott to 
                          Carlos M. Gutierrez

    Question 1. Mr. Gutierrez, will you pledge to me that, if you are 
confirmed, you will open the U.S. A-TEAM partnership to other foreign-
owned automotive manufacturers beyond DaimlerChrysler that have 
invested in a significant U.S. manufacturing and R&D presence?
    Answer. I have been informed about the collaboration established by 
the U.S. Council for Automotive Research (USCAR) and the Department of 
Commerce's Technology Administration on December 9, 2004, that created 
the U.S. A-TEAM partnership. I understand this collaboration was 
initiated over a year ago by USCAR, the pre-competitive research 
consortium of General Motors, Ford and DaimlerChrysler, and thus the 
collaboration is not with individual auto manufacturers. The Department 
of Commerce, however, continues to work very closely with all American 
automotive manufacturers and, we would be open to discussions with 
other companies or organizations interested in establishing similar 
cooperative manufacturing R&D relationships.

    Question 2. Mr. Gutierrez, I understand that the Department of 
Commerce is working with the U.S. Trade Representative to address 
problems with China enforcing contracts under the 1958 New York 
Convention, of which it is a signatory. Many U.S. companies have 
experienced problems with Chinese companies not abiding by contracted 
agreements. If you are confirmed, will you aggressively confront this 
problem with China, and any other countries with similar problems?
    Answer. I understand that the Bush Administration is committed to 
encouraging China to strengthen its commercial legal system, including 
the need to recognize and enforce foreign arbitral awards under the 
1958 United Nations Convention on the Recognition and Enforcement of 
Foreign Arbitral Awards. I have been advised that the Commerce 
Department, through the U.S.-China Joint Commission on Commerce and 
Trade, has long sought to promote commercial law development in China, 
particularly with respect to promoting arbitration and ensuring that 
arbitral awards are honored. If confirmed, I intend to continue this 
work and to fully support U.S. companies in China, as well as in any 
other country where they might encounter similar problems.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                          Carlos M. Gutierrez

Timber Industry
    Question 1. [Submitted on behalf of Senators Burns and Snowe] U.S. 
timber industry jobs and operations, including small mill operators in 
Montana, rely on effective enforcement of U.S. trade laws, particularly 
against unfair Canadian lumber imports. In evaluating the extent of 
Canadian timber subsidies, for example, it is imperative that the 
Commerce Department ascertain the true market value of Canadian timber 
in comparison to timber pricing data that reflects full value. Will you 
ensure full enforcement of the trade laws in the softwood lumber 
sector, including selection of accurate subsidy-measurement benchmarks?

    Question 1a. [Submitted on behalf of Senators Burns and Snowe] The 
unfair trade determinations under review by NAFTA panels are the 
original Commerce Department and International Trade Commission final 
determinations issued at the end of countervailing duty and antidumping 
duty investigations in 2002. I understand that under U.S. law, the 
decisions of these NAFTA panels can only have prospective effect. That 
is, their only impact can be to change the rates at which duty deposits 
are collected on imports entering the United States after publication 
of notice of the NAFTA panel decisions. The outcomes of these appeals 
could not result in the U.S. Government returning cash deposits already 
paid on Canadian lumber imports or, for that matter, collection of 
additional deposits on those imports. Can you confirm that this is your 
understanding as well? Furthermore, can you confirm my understanding 
that the U.S. Government would be legally forbidden to return duty 
deposits in response to these NAFTA panel decisions (apart from special 
authority that would be available to allocate deposits in the context 
of settlement of the Canadian lumber dispute)?
    Answer. Yes, I will ensure full enforcement of the trade laws in 
all respects and in all sectors, including the softwood lumber sector.
    Regarding the impact of NAFTA litigation, I understand that the 
Department's position is that the general rule is that NAFTA decisions 
only apply prospectively. There is an exception to that general rule, 
but it only applies with respect to NAFTA decisions regarding a review 
of an existing antidumping or countervailing duty order, not the 
original investigation. I have been advised that, because that 
exception does not apply to investigations, the Department's position 
is that the current litigation will not impact pre-judgment imports of 
lumber. Any assessments or refunds of antidumping and countervailing 
duties on the pre-judgment imports will be decided in subsequent 
administrative reviews by the Department.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Gordon H. Smith to 
                          Carlos M. Gutierrez

Softwood Lumber
    Question. As you know, the lumber dispute between the United States 
and Canada is the largest trade case in our history. Four years of 
well-intentioned work has yielded little progress in bringing the 
dispute to a conclusion. Do you intend to maintain the Commerce 
Department's position that duties collected on Canadian lumber will not 
and cannot be returned unless it is part of a negotiated settlement?
    Answer. Yes.

Piracy
    Question 1. Mr. Gutierrez, America's copyright industries generate 
some 12 percent of GDP and account for over 8 percent of total U.S. 
employment. The four core copyright industries--movies, music, 
publishing and computer software--account for almost $90 billion in 
foreign sales and exports--more than agriculture, more than automobiles 
and parts, more than aircraft. How do you intend to protect this 
significant component of our economy in an age when technological theft 
is so easy?
    Answer. The Bush Administration recognizes the importance of 
protecting the intellectual property of the copyright industries and 
other U.S. businesses and has made it a priority to fight 
counterfeiting and piracy. Having spent a number of years with a 
consumer products company, I fully recognize the value of intellectual 
property assets and, if confirmed, would continue to give intellectual 
property protection priority status.
    Recently, the Department of Commerce helped launch an 
Administration cooperative initiative called the Strategy Targeting 
Organized Piracy (STOP) to combat counterfeiting and piracy. If 
confirmed, I would work with Administration colleagues to make that 
initiative a success.
    In negotiations and consultations with our trading partners, I 
would place significant emphasis on the need for improved criminal, 
civil and administrative enforcement and the need to protect copyright 
over the Internet and promote accession to the World Intellectual 
Property Organization's (WIPO) Internet Treaties by all countries, 
especially those with a high incidence of piracy.
    In addition, if confirmed, I would work to support the 
Administration's commitment to vigorously enforce trade laws and 
agreements and to make sure our trading partners comply with their 
TRIPs (Agreement on Trade-Related Aspects of Intellectual Property 
Rights) obligations. The Administration has negotiated and will 
continue to negotiate strong intellectual property provisions in all 
free trade agreements. If confirmed, I would strongly support those 
efforts.

    Question 2. Copyright piracy is a huge problem in China for our 
creative industries. For the computer software industry, only about 8 
percent of the software installed in a given year in China is legally 
purchased--much of it by the Chinese government. Now it seems that the 
Chinese government is about to implement a policy of buying only 
Chinese software. How do you propose to address these twin market 
access barriers of piracy and discriminatory procurement policies?
    Answer. I understand that China's top leadership has committed to 
reducing infringement of intellectual property rights (IPR) in China 
and that last year, during the U.S.-China Joint Commission on Commerce 
and Trade meeting, China specifically committed to extend its ban on 
the use of pirated software in central government and provincial 
agencies to include local governments. I am advised that in September 
2004, Vice Premier Wu Yi directed that all institutions at the 
provincial level use only legal software by the end of the year, and 
many local governments, including Shanghai, Beijing, and Guangzhou, 
have undertaken measures to ensure that their agencies use only legal 
software. If confirmed, I will follow up with China's leadership to 
ensure these commitments are honored. I also understand that, for an 
industry such as software, where U.S. companies either dominate or are 
competitive in nearly all segments of the sector, having access to 
China's government procurement market is critical. I understand that 
the Administration is already actively engaged with the Chinese 
Government to encourage China to keep its government procurement market 
open to American firms, and, if confirmed, I will continue to press the 
Chinese leadership on this issue.

Trade Policy
    Question 1. I understand that China is on the verge of releasing 
government procurement regulations that will bar most U.S. software 
products from the government market. What is the Administration's 
position on this issue, and what is its strategy for addressing it?
    Answer. I understand that the Administration has been monitoring 
China's development of its software government procurement policy since 
the issue emerged in early 2003, and has been actively engaging Chinese 
leadership to encourage China to allow U.S. companies to continue to 
provide software products and services. I understand Secretary Evans 
intends to raise this issue with senior Chinese leaders when he travels 
to China this week. This is a priority issue for the Administration, 
and, if confirmed, I will continue to press the Chinese on this issue 
at senior levels.

    Question 2. Many nations, unlike the United States, have not signed 
the WTO Agreement on Government Procurement or similar bilateral trade 
agreements with the U.S., which means that these nations are free to 
exclude U.S. firms from government procurement contracts. Even some 
countries that have signed onto the Government Procurement Agreement 
seek to benefit domestic suppliers over U.S. firms indirectly--for 
instance, by extended preferences to software firms that follow 
specific development or licensing models, regardless of the underlying 
merits of the software at issue. As Secretary of Commerce, will you 
work aggressively to persuade United States' trading partners that such 
barriers to open and merit-based procurement undermine the principles 
of neutrality and non-discrimination that are the foundation of 
international trade? Will you also assure this Committee that you will 
continue the Department's advocacy against software procurement 
preferences that limit competition or are based on factors unrelated to 
merit? What specific steps will you take with respect to China's 
efforts to cut off access of U.S. software companies to its government 
procurement market, a development that foreshadows the exclusion of 
many other U.S. industries to PRC government procurement?
    Answer. If confirmed as Secretary of Commerce, I will be aggressive 
in encouraging our trading partners to adopt non-discriminatory 
approaches to government procurement that conform to generally accepted 
international practices. I will ensure the Department continues to 
advocate for government procurement rules whereby decisions are made 
based on the principle of best value. I will also reach out to my 
counterparts in the European Union and Japan, and other countries that 
have invested significantly in China, to encourage Chinese Government 
leadership to reconsider their proposed software procurement policy. If 
confirmed, I will take advantage of every opportunity to raise our 
concerns about China's government procurement policy with China's 
senior leadership.

    Question 3. Technology innovation has been the engine of American 
economic growth for years, and America's innovation industries are 
leaders in the global economy. The Department of Commerce has long been 
a champion of American innovation, and I have no doubt that this will 
continue under your leadership. Your counterparts in other countries, 
however, may not always perceive U.S. innovation as we do and may even 
view U.S. leadership in this area as a threat to their own industries. 
In particular, there is a risk that other nations may condemn, as anti-
competitive, business practices that from a U.S. perspective promote 
innovation and are pro-consumer. As Secretary of Commerce, would you 
make it a priority for the Department to advance the interests of 
America's innovation industries in foreign markets? Specifically, would 
you engage actively with other U.S. agencies to ensure that our key 
trading partners do not use competition law to unfairly disadvantage 
U.S. firms in foreign markets?
    Answer. If confirmed as Secretary of Commerce, I am committed to 
maintaining the competitiveness of America's technology innovation 
industries. Advancing those industries' interests in foreign markets 
will be on my agenda. I will work with my colleagues in the 
Administration as well as our trading partners to ensure that 
competition laws are not used to disadvantage American firms in foreign 
markets.

    Question 4. As you know, China has a huge trade surplus with the 
United States. China's Premier has stated that China will reduce this 
surplus by importing more American products. Yet it appears that the 
Chinese Government is about to throw up a new barrier to market access 
for one of our most competitive exports by requiring government 
ministries to purchase only Chinese software. What will the Department 
of Commerce do, under your leadership, to hold China to its word?
    Answer. I understand that the Administration has been monitoring 
China's development of its software government procurement policy since 
the issue emerged in early 2003, and has been actively engaging Chinese 
leadership to encourage China to allow U.S. companies to continue to 
provide software products and services. Secretary Evans intends to 
raise this issue with senior Chinese leaders when he travels to China 
during this week. This is a priority issue for the Administration, and, 
if confirmed, I will continue to press the Chinese on this issue at 
senior levels.

Columbia River Issues
    Question 1. You are aware of the importance of the Federal Columbia 
River Power System to the economy of the Pacific Northwest as it 
provides transportation, irrigation, flood control, and almost one-half 
of the electricity used in the region. The Department of Commerce (NOAA 
Fisheries) plays an enormous role in how this system is managed. As you 
oversee the Department's role in managing the Fisheries and Endangered 
Species Act aspects of salmon and steelhead policy, how will you ensure 
that the Department adequately considers the impacts of those policies 
on farmers, ranchers, and electricity ratepayers in the Northwest?
    Answer. I am aware that NOAA Fisheries, in conjunction with the 
Bonneville Power Administration and the Army Corps of Engineers, plays 
a key role in the operation of the Federal Columbia River Power System. 
The existence of the dams that make up this system contribute 
significantly to the economic foundation of the Pacific Northwest by 
providing electric power generation, navigation, irrigation, and flood 
control. I understand that great attention is warranted as we attempt 
to balance the needs of listed salmon and steelhead with the operation 
of a hydropower system. Should I be confirmed, I will work diligently 
to ensure that decisions made by the Department of Commerce give 
adequate consideration to all of the region's stakeholders, including 
farmers, ranchers, and the electricity ratepayers you mentioned.

    Question 2. NOAA Fisheries is responsible for developing recovery 
plans for ESA-listed fish in the Northwest that take into account 
impacts to the fish beyond the narrow focus of the hydropower system 
(many factors such as harvest, hatcheries and habitat play a large 
role). NOAA expects to issue these plans by the end of the year. Is 
this pace realistic, and can you please give details regarding whether 
there is adequate funding allocated to this effort?
    Answer. I understand that NOAA Fisheries has been working 
collaboratively at the local level, including through the Northwest 
Power Planning and Conservation Council's sub-basin planning process to 
develop and acquire the information necessary to issue recovery plans 
for ESA-listed fish. Nevertheless, I am unable to comment specifically 
on the efficacy of the timelines you mention until I have time to 
become familiar with the details of this process. With respect to your 
question regarding funding for this effort, the President's FY 2006 
Budget is in its final stages of review and will be released in 
February. Should I be confirmed, I would be pleased to have additional 
discussions with you about these issues after the President's Budget 
request is submitted to the Congress.

    Question 3. For several years, salmon and steelhead have returned 
to the Columbia River in record numbers. Does NOAA Fisheries have a 
clear definition for what constitutes numerical ``recovery'' of these 
runs? If so, please elaborate on that definition. Also, please describe 
the status of any pending de-listing determinations.
    Answer. I am still working to educate myself on the particulars of 
many NOAA issues, notably the complexities of salmon policy. 
Nevertheless, I understand the critical importance of recognizing what 
defines ``recovery'' and that this issue is one that will continue to 
dominate the salmon policy debate. If confirmed, I will work with NOAA 
Fisheries to ensure that realistic recovery targets are developed as 
expeditiously as possible. With respect to your question regarding 
pending de-listing determinations, I am unable to comment until I have 
more time to become familiar with NOAA's work on this issue.

Klamath Basin Issues
    Question 1. One of the pressing issues in southern Oregon and 
northern California concerns the Klamath Project and NOAA Fisheries 
biological opinions for coho salmon in the Klamath River. In 2001, a 
NOAA Fisheries biological opinion was largely responsible for cutting 
off water to family farms and wildlife refuges that depend on water 
supplied through the federal Klamath Project. As a result of an 
independent review of that opinion by the National Research Council we 
now know that the requirement for higher flows was not backed by 
science or existing data. At the same time, there remains in place a 
biological opinion that calls for high Klamath River flows, to be 
achieved to a large degree by idling productive farmland and taxing 
groundwater supplies. It is my understanding that the Bureau of 
Reclamation and NOAA Fisheries will complete a new ESA consultation for 
the Klamath Project and coho salmon before the 2006 irrigation season. 
Will you provide me with the anticipated schedule for that consultation 
and a description of the role that will be played by the affected water 
users in the Klamath Project?

    Question 1a. The report of the National Research Council makes it 
abundantly clear that in the recent past there has been an ineffective 
emphasis on regulating the Klamath Project water supply as a means to 
attempt to benefit coho in the mainstem Klamath River. Will you provide 
me with information on how NOAA Fisheries and the Bureau of Reclamation 
will go about achieving a more appropriate and equitable approach to 
addressing the coho in the Klamath Basin, including avoidance of land 
idling and excessive groundwater pumping as tools?

    Question 1b. It is my understanding that in past consultations the 
Bureau of Reclamation and NOAA Fisheries have taken different 
conceptual approaches to the analysis of impacts to coho resulting from 
Klamath Project operations. In particular, they have apparently not 
agreed on how one is to identify or characterize the ``environmental 
baseline'' that is a critical element in ultimately identifying impacts 
of a federal action. It seems highly appropriate that your agency and 
the Bureau of Reclamation resolve this issue well in advance of the 
consultation itself. Will you pursue an effort to resolve any such 
areas of disagreement and provide me with a schedule and process for 
doing so?
    Answer. I recognize the importance of the issues you raised 
regarding the Klamath Basin. I am also aware that balancing the water 
needs in the Basin has been a priority of this Administration. I am 
advised that is why, in early March 2002, the President created the 
Klamath River Basin Working Group of which the Department of Commerce 
is a member. I understand that Working Group has worked diligently to 
coordinate federal efforts within the Basin. Should I be confirmed, I 
will work closely with you and your colleagues in the region to ensure 
the concerns you raise are given every consideration by NOAA.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. George Allen to 
                          Carlos M. Gutierrez

    Question 1. I am interested in how you view your responsibilities 
under our Trade laws with respect to administering dumping cases 
against the Chinese. It is my understanding that dumping cases against 
Chinese firms have reached such significant volume that the Office of 
Import Administration has created a special office for the dispensation 
of these cases. At the same time, I am concerned that there is often a 
lack of appreciation for the quality and accuracy of data used to 
measure the costs of Chinese firms. This is often to the detriment of 
U.S. manufacturers in these cases. I was pleased to see that in the 
House Report accompanying the Consolidated Appropriations Act there was 
language that emphasizes the need to utilize ``surrogate'' data from 
market economies that more accurately reflects the costs of Chinese 
production. This I believe would reverse a disturbing trend toward 
``zeroing'' out U.S. firms in China. Can you provide me with an 
indication of your intentions with respect to how these cases that so 
directly affect U.S. jobs can be fairly administered?
    Answer. I fully appreciate the seriousness of the disputes 
involving unfairly traded products from the People's Republic of China 
that are entering the United States. I understand that the Commerce 
Department has aggressively enforced applicable trade laws against 
unfairly traded products from China, and, if I am confirmed, the 
Department will continue to do so under my leadership. I am informed 
that the Department has recently published antidumping duty orders on 
color televisions and wooden bedroom furniture from China, and has 
reached an affirmative dumping determination on certain canned and 
frozen shrimp from China. I understand that, since 2001, the Commerce 
Department has published 24 antidumping duty orders on products from 
China, and that over the last four years the number of investigations 
initiated and antidumping orders put into place by the Commerce 
Department against products from China is approximately two times 
greater than the next leading country.
    Further, I am informed that the Department's enforcement of the 
U.S. trade laws against unfairly traded products from China has 
recently been strengthened by the creation of the Office of China 
Compliance within the Commerce Department's Import Administration. This 
office has a large staff of individuals with methodological, language, 
accounting and computer programming expertise in the conduct of 
antidumping investigations involving non-market economy countries, of 
which China is the largest. I understand that, consistent with the law, 
it is the Department's practice to use surrogates from market economy 
countries in all proceedings involving non-market economy countries 
such as China. I am advised that the Department will continue to 
evaluate the usefulness and reliability of these surrogate values on a 
case-by-case basis and will modify or update them as appropriate.
    Finally, I understand that the Import Administration is also in the 
process of reviewing the Department's practices in conducting 
antidumping proceedings involving non-market economy countries. If 
confirmed as Secretary, I will ensure that this review continues. I 
will also direct the Import Administration to continue with its program 
of pro-active measures to identify and address unfair trade practices 
and policies at their source, including continuing to monitor the 30 
largest categories of imports from China with the goal of identifying 
unfairly traded goods and, where warranted, resolving the problems 
before domestic industries are injured.

    Question 2. One of our most longstanding trade issues involves 
imports of cement from Mexico, which are covered by a U.S. antidumping 
order. This case is an example of why we need strong enforcement of 
laws against unfairly priced imports. Unlike U.S. cement producers, 
Mexican producers have a home market in Mexico that is closed to any 
outside competition, allowing them to earn high profits by charging 
among the highest cement prices in the world to Mexican customers. They 
use their high profits from home market sales in Mexico to subsidize 
their exports to the United States at unfairly low prices. Without an 
antidumping order in place, imports from Mexico would injure U.S. 
producers and impede investment in new cement capacity in the United 
States. Can you assure us that, under your leadership, the Department 
of Commerce will be aggressive in enforcing U.S. laws against unfairly 
traded imports from all countries?
    Answer. I have been informed that the antidumping duty order on 
cement from Mexico has been in place for many years, and that the 
Commerce Department has conducted numerous annual administrative 
reviews of the order. These reviews have helped ensure that the amount 
of dumping occurring is measured in a timely manner, and that the 
appropriate amount of duties are collected so that these imports do not 
continue to injure domestic producers. If I am confirmed as the 
Secretary of Commerce, I will ensure that the Department continues to 
work vigorously to ensure that domestic industries are not injured by 
unfairly traded imports, including imports of cement from Mexico.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                          Carlos M. Gutierrez

    Question 1. Importance of NOAA in Commerce Department. NOAA's 2005 
budget of $3.9 billion will represent more than 60 percent of the 
Department of Commerce's budget. In fact, this is the largest budget 
ever given to NOAA. However, past Secretaries of Commerce have not 
given NOAA the attention or priority that it deserves with respect to 
oceanic and atmospheric issues. How do you see NOAA's role within the 
Department under your direction?

    Question 1a. What kind of support can we expect to see for NOAA and 
its missions?
    Answer. NOAA is the largest bureau within the Department of 
Commerce, and with responsibilities of exceptional importance to our 
economy, public safety, and marine environment, I take NOAA's mission 
very seriously. Recent world events have made it clear to everyone just 
how important is that the work that the scientists and managers of NOAA 
do every day. In speaking with members of the Committee, they have 
impressed upon me the depth and breadth of issues NOAA handles.

    Question 2. NOAA Funding Needs. The U.S. Commission on Ocean Policy 
recommended up to a $4 billion increase in funding for ocean programs--
from fisheries to exploration and mapping. The importance of 
capitalizing, maintaining and perhaps expanding many of these critical 
NOAA programs--including the Pacific Tsunami Warning System--has become 
all too apparent as the press reports on natural disasters, climate 
change, marine mammal die-offs, oil spills, and the like. What are your 
plans for the agency's budget, given these emerging fiscal needs?
    Answer. The Administration is still developing the FY 2006 budget, 
and while I have not been involved in that process, I expect it will 
reflect the President's commitment to sound ocean policy. For example, 
I have been informed that the Administration has already announced that 
it will be requesting $2.7 million to support state and local coral 
conservation efforts to implement local action strategies developed by 
the states, territories and commonwealths that make up the U.S. Coral 
Reef Task Force.
    On December 17, 2004, the President released the Administration's 
reponse to the U.S. Commission on Ocean Policy, the ``U.S. Ocean Action 
Plan.'' As noted in the NOAA statement from Admiral Lautenbacher on the 
release of the Administration's Plan, ``this is a commitment we are 
making not just for the short term. We can look no further than the 
President's commitment to promote lifelong ocean education as a sign 
that the Ocean Commission will have an impact for generations to 
come.''

    Question 2a. Do you foresee a significant increase as recommended 
by the Commission, or do you see the budget operating at the status 
quo?
    Answer. I expect to testify before the Senate Appropriations 
Committee after the President's FY 2006 budget is released in early 
February, and look forward to working with the Congress on NOAA funding 
needs.

    Question 3. NOAA Management Changes. The U.S. Commission on Ocean 
Policy also recommended management changes for NOAA, such as the 
integration of six line offices, establishing an integrated regional 
presence (i.e., in the Western Pacific), moving programs from other 
agencies, and substantial improvements in existing programs. Can you 
please tell us how you plan to address the Commission's recommendations 
relating to the restructuring of NOAA?
    Answer. I have been advised that the U.S. Commission on Ocean 
Policy recommended a phased approach to strengthening NOAA. The first 
recommended step is the passage of an organic act codifying NOAA's 
existence and mission within the Department of Commerce. Secretary 
Evans transmitted such a proposal to Congress last June. The next phase 
would be a review of the various recommendations relating to agency 
institutional structures and consolidation. It is my understanding that 
the President has tasked the new interagency Committee on Ocean Policy 
with this review. If confirmed as Secretary, I would serve on this 
Cabinet-level committee.
    I have had the opportunity to meet with VADM Lautenbacher, Under 
Secretary of Commerce for Oceans and Atmosphere, to discuss the 
activities and structure of NOAA. He briefly reviewed the 
organizational changes that have already occurred to integrate the 
activities of the Line Offices. I hope to bring my own management 
experience to further discussions within the Administration and with 
Members of Congress about how to build upon these improvements.

    Question 4. Opportunities for Strengthening both Commerce and NOAA. 
There has been widespread support, from the U.S. Commission on Ocean 
Policy, former NOAA Administrators, ocean policy experts, and this very 
Committee, to providing NOAA more budgetary and programmatic 
independence from the Department of Commerce--and ultimately full 
independence. NOAA's budget growth, and the continuing need for 
increased funding, indicates that the agency may have reached a funding 
ceiling within the Department. This poses a problem for both NOAA and 
the Department. As Secretary, will you give consideration to this idea 
that NOAA should be more independent, and that a transition to 
independence may in turn present an opportunity to strengthen the 
Department of Commerce by focusing more on trade and business?
    Answer. If confirmed as the Secretary of Commerce, I will certainly 
be examining all of the Department's operations with an eye towards 
identifying ways to make each operating unit more efficient and 
effective. Knowing the particular interests that many members of 
Congress have in NOAA, I will pay special attention to the many ideas 
that have been raised about NOAA's current structure. I should note, 
however, that based upon my experience as a CEO, I frankly would be 
skeptical about any proposal that would make the Secretary responsible 
for an organization for which he lacks budgetary and personnel 
authority.

    Question 5. Implementing U.S. Ocean Commission Recommendations. As 
Secretary of Commerce, you will have significant responsibility for 
implementing the recommendations of the U.S. Commission on Ocean 
Policy. As you know, the President responded to these recommendations 
in December of 2004 with the U.S. Ocean Action Plan. Do you believe 
that this Action Plan adequately addresses the Commission's 
recommendations?

    Question 5a. Will the President's proposal to establish an 
interagency Ocean Committee within CEQ undermine the existing authority 
of the Department of Commerce and NOAA as the expert civilian ocean 
agency?

    Question 5b. What other initiatives do you plan to support at NOAA 
in order to expand its role in oceanic and atmospheric management?

    Answer. The President's U.S. Ocean Action Plan outlines some 
immediate actions as well as a process and structure for addressing the 
other recommendations of the U.S. Commission on Ocean Policy's report. 
I have been informed that the Commission's report included over 200 
recommendations. I look forward to learning more about the report and 
would expect to be actively engaged in the new Committee on Ocean 
Policy. I anticipate that the increased attention to these important 
issues will enhance, not undermine, the existing authorities of the 
Department and NOAA. If confirmed, I will be working closely with NOAA 
leadership to improve oceanic and atmospheric science and management 
activities.

    Question 6. Hollings Manufacturing Extension Partnership. The 
Hollings Manufacturing Extension Partnership (MEP) supports a network 
of locally-run centers that provide technical advice and consulting to 
small manufacturing companies in all fifty states and Puerto Rico. Many 
of these firms lag behind foreign competitors in technology and 
operations, leading larger American firms to look increasingly for 
offshore suppliers. MEP-assisted companies surveyed reported $2.79 
billion in new or retained sales, $681 million in cost savings, and 
$940 million in new investment in FY 2002. During that period, these 
firms created or retained 41,017 jobs that otherwise might have been 
lost. For the past two years, the Administration has proposed 
supporting only the MEP office at NIST and withdrawing support from the 
centers around the country that directly provide these valuable 
services to small manufacturers. While Congress has restored full 
funding for MEP, I understand that OMB has once again recommended this 
program for elimination in FY 2006. You have pledged to help small 
businesses like the small manufacturers that MEP helps. Can you assure 
me that, if confirmed, you will do everything in your power to ensure 
full funding for this important and successful program?
    Answer. Coming from a Michigan-based manufacturer, I am aware of 
the importance of manufacturing to the economy. If confirmed as 
Secretary of Commerce, I will support our nation's manufacturers in 
their efforts to become more competitive and productive in the global 
marketplace. I have been advised that the national manufacturing 
network of the Hollings Manufacturing Extension Partnership has 
assisted small manufacturers and has demonstrated potential for 
assisting other federal agencies in meeting their missions. I will make 
every effort to ensure that small manufacturers have access to 
technical and information resources to allow them to remain 
competitive.

    Question 7. Advanced Technology Program. The Advanced Technology 
Program (ATP) is an industry-led, competitive, and cost-shared program 
that allows U.S. companies to develop the next generation of 
breakthrough technologies. These new innovations enable the U.S. to 
aggressively compete against foreign rivals. The National Academy of 
Science has found it to be an effective program which could use more 
funding wisely. ATP is funding research ranging from cancer vaccines to 
hi-tech flexible displays to composite materials. These are the kinds 
of ground breaking technologies that provide the country a competitive 
advantage. Yet, the Administration has moved to eliminate this program. 
What can you do to help me revive ATP?
    Answer. I understand that the Advanced Technology Program has 
sponsored numerous successful research projects over the years, but 
that scarce federal resources caused by the need to fight the war on 
terrorism and protect the homeland have forced the Administration and 
the Congress to make difficult budget choices affecting ATP and other 
programs. As a businessman, I can appreciate the need to set priorities 
and to watch the bottom line.
    I also appreciate the need for our industries to stay competitive 
in a global economy, and I believe that it is important to look at 
initiatives that offer benefits broadly serving all U.S. businesses. 
For instance, the President's Manufacturing Initiative sets out a plan 
to reduce the cost and complexity of the tax code, making tax relief 
permanent, and lowering health care, energy, and legal costs.

    Question 7a. In the absence of a program like ATP that fills the 
gap between basic R&D and a project ready for venture funding, how will 
the government ensure that we don't just win Nobel Prizes but also win 
the profits that go with them?
    Answer. As someone who has worked in manufacturing in my 
professional career, I believe that the U.S. continues to enjoy a 
competitive advantage in the manufacturing sector. We have some of the 
best factories in the world with technologies and supply chain systems 
that give us the ability to use manufacturing more efficiently than our 
competition abroad. I agree that we need to not only develop but also 
implement technologies into the factory. We can also support our 
federal technology transfer structure in order to move new technology 
from the laboratories into the commercial marketplace.

    Question 8. Patent. We hear a lot of back and forth about the 
backlog in the Patent Office. For FY 2005, Congress has provided an 
additional $342 million over the FY 2004 level for the patent office. 
What will it take to reduce the backlog and have the Patent Office 
operate more efficiently?
    Answer. I have been advised that the USPTO, at Congress' direction, 
developed a 21st Century Strategic Plan to not only increase 
productivity in processing time but also to enhance quality and promote 
electronic filing and processing. The Plan has the backing of a wide 
range of businesses, industries and trade groups. If confirmed, I would 
work with the Director of the USPTO to ensure that the initiatives in 
the Plan are fully funded and implemented in a timely manner.
    Since implementation of the majority of the Plan's initiatives is 
contingent upon adoption of changes in the fee system that are 
contained in the United States Patent and Trademark Fee Modernization 
Act, if confirmed, I would work with Congress to make those adjustments 
permanent. To ensure effective implementation of the USPTO's strategic 
plan, we should work toward certainty in achieving stability and 
certainty in the USPTO's access to future revenues.

    Question 8a. Are you able to find the kind of folks--educated in 
both technology and the law--that you need to fill the new positions 
you intend to create?
    Answer. My understanding is that the USPTO has been successful in 
attracting, hiring and retaining personnel with high levels of 
education and professionalism. While private sector competition in 
certain ``hot'' areas such as communications and electronics has been a 
challenge, the opportunity for public service, flexible work schedules, 
telecommuting opportunities, enhanced pay and pro-family and life style 
benefits the USPTO offers are highly valued by employees and job 
applicants.

    Question 9. Technology Transfer. What is your evaluation of the 
nation's technology transfer policy? How can we improve our system for 
getting inventions out of the labs and onto production lines?
    Answer. The new knowledge and technologies that flow from U.S. 
research universities and federal laboratories, supported in large part 
by federally-funded R&D dollars, are key aspects of the Nation's 
overall innovation system. Effectively transferring and harnessing new 
technology and know-how in order to create commercial products and new 
business opportunities has been strategically important for my past 
industry--as it has been for many other industry sectors.
    The Commerce Department, through the Technology Administration, 
leads our nation's federal technology transfer efforts. I understand 
that the President's Council of Advisors on Science and Technology 
(PCAST) reviewed the Nation's federal technology transfer structure in 
2003 and made recommendations to improve upon the successful system we 
already have. I would be pleased to work with the Congress to identify 
high priority Commerce initiatives to support innovation and technology 
transfer.

    Question 10. Space Commercialization. When SpaceShipOne won the X-
Prize last year by becoming the first privately-funded aircraft to 
visit and return from space, many had high hopes for a revitalized U.S. 
space commerce sector. Yet, your Department's Office of Space 
Commercialization is moribund, at best. Under your leadership, what 
role will the Department play in promoting space commerce?
    Answer. The Department has played and will continue to play a key 
role in the development of U.S. Government policies that foster the 
growth and competitiveness of the U.S. commercial space industry. It 
serves as an advocate for the industry within interagency deliberations 
affecting the future of space, encouraging the promotion of commercial 
interests as well as national security, foreign policy, and other 
interests. The Department will remain engaged in commercial space 
issues ranging from GPS to commercial remote sensing, fair trade and 
exports, space transportation, protection of space frequencies, and 
protection of the U.S. industrial base.

    Question 10a. Do you intend to appoint a Director of Space 
Commercialization?
    Answer. Yes.

    Question 10b. Virgin airways intended to invest a significant 
amount in the nascent space tourism business, specifically in the 
company which flew SpaceShipOne to the X-prize. In the aviation world, 
our airlines have always faced restrictions on foreign ownership. Given 
the strategic, as well as economic, importance of the potential 
private, commercial space launch business, should we consider foreign-
ownership restrictions similar to those imposed on the airlines?

    Answer. I agree that the U.S. commercial space launch industry is 
of great strategic and economic importance to the United States. To the 
extent foreign ownership in this industry may become an issue, I 
understand that laws are currently in place that can effectively 
address it. Proposed transactions involving foreign ownership and 
control in our domestic industry would likely require review by the 
Committee on Foreign Investment in the United States (CFIUS), chaired 
by the Treasury Department, under the Exon-Florio provision of the 
Omnibus Trade and Competitiveness Act of 1988. I understand that the 
Department of Commerce is an active member of this committee, and that 
CFIUS regularly reviews proposed foreign acquisitions of U.S. companies 
to ensure that U.S. interests, such as technological leadership in 
areas affecting U.S. national security, are not compromised by the 
transaction.

    Question 11. Census. The 2000 Census missed about 6 million 
Americans, according to adjusted Census data that the Department was 
forced to release. How do you plan to ensure that the Census counts all 
Americans?
    Answer. It is my understanding that Congress has approved and 
funded a short-form-only 2010 census. The Census Bureau will be able to 
focus every resource on the Constitutional mandate of counting all the 
people. The collection of detailed characteristics data, performed once 
a decade on the long form and constituting 60 percent of the workload, 
will now occur every year through the American Community Survey (ACS). 
I am advised that the ACS will provide better and more current data and 
reduce peak work load spikes. Re-engineering the short form will use 
the latest technology and methodologies and re-engineering the Master 
Address lists will provide greater accuracy.

    Question 11a. Will scientific adjustment of the data, known as 
``sampling,'' be on the table if you are confirmed?
    Answer. I am advised that the Director of the Census Bureau has 
informed Congress that the Census Bureau is not seeking any funds for 
planning or implementation of statistical adjustment in the 2010 
Census.
    In November 2004, the GAO issued a report entitled ``Census Bureau 
Needs to Accelerate Efforts to Develop and Implement Data Quality 
Review Standards.'' The report built on earlier GAO work examining 
flaws in 2000 Census data reporting the Hispanic and the homeless 
populations. The report says that standards were never in place to 
assess data quality in 2000. Furthermore, the report states that while 
limited improvements and standards have been implemented since then, 
the Bureau must accelerate its efforts to review data quality and 
implement new standards in time for the 2010 Census.

    Question 11b. What steps will you take as Secretary to accelerate 
this process and bring it more in to the open?
    Answer. I am advised that the Census Bureau has responded to the 
GAO Report and is writing an action plan to be submitted by the end of 
January to address the GAO recommendations.

    Question 11c. Do you intend to follow GAO's recommendations to 
improve Census Data quality?
    Answer. I have studied neither the report nor the response. I have 
confidence in the professionalism of the Census Bureau and understand 
that the Bureau has a long history of continuously improving data 
quality in a transparent, comprehensive process.
    The Census Bureau is now sharing information with the Department of 
Homeland Security breaking down the Arab population by zip code and 
with the Mexican government to allow them to better assess and tax the 
value of U.S. exports. Some worry that this kind of data sharing will 
effect the quality of Census data because Americans and American 
businesses will become reluctant to share data that could be used for 
law enforcement or taxation purposes.

    Question 11d. What is your reaction to this kind of data sharing?
    Answer. I am advised that the Census Bureau responded to one 
request for publicly available data from the Department of Homeland 
Security, just as it would have to any other requester. I also am 
advised that the Census Bureau and the Department of Homeland Security, 
after consultation with U.S. industry, have entered into a limited 
agreement with Mexican law enforcement authorities that permits these 
authorities to request verification within broad ranges of export value 
data being reported by exporters to both governments. Like the Census 
Bureau professionals, I am committed to the protection of individual 
and business data as provided by law. Federal law provides heavy fines 
and imprisonment for any breach of privacy, although I understand none 
occurred in either case you mentioned. I will be vigilant against any 
violation of the law.

    Question 12. The Economy, the Workforce, and Jobs. Do you believe 
that outsourcing is a problem for the United States? If so, what can we 
do to keep jobs in America?
    Answer. I understand that of all the major U.S. layoffs in the past 
three years, only a small fraction--about 2 percent--were due to 
overseas relocation of jobs. While losing a job is always traumatic, to 
create and keep jobs here in the United States, American workers must 
remain the best qualified and most productive. Education is the key. We 
have to have our youngest students ready to learn. We need to encourage 
excellence in math and science. We need to train our young people for 
tomorrow's jobs and offer retraining to experienced workers.
    The President and the Congress have a role, too, to help businesses 
cut costs. Working together, the Executive and Legislative Branches of 
government can help businesses get control of health care costs, 
litigation costs, energy costs, and so on.
    I want trade and investment to remain a two-way street. The U.S. 
benefits from a large amount of ``insourcing''--six million Americans 
work in the United States for foreign companies and millions more jobs 
are created indirectly from this investment.
    I look forward to working with the Congress to enhance the 
environment for business here at home.

    Question 12a. The Administration and your predecessor, Secretary 
Evans, consistently cite job growth as a sign that the economy is 
moving in the right direction. Yet we're losing manufacturing jobs and 
poverty continues to rise. We're starting to see the first signs of 
inflation. What will you do as Secretary to help put the nation on 
sound financial footing?
    Answer. From my vantage point at Kellogg, the U.S. economy is on 
the right track. Clearly, our economy has overcome several blows in the 
past few years. But going forward, it appears to me, the essentials of 
a strong and growing economy are in place.
    Job creation and economic growth are signals that we are on firm 
footing. The economy grew more than 4 percent in 2004 and is expected 
to grow at 3.5 percent in 2005. We are experiencing a broad-based jobs 
recovery, with 2.6 million jobs created since August 2003. Inflation is 
relatively low and energy prices are nudging down.
    As Secretary, I will work with the Congress to exercise federal 
spending restraint, foster a tax and regulatory climate that allows 
businesses to grow and hire, and serve as a steward of our resources.

    Question 13. As you know, Senator Stevens and I have annually 
supported increased funding for the NOAA's tsunami warning program, 
including warning centers in Hawaii and Alaska. Despite our strong 
support, we still do not have sufficient coverage in the Pacific, where 
85 percent of all tsunamis occur. I understand that NOAA may be 
considering developing a 20-buoy array for the Indian Ocean, where we 
today have no buoys. Could you please provide details on NOAA's plan 
for the Indian Ocean, and how the Administration plans to fund this 
endeavor? Will these funds be part of a future emergency supplemental 
funding package or part of your 2006 budget request?
    Answer. I have been advised that the Bush Administration is 
currently reviewing a proposal to implement a Global Tsunami Warning 
System that would include enhanced coverage in the Pacific Ocean and 
extension of coverage to the Indian Ocean. This system will be a 
critical component of the Administration's plan to establish a Global 
Earth Observing System. The new system will include additional tsunami 
buoys, tide monitoring stations, and efforts to improve community-based 
preparation for future events. The tsunami buoys would be placed along 
the major seismic fault lines to ensure accurate and timely warnings 
for tsunami events.
    I am further advised that the Administration is currently 
completing its review of the proposal for the Global Tsunami Warning 
System, but at this time has not made any decisions on funding 
strategies.

    Question 14. With respect to the program in the Pacific Ocean, how 
will you ensure we improve accuracy of the Pacific warning system and 
will you provide funding for such increases in your FY 2006 and 2007 
budget requests?
    Answer. The President's FY 2006 budget will be released in early 
February, and I have not, of course, been involved in its development. 
As indicated in the previous question, however, the Administration is 
currently considering a proposal to implement a Global Tsunami Warning 
System. The proposal includes specific initiatives to improve 
observations, warnings, and community preparedness in each of the 
world's major oceans, including the Pacific Ocean. Given the frequency 
of tsunamis in the Pacific Ocean, the Pacific Region will be a high 
priority.
    The Administration is currently reviewing the proposal for the 
Global Tsunami Warning System. At this time, the Administration has not 
made any decisions on funding strategies for FY06 and FY07 budget 
requests.
                                 ______
                                 
Response to Written Questions Submitted by Hon. John D. Rockefeller IV 
                         to Carlos M. Gutierrez

Negotiating a Solution To The CDSOA Dispute
    Question. Since the Executive Branch's strategy report in 2002, the 
United States has lost important issues raised in another six Rules 
cases at the WTO, including the statutory challenge to the Continued 
Dumping and Subsidy Offset Act of 2000 or ``CDSOA''--this provision is 
also known as the ``Byrd amendment'' as it was added by my senior 
colleague. \1\ The Administration has recognized the CDSOA decision as 
imposing new obligations on the United States by prohibiting its 
distribution of monies sourced from assessed antidumping and 
countervailing duties. Congress has repeatedly called for negotiations 
to address the issue not only in letters but in the Fiscal Year (FY) 
2004 consolidated appropriations law enacted on January 23, 2004. \2\ 
In response, the United States submitted a proposal in the Rules 
negotiations to recognize ``the right of Members to distribute monies 
collected from antidumping and countervailing duties.'' \3\ The United 
States, however, has not yet submitted a formal textual proposal to 
address the issue.
---------------------------------------------------------------------------
    \1\ 19 U.S.C. Sec. 1675c.
    \2\ Consolidated Appropriations Act of 2004, Pub. L. 108-199.
    \3\ TN/RL/W/153 (April 26, 2004).
---------------------------------------------------------------------------
    As the Secretary of Commerce, can you commit to working with the 
U.S. Trade Representative to develop a formal textual proposal in the 
context of the Doha Round and to negotiate an early agreement which 
recognizes the sovereign right of WTO Members to distribute monies 
collected from antidumping and countervailing duties? This provision 
has helped the very companies and workers who have been injured by 
illegal dumping and the U.S. Congress has every right to direct 
revenues in this common sense manner.
    Answer. I am advised that the Administration intends to continue to 
address this issue in the context of the WTO's ongoing Doha Round of 
multilateral trade negotiations. I understand the Administration has 
staunchly defended the Continued Dumping and Subsidy Offset Act of 2000 
(CDSOA) throughout a long WTO dispute settlement process and will 
continue to work with our trading partners to achieve a negotiated 
resolution of the underlying issues. While I understand the United 
States has not tabled a text on this issue, I understand a paper has 
been submitted indicating our intent to negotiate on this matter.
    As required in Senate Report language, the Department of Commerce 
and the Office of the U.S. Trade Representative are consulting to 
ensure proper implementation of the requirements of U.S. law regarding 
negotiations over the distribution of antidumping and countervailing 
duties. I am advised that the Administration intends to comply with all 
such requirements, including reporting requirements. I understand that 
the Administration will complete these consultations as soon as 
possible and will continue to work to advance Congressional objectives 
in the Doha Round negotiations.

Addressing Problems With The WTO Dispute Settlement System
    Question. As I understand it, there has also been a startling lack 
of progress in the Doha dispute settlement negotiations. This is 
despite the fact that the WTO dispute settlement system has 
consistently been used to erode the effectiveness of our trade remedy 
laws. Two years ago, in the Bipartisan Trade Promotion Authority Act of 
2002, Congress expressed its concern with the pattern of WTO decisions 
imposing new obligations and restrictions on the use of antidumping, 
countervailing, and safeguard measures. \4\ In the Senate Report, 
Congress recognized that foreign governments have been successfully 
using dispute settlement procedures to ``erode bargained-for trade 
remedy protections,'' which negatively affects American firms, workers, 
and farmers and could jeopardize public support for a liberal trading 
system. \5\ Therefore, one of principle negotiating objectives with 
respect to dispute settlement is the negotiation of provisions that 
would require ``determinations based on facts and the principles of the 
agreements. . . .'' \6\
---------------------------------------------------------------------------
    \4\ 19 U.S.C. Sec. 3801(b)(3)(A).
    \5\ S. Rep. No. 139, 107th Cong., 2d Sess. 8 (Feb. 28, 2002).
    \6\ 19 U.S.C. Sec. 3802(12)(A).
---------------------------------------------------------------------------
    Congress further required the Secretary of Commerce to submit a 
report to Congress by December 31, 2002, identifying the Executive 
Branch's strategy to address WTO decisions that impermissibly add to 
obligations or diminish U.S. rights under the WTO Agreement. \7\ In 
that report, the Executive Branch acknowledged the problem with the 
dispute settlement system, particularly in the context of Rules cases, 
and pledged to address the problem in the ongoing Dispute Settlement 
and Rules negotiations as well as in ongoing disputes.
---------------------------------------------------------------------------
    \7\ 19 U.S.C. Sec. 3805(b)(3).
---------------------------------------------------------------------------
    The fact is that the United States has been on the receiving end of 
more GATT and WTO challenges than any other Member. \8\ Over the past 
two years, roughly half of all WTO decisions were issued in cases 
challenging U.S. measures, and over three-quarters of those decisions 
addressed the administration of our trade remedy laws. Despite our 
frequent posture as a responding party in WTO dispute settlement 
proceedings, the United States has only made four publicly-available 
submissions in the dispute settlement negotiations concerning two 
topics. The United States has yet to submit a textual proposal as to 
how it would provide ``some form of additional guidance to WTO 
adjudicative bodies concerning (i) the nature and scope of the task 
presented to them (for example when the exercise of judicial economy is 
most useful) and (ii) rules of interpretation of the WTO agreements.'' 
\9\ While I am told that efforts are underway to submit such a 
proposal, I find it alarming that the United States has not yet 
approached these negotiations with the same vigor and creativity as our 
trading partners.
---------------------------------------------------------------------------
    \8\ See Pescatore & Stewart and Stewart, Handbook of WTO/GATT 
Dispute Settlement at Index 3/1-3/8 (Country-Party Index).
    \9\ TN/DS/W/52 (March 14, 2003).
---------------------------------------------------------------------------
    As the Secretary of Commerce, how do you intend to advance the 
negotiation of changes to the WTO dispute settlement system or the 
Rules agreements that would reverse the long line of adverse (anti-
U.S.) trade remedy decisions?
    Answer. Like my predecessor, Secretary Evans, I intend to work very 
closely with the Office of the U.S. Trade Representative to advance the 
negotiation of changes to the WTO Dispute Settlement Understanding, as 
well as the Antidumping and Subsidies Agreements, that will not only 
reverse the most egregious decisions of WTO dispute settlement panels 
and the Appellate Body, but will ensure that in future disputes, the 
panels and the Appellate Body will adhere to the appropriate standards 
of review and give appropriate deference to the fact-finding and 
technical expertise of national investigating authorities.
    If confirmed, I intend to follow the strategy outlined in Secretary 
Evans' December 2002 report to Congress on this topic. First, it will 
entail working to gain greater Member country control over the dispute 
settlement process and greater flexibility for Member countries to 
settle disputes. This should help prevent panels and the Appellate Body 
from making erroneous and unnecessary findings that have often added or 
reduced the rights and obligations contained in the Rules Agreements. 
Second, it will entail working to make the dispute settlement system 
more transparent. Greater public scrutiny of the system should make 
panels and the Appellate Body more accountable and less likely to 
impose obligations on Member countries not found in the WTO agreements. 
The Administration intends to pursue changes to the Rules Agreements 
that will ensure that panels and the Appellate Body adhere to the 
standards of review. Finally, I understand the Administration will 
continue to pursue changes to those Agreements that will reverse 
specific adverse findings, including those regarding the Continued 
Dumping and Subsidy Offset Act, ``zeroing,'' and injury determinations.

TAA for Firms
    Question. The Trade Expansion Act of 1962 established the Trade 
Adjustment Assistance program for firms to assist firms and industries 
negatively impacted by import competition. The TAA for Firms program, 
which is administered by the Department of Commerce through the 
Economic Development Administration, offers technical assistance to 
help trade-impacted firms make the strategic adjustments necessary to 
remain competitive in a global economy. Technical assistance is 
provided through one of 12 regional trade adjustment assistance 
centers, usually involving private-sector contractors.
    In a December 2000 report on the TAA for Firms program, the 
Government Accountability Office (GAO) made two disturbing findings 
regarding the Department of Commerce's administration of the program:

   Less than half (39 percent) of center expenditures (which 
        average about $10 million annually) were used to fund technical 
        assistance to eligible firms with approved business recovery 
        plans. Instead, the vast majority of center expenditures (61 
        percent) went to fund operational and administrative costs.

   The impact of the TAA for Firms program is unclear because 
        the Economic Development Administration has failed to formally 
        monitor and track program results.

    Mr. Gutierrez, to your knowledge, has the Commerce Department taken 
steps to ensure that all 12 program centers are making the best use of 
the limited program funding?
    Since this report, has the Department developed a standard process 
for evaluating program outcomes?
    Answer. Senator Rockefeller, I have been advised that the 
Department of Commerce has undertaken substantial efforts to ensure 
that the Trade Adjustment Assistance Centers (``TAACs'') (11 centers as 
of 2004) are being run more efficiently and producing favorable results 
for its clients.
    I have been informed that in the five years since the GAO report, 
the Economic Development Administration (EDA) has implemented several 
substantive improvements. As reported in the Department's GPRA 
(Government Performance and Results Act) measurements, EDA closely 
tracks the number of adjustment proposals implemented, the specific 
firms receiving assistance, as well as documenting the project 
descriptions of the assistance provided.
    In addition, I have been advised that EDA has implemented a revised 
allocation model for the TAA for Firms programs that rewards those 
TAACs that excel in producing results (such as number of firms assisted 
and number of jobs impacted), while acknowledging the different 
geographic and demographic factors in each TAAC service area.

Defending and Preserving Existing Trade Remedy Laws, Including Our 
        Ability to Capture the Full Amount of Dumping
    Question. As you know, the WTO Agreement condemns the unfair trade 
practice of injurious dumping and provides rules for how WTO Members 
should calculate dumping margins. The Commerce Department has the 
responsibility for administering U.S. trade remedy laws such as the 
antidumping and countervailing duty laws. Despite efforts by the United 
States to negotiate clear obligations consistent with U.S. practice, a 
number of our trading partners have challenged our compliance with the 
agreements negotiated. Unfortunately, the WTO panel and Appellate Body 
dispute review system has resulted in a series of decisions that are 
contrary to the U.S. understanding of obligations assumed.
    Congress has mandated that as part of the ongoing negotiations 
problems in the dispute settlement process in our trade remedy cases be 
corrected and that our laws be maintained. One particularly troubling 
string of decisions out of the WTO Appellate Body is worth noting as if 
ever applied to U.S. law would fundamentally weaken the protection 
promised by the Congress to our companies, workers and their 
communities. The string of cases involves whether a government is 
allowed to offset 100 percent of the dumping found. Some of our trading 
partners are arguing that they are entitled to ``credit'' for any 
exports which are not dumped. In the U.S., 100 percent of the dumping 
found is captured and, if dumping continues, will be charged dumping 
duties. This common sense approach is what the U.S. has done for 
decades and represents the desire of the Congress for a remedy that 
addresses 100 percent of the dumping found. Trading partners want to 
reduce the liability by receiving ``credit'' for non-dumped 
transactions even though this was never contemplated by the U.S. (or 
other countries) during the negotiations and would seriously weaken the 
remedial purpose of U.S. law. The claim by our trading partners is 
similar to a driver telling a police office that well, yes, they were 
going 70 miles per hour in a 30 mile per hour zone but that infraction 
should be reduced or eliminated because they had been stopped at a 
traffic light shortly before!
    While the Secretary of Commerce has many functions in any 
Administration, the role of ensuring that our trade remedies are 
vigorously enforced and our rights fully protected is in my and many 
members of Congress' view, paramount.
    Can you assure this Committee today that you will do everything 
within your power as Commerce Secretary to defend and preserve our 
existing trade remedy laws, including our ability to continue to 
capture 100 percent of the actual dumping (without any offset for non-
dumped sales)?
    Answer. If confirmed, I will vigorously defend and enforce our 
existing trade remedy laws, and implement those laws as intended to 
stop dumped or subsidized goods from injuring U.S. industries.
    With respect to the WTO disputes seeking to require a credit for 
non-dumped goods, it is my understanding that this issue has not been 
finally resolved. The Commerce Department, working closely with the 
Office of the United States Trade Representative, is vigorously 
defending its ability to assess duties on 100 percent of the dumping, 
without offset from non-dumped goods, in several ongoing WTO disputes. 
If confirmed as the Secretary of Commerce, I will instruct Commerce 
officials to continue to defend this important methodology so that no 
offset is required for non-dumped sales.

Technology Opportunity Program
    Question. As the Secretary of Commerce, you will oversee the 
National Telecommunications and Information Administration (NTIA). As a 
keen advocate for broadband technology and telecommunications, I 
believe that NTIA should play an active role in policy and in community 
outreach.
    I am disturbed that this Administration has sought to eliminate 
funding for the popular and effective Technology Opportunity Program 
(TOPs), and that funding was eliminated in the 2005 Omnibus 
Appropriations bill. In 2004, TOPs issued $14.4 million in 27 grants 
but there were 494 applications seeking $277 million. There were 6 
grants from West Virginia in 2004, and one telemedicine grant to WV 
Primary Care Network was successful. Other TOPs grants are helping 
faith-based programs and supporting first responder networks.
    As Secretary of Commerce will you re-evaluate and reconsider the 
TOPs program. And if not, how do you propose to aggressively fulfill 
the mission of NTIA to promote telecommunications access, especially in 
rural areas which has less access to broadband, according to NTIA 
reports?
    Answer. I have been advised that the Administration viewed the TOP 
program, established in 1994, as one that has fulfilled its mission of 
generating awareness about how the World Wide Web can enhance delivery 
of social services. Increasing numbers of Americans have integrated the 
Internet into their daily lives and are using the Internet at a record 
pace.
    As you note, Congress eliminated funding for the TOP program. 
Nevertheless, I understand the U.S. Department of Agriculture is 
working hard to bring telecommunications and broadband services to 
rural areas through a variety of programs, including the rural 
broadband program created by the 2002 Farm bill.
    Should I be confirmed, I would work to ensure that wireless 
broadband services and other new and emerging technologies are brought 
to the marketplace so that broadband service is available to more 
Americans at affordable prices.

TAA for Workers
    Question. I trust you are familiar with our Trade Adjustment 
Assistance, or TAA, program. In your experience with Kellogg or as a 
board member of Colgate-Palmolive, you have likely seen examples of 
American workers benefiting from TAA when global free trade policies 
resulted in business decisions costing American jobs.
    In 2002, Congress passed the Trade Adjustment Assistance Reform 
Act, which offered trade displaced workers and retirees a tax credit of 
up to 65 percent of the cost of health insurance coverage. The 
participation rate for this program has been very low (as of July 2004, 
less than 6 percent of the 229,044 who were eligible were enrolled). 
Although this is not something over which you will have direct 
oversight as Secretary of Commerce, would you be willing to explain how 
you might advise the President and Congress on ways to improve the 
program, or do you believe there are other appropriate ways--that may 
be within your purview as Secretary--to ameliorate some of the negative 
impacts of trade policies on our domestic workforce?
    Answer. From my roles in the private sector I have seen firsthand 
the powerful effect of trade in creating economic opportunity for 
workers across the globe.
    As I have learned, the Trade Adjustment Assistance (TAA) for 
Workers is administered by the Department of Labor. I am aware, 
however, that the Department of Commerce administers the related TAA 
for Firms program. I have been advised that the Petition for 
Certification used by firms applying for TAA for Firms benefits 
includes a section highlighting the TAA for Workers program.
    In my discussions with senior Department officials, I have further 
learned that the Department of Commerce's Economic Development 
Administration has partnered closely with the Department of Labor's 
Employment Training Administration to jointly respond to communities 
experiencing sudden or severe economic dislocation, such as caused by 
changing trade patterns.
    Should I be confirmed as Secretary of Commerce, I will work to 
strengthen the ties between the Commerce Department and other federal 
entities with compatible missions in order to provide the most 
effective federal response possible to those communities facing 
economic challenges.

Assessment of the Commerce Department's Application of Duty Drawback
    Question. I understand that the Department of Commerce has recently 
changed their practice as to granting duty drawback adjustments to U.S. 
price in antidumping investigations and reviews. Where a country 
imposes tariffs on imported products used as inputs in domestically 
sold products, and which are not collected on exported products, the 
statute directs the Commerce Department to adjust for the inclusion of 
these duties in costs and prices of the home market merchandise. 
However, I understand that Commerce has begun granting these 
adjustments in cases in which the subject foreign producers use no 
imports as inputs and pay no duties for products sold in the home 
market. This contradicts a recent Court case, Hevensa v. U.S., has 
resulted in low or no margins and increased dumped imports from these 
countries and rewards countries for having high tariffs. This has 
resulted in layoffs and has caused economic injury to domestic 
industries.
    Can you please consult with the appropriate Department personnel 
and respond to me in writing regarding these actions at the Department?
    Answer. I am advised that there has been no change in the 
Department's practice on granting adjustments for duty drawback and 
that the Department's practice is based on the language of the statute. 
I further understand that in the Hevensa case, the party at issue 
failed to satisfy the two-part test that the Department has 
traditionally applied and that the U.S. Court of International Trade 
has consistently upheld. I am told that there has been no departure 
from that test or from relevant court precedent. One requirement of the 
two-part test is that there be sufficient imports of raw materials to 
account for the duty drawback. I understand the Department has not 
begun granting duty drawback adjustments where there were no imports of 
raw materials. Such a change to the Department's practice would require 
a change in the law. The Department continues to grant adjustments only 
if the respondent satisfies the court-sanctioned two-part test.

Broadband Deployment in Rural America
    Question. The President has set a goal of universal broadband 
deployment by 2007. I wanted to ask about your position on a bill that 
Sen. Burns and I have worked on for four years now which is designed to 
help meet that goal. We have proposed a tax incentive for broadband 
deployment. It's targeted primarily at rural areas and gives special 
emphasis to next-generation broadband like fiber-to-the-home.
    That bill has passed the Senate twice now. Last year in the FSC-ETI 
conference, the Senate conferees supported this provision 21-0. But the 
Ways and Means chairman opposed it and it died on the House side. What 
I can't understand is why the Administration did not weigh in support 
of the broadband tax incentive. It is completely bi-partisan. Senator 
Burns and I have worked hand in hand on this, with 60 other members of 
the Senate. The House sponsor is a Republican, Mr. English from 
Pennsylvania. We could have passed this bill with your support, and it 
would have helped us meet the goal of universal deployment by 2007.
    So my question is this: Can I have your pledge to look at this 
legislation anew and get back to me in the next month with a specific 
answer on whether the Administration will support it? I think if you 
look at it with a fresh eye, you will agree that it is good policy and 
will be very helpful in meeting our mutual objective of universal 
broadband deployment.
    Answer. As you note in your question, President Bush has 
articulated a bold new vision for broadband in America by setting a 
national goal for universal and affordable access to broadband by 2007. 
I think that this is a very important goal, both for the Nation and on 
a global scale, in terms of our nation's competitiveness, and it is one 
that I wholeheartedly endorse and fully support.
    I have been advised that although the recently enacted American 
Jobs Creation Act of 2004 did not include the broadband provision that 
you and Senator Rockefeller sponsored, the President signed the Jobs 
and Growth Tax Reconciliation Act of 2003, which included provisions 
that allow companies to accelerate depreciation of capital-intensive 
broadband equipment. I have also been informed that the Administration 
has championed making the research and experimentation tax credit 
permanent, and the President has signed into law an 18-month extension 
of this credit. The President has also supported dramatic increases in 
funding for research and development initiatives.
    I believe that President Bush is dedicated to keeping our nation on 
the leading edge of progress in the 21st century by encouraging 
entrepreneurship and making the best technology available to our 
citizens. If confirmed, I hope to join him in helping to achieve his 
goal of universal and affordable access to broadband for all Americans. 
I will look forward to working with you and other members of the 
Committee and the Congress on achieving the President's goal, and I 
would be willing to look at your bill and other relevant legislation 
introduced in the 109th Congress. I would also consult with other 
members of the Administration on this issue which crosses a number of 
departments.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                          Carlos M. Gutierrez

European Government Subsidies to Airbus
    Question 1. I am pleased the Administration decided in October to 
terminate the 1992 US-EU Bilateral Agreement on Aircraft and instead 
rely on the stricter disciplines of the World Trade Organization's 
Subsidies Agreement. The 1992 Agreement has become outdated and 
unhelpful to U.S. interests. It is well past time to end ``launch aid 
for the development and production of large commercial aircraft.'' Can 
I assume that you agree with the position that President Bush and the 
Administration have taken that European government subsidies to Airbus 
must cease?
    Answer. I do support the President's position on ending EU 
subsidies to Airbus. These subsidies have caused unfair loss of U.S. 
exports, the laying off of highly paid, highly skilled workers critical 
to the U.S. manufacturing base, and loss of market share to key U.S. 
companies, and therefore must cease.
    I understand that International Trade Administration staff has been 
working closely with the Office of the United States Trade 
Representative on its case against the European Commission. I will see 
to it that the Department of Commerce continues to devote its resources 
and expertise to resolve this issue.

    Question 2. In October, the U.S. filed a ``Request for 
Consultation'' at the World Trade Organization regarding European 
government subsidies to Airbus. On January 13, 2005, the U.S. will have 
the opportunity to request that the WTO's Dispute Settlement Body 
include this issue on its agenda for its monthly meeting on January 
23rd. Does the Administration intend to file a formal request at the 
January 23rd meeting to establish a panel to look into the Airbus 
subsidies and the resulting economic damages it has caused? Would you 
support such an action?
    Answer. I am advised that the U.S. Trade Representative is leading 
Administration efforts on this issue with the Europeans. I understand 
that the Administration has made clear that it is time to bring an end 
to the subsidies to Airbus. While I am advised that the Administration 
is prepared to achieve that objective through litigation, I also 
understand that the Administration continues to explore ways to achieve 
the same goal through negotiation. If I am confirmed, I can assure you 
that working with USTR and my other interagency colleagues to bring an 
end to these subsidies will be a major priority.

    Question 3. Would you support Administration efforts to negotiate a 
new agreement on large commercial aircraft with the European Union, 
with the underlying premise for negotiations that all ``launch aid'' 
must cease immediately?
    Answer. It is important to level the playing field between the 
United States and European aerospace industries whether it be through a 
negotiated agreement or through WTO dispute settlement proceedings. If 
confirmed, I will support any efforts by the Administration toward that 
end.
    I consider this a very important issue and, if confirmed, I would 
look forward to continuing to work with you to resolve the matter.
Pacific Northwest Salmon Recovery
    Question 1. Washington State, along with the entire Pacific 
Northwest, have been engaged in a bipartisan, on-the-ground effort to 
recover our iconic salmon runs to healthy, harvestable levels. NOAA 
Fisheries plays a vital role in these recovery efforts. However, over 
the past year they have issued and proposed several extremely troubling 
rule changes that lead many of us to question the agency's commitment 
to using sound science to recover our endangered salmon stocks.
    Specifically, these erosions include a flawed rewrite of the 
government's plan to recover salmon on the Columbia River that is 
unlikely to withstand judicial review; proposals to reduce critical 
habitat designations for endangered and threatened salmon and steelhead 
in Washington, Oregon, Idaho, and California by up to 80 percent; a 
hatchery fish listing policy that would count salmon grown in a bucket 
the same as those reproducing in the wild; and finally amendments to 
the Northwest Forest Plan which seriously dilute the ability of the 
Federal Government to protect salmon habitat on federal lands.
    I am very concerned that these proposals will move us away from the 
consensus- based recovery efforts and back to uncertainty and turmoil 
and to the era of court induced ``remedies.'' I do not want to see that 
happen. Do NOAA's proposals represent a concerted effort to erode the 
Pacific Northwest's regional efforts to recover endangered salmon runs?

    Question 1a. I am also very concerned about the allegations of 
politics trumping scientifically based decision-making. If confirmed as 
Secretary of Commerce, what will you do to restore confidence in NOAA 
Fisheries?

    Question 1b. To date our region has spent several billion dollars 
over the past 25 years to protect the habitat and survivability of 
stream-bred wild salmon. Now that we are finally beginning to see 
results of these efforts, what can you do to assure me that the 
Commerce Department will continue to request the resources necessary to 
support our collaborative, science-based recovery efforts?

    Question 1c. I am concerned that these policy shifts will not be 
legally defensible and, as occurred in the past, a federal judge may 
overturn NOAA's finding and my region would again be plunged into 
uncertainty and conflict over how to proceed with salmon recovery 
efforts. How confident are you that these policies will stand up to 
court challenges?

    Answer. First, I appreciate you raising these issues with me. I 
have come to understand just how essential healthy salmon populations 
are to the Pacific Northwest region, both culturally and economically. 
The issues you raise are as important to me as Secretary-designate as 
they are to you as a representative of the people of Washington. I 
understand there is a good team of professionals at NOAA, and I assure 
you I will work closely with them as the issues relating to salmon 
recovery are considered. I am committed to also working closely with 
all the stakeholders in the region, as well as their elected 
representatives and senators, to ensure the actions taken by NOAA 
Fisheries under my tenure are based on the best available science and 
every appropriate opportunity for peer review is honored. I look 
forward to working with you on these issues and, should I be confirmed 
as Secretary of Commerce, I would welcome the chance to meet with you 
to discuss them in greater detail.
Recent Listing of Puget Sound Orcas Under the Endangered Species Act
    Question 1. Last month NOAA Fisheries proposed listing Puget 
Sound's Southern Resident orcas population as ``threatened'' under the 
Endangered Species Act. Since the orcas range all over the Puget Sound 
and are the keystone species, I understand that an ESA listing could 
potentially have a dramatic impact on my home state. I do not want to 
see Puget Sound economic activity curtailed or the recovery of these 
majestic whales slowed because of a lack of agency resources to process 
the likely increase in NOAA permit requirements. If confirmed as 
Secretary of Commerce, will your provide NOAA Fisheries with the 
additional resources they will need to fulfill these additional legal 
requirements?

    Question 1a. As you know, an Endangered Species Act listing 
triggers the development of a conservation plan. Over the past three 
years I have provided resources to help inform and develop a plan for 
these orcas allow our region to move forward and begin identifying the 
steps necessary to recover these regional icons. Will you commit to a 
clear schedule so this plan can be finalized?

    Question 1b. Will you commit to working to see that NOAA has the 
funding to research what is causing these animals to decline?

    Answer. I am aware of the Committee's strong interest in the 
southern resident killer whale stock. If confirmed as Secretary, I will 
consult with the Committee on all activities involving the recovery of 
southern resident killer whales. I am advised that a conservation plan 
is under development, and a draft should be available in the early 
Spring of this year. I look forward to working with you with regard to 
this and other vital economic issues in the Pacific Northwest.

Magnuson-Stevens Reauthorization
    Question 1. As Secretary of Commerce, you would have primary 
responsibility over the nation's fisheries under the Magnuson-Stevens 
Fisheries Management Act. Recreational and commercial fishing is 
vitally important contributor to Washington's economy, generating 
billions of dollars in economic activity and thousands of jobs. As you 
know, the Magnuson-Stevens Act will be brought up for reauthorization 
in the upcoming Congress. Could you please identify the reauthorization 
priorities you would push as Secretary of Commerce?

    Question 1a. How do you think we can best balance the economic 
needs of fisherman while maintaining the long-term sustainability of 
harvestable fish populations?

    Question 1b. I was pleased that the U.S. Ocean Commissions Report 
found that North Pacific seafood resources are responsibly managed and 
can serve as a model of how local interests can collectively address 
overfishing and create a sustainable and high value use of ocean 
resources. Do you agree with the Commission's findings?

    Answer. I am advised that the Administration plans to submit a 
revised Magnuson-Stevens Act reauthorization proposal during the first 
session of the 109th Congress that will include themes similar to those 
contained in the Administration's proposal that was transmitted to the 
108th Congress.
    I am further advised by NOAA's fisheries that there are several 
components necessary to balance the economic needs of fishermen with 
maintaining harvestable fish populations, including: (1) providing up-
to-date and accurate stock assessment information to the Regional 
Fishery Management Councils; (2) expanding scientific programs to 
address long-term environmental factors; (3) continuing to upgrade the 
application of Magnuson-Stevens Act management requirements, especially 
the national standards and other provisions that specifically address 
the economics and community needs of federally managed fisheries; and 
(4) working with the Councils to encourage the development of 
management measures which appropriately use market-based economic 
incentives to promote resource sustainability as well as economic 
viability.
    I am advised that the North Pacific Fishery Management Council, the 
State of Alaska, and all the user groups they represent have done an 
excellent job in managing the resources in Alaskan waters.
Counterfeiting of U.S. Goods in China
    Question 1. The counterfeiting of software, movies, music, and 
video games abroad, particularly in China, costs the U.S. software and 
entertainment industries untold billions in loses annually. Initiatives 
to crack down on pirated U.S. intellectual property and counterfeit 
goods have been pursued across several Administrations with little 
sustained success. What priority will you place on stemming the flow of 
pirated and counterfeit software, games, CDs, and DVDs into the U.S. 
from China and other countries?
    Answer. I know that this Administration recognizes the importance 
of protecting the intellectual property of U.S. businesses here and 
abroad and has made it a priority to fight counterfeiting and piracy. 
Intellectual property is a vital component of our nation's economy and 
our businesses and innovators deserve full government engagement in 
this effort. Having spent a number of years with a consumer products 
company, I fully recognize the value of intellectual property assets 
and, if confirmed, would continue to follow Secretary Evans' path in 
giving intellectual property protection high priority status.

    Question 2. Last October, the Commerce Department announced the 
Strategy Targeting Organized Piracy initiative. What elements of the 
initiative focus specifically on stopping the piracy and counterfeiting 
of the U.S. goods in China?
    Answer. The Strategic Targeting Organized Piracy (STOP) initiative, 
to my knowledge, is intended to address worldwide piracy and 
counterfeiting and does not specifically target any particular country. 
All countries need to focus domestically on the escalating problem of 
piracy and counterfeiting to eradicate the harm it does to the global 
economy. Because of the scope of the problem in China, the world's 
largest producer of and market for counterfeit goods, attacking this 
issue is a high priority for the Department. Under STOP, Commerce will 
work on the problem of piracy and counterfeiting of U.S. goods in China 
by providing technical assistance and training to Chinese officials to 
help them bring their regime for protecting IPR into compliance with 
their obligations under the WTO, by ensuring that U.S. businesses 
understand the importance of taking steps to protect and enforce their 
intellectual assets, and by helping U.S. rights holders navigate the 
Chinese system. We also see international cooperation with our 
likeminded trading partners, such as through the WTO, WIPO, and APEC, 
as critical to improving China's IPR regime.
    Additionally, I have been advised that as part of STOP, a new 
Investigations and Compliance unit has been created to identify and 
pursue the elimination of foreign trade practices in violation of our 
trade agreements with respect to IPR. To combat the widespread piracy 
and counterfeiting in China, the unit established a case referral 
program with its Chinese counterparts to address specific IPR issues of 
U.S. companies in a timely and effective manner.

    Question 3. What is the current status of the initiative's 
implementation?
    Answer. My understanding is that the Department of Commerce and the 
other agencies involved in this cooperative effort are sharing 
information and strategies, interacting with representatives of the 
affected industries, and continuing to map out the most effective and 
efficient means of stopping the flow of illicit merchandise. The 
Department of Commerce has set up a hotline and website to assist U.S. 
right holders in securing intellectual property protection abroad. The 
Department also has produced and distributed a publication to small 
businesses detailing how STOP can protect their intellectual property 
at home and abroad.

    Question 4. When should U.S. software companies and the 
entertainment industry expect to see a marked reduction in counterfeit 
products as a result of the initiative?
    Answer. While I would hope and expect to see positive results from 
the initiative on an expedited basis, I am not in a position at this 
point to provide any specific estimates. You have my assurance that, if 
confirmed, I will devote substantial effort to making this initiative 
work to the benefit of the affected industries.

    Question 5. How does the Department plan on measuring the success 
of the initiative?
    Answer. I am unaware that any specific method has been determined 
to measure the success of the initiative. If confirmed, I would work 
with the other agencies and representatives of the affected industries 
to develop a reasonable method to do so.

    Question 6. What is the Administration doing to encourage and 
assist the Chinese Government to fix the apparent shortcomings in its 
judicial system with respect to the theft of intellectual property and 
the counterfeiting of goods?
    Answer. My understanding is that the Under Secretary of Commerce 
for Intellectual Property has led delegations to China for 
consultations with senior officials at China's patent, trademark, and 
copyright agencies and other agencies involved in intellectual property 
issues to further the Administration's goals of improving the 
intellectual property environment for U.S. right holders in China. 
Those consultations have, to my knowledge, included specific 
discussions on improving the effectiveness of the enforcement 
mechanisms available through the judicial and administrative systems.
    I was pleased to learn that for the first time an attorney from 
USPTO's Office of Enforcement, who is fluent in Mandarin, has been 
placed as a full-time attache at our embassy in China to help make sure 
that China keeps its commitments on intellectual property protection. I 
also understand that the USPTO maintains a team of China intellectual 
property rights experts here in Washington and has conducted many 
training programs over the past several years for Chinese intellectual 
property officials on the importance of intellectual property 
protection and enforcement. In recent months, Commerce has devoted 
considerable energies to improving the criminal IPR enforcement 
environment. The Department has also worked with the courts, police, 
judges and other officials in addressing relevant IPR concerns and 
business issues.
    If confirmed, I would certainly encourage further consultations, 
training sessions and dialogue with Chinese officials.
Diversion of User Fees From the Patent and Trademark Office
    Question 1. The general sense of the high-tech community is that 
the United States patent approval system is under-funded and over 
burdened. Last year, the creators of intellectual property--businesses, 
universities, and individuals, said that they would be willing to pay 
higher fees on patent applications, as well as change how these fees 
are structured, if the Administration and Congress would promise not to 
divert these fees to fund unrelated government programs at the 
Department. Since 1992, approximately $700 million in PTO user fees 
have been diverted to unrelated programs. While the FY05 omnibus 
appropriations bill includes provisions that allowed the PTO to raise 
its fees over the next two years, and change the way the fees are 
structured, it did not incorporate language that would once and for all 
end patent-fee diversion. Is it your position that patent fees should 
be used only for their intended purpose at the Patent and Trademark 
Office and not diverted for other purposes within the Department?
    Answer. My understanding is that Secretary Evans and this 
Administration have worked to provide USPTO full access to its fees and 
that the recently enacted FY 2005 budget gives the USPTO access to most 
if not all of the fees it expects to collect. The USPTO plays a 
critical role in our intellectual property system and economy. If 
confirmed, I would work with my colleagues within the Administration 
and the Congress to help ensure that the USPTO receives full access to 
its fees in the future.

    Question 2. Can you assure me that, if confirmed, you will do 
everything in your power to ensure that user fees received by the 
Patent and Trademark Office will not be diverted for other purposes 
within the Department in budgets you submit to Congress?
    Answer. Consistent with my answer to the above question, if 
confirmed, I would work with my colleagues within the Administration to 
help ensure that the USPTO receives full funding in the future. My 
understanding is that the USPTO submits its proposed budget directly to 
the Office of Management and Budget for consideration.

    Question 3. What additional plans do you have to ensure high-
quality patent search and examinations, to reduce the time it takes to 
award patents, and to improve the overall cost efficiency of the Patent 
and Trademark Office?
    Answer. My understanding is that the USPTO, at Congress' direction, 
developed a 21st Century Strategic Plan not only to increase 
productivity in processing time but also to enhance quality and promote 
electronic filing and processing. The Plan has the backing of a wide 
range of businesses, industries and trade groups. If confirmed, I would 
work with the Director of the USPTO to ensure that the initiatives in 
the plan are fully funded and implemented in a timely manner.

    Question 4. The increase in user fees will allow the Patent Office 
to hire a significant number of new patent examiners. As the fee 
increase is for only two years, will you have to come back and ask 
Congress to make the fee increases permanent?
    Answer. My understanding is that implementation of the majority of 
the USPTO's Strategic Plan's initiatives, including the hiring and 
training of patent examiners, is contingent upon adoption of changes in 
the fee system that are contained in the United States Patent and 
Trademark Fee Modernization Act. Effective implementation of the 
USPTO's strategic plan requires that the USPTO have certainty as to 
future revenues. If confirmed, I would work with Congress to make those 
adjustments permanent.

Imports of Cement From Mexico Covered By U.S. Antidumping Orders
    Question. One of our most longstanding trade issues involves 
imports of cement from Mexico, which are covered by a U.S. antidumping 
order. This case is a perfect example of why we need strong enforcement 
of laws against unfairly priced imports. Unlike U.S. cement producers, 
Mexican producers have a home market in Mexico that is closed to any 
outside competition, allowing them to earn high profits by charging 
among the highest cement prices in the world to Mexican customers. They 
use their high profits on home market sales in Mexico to subsidize 
their exports to the United States at unfairly low prices. Without an 
antidumping order in place, imports from Mexico would injure U.S. 
producers and impede investment in new cement capacity in the United 
States. Can you assure me that, under your leadership, the Department 
of Commerce will be aggressive in enforcing U.S. laws against unfairly 
traded imports, including those from Mexico?
    Answer. I have been informed that the antidumping duty order on 
cement from Mexico has been in place for many years, and that the 
Commerce Department has conducted numerous annual administrative 
reviews of the order. These reviews have helped ensure that the amount 
of dumping occurring is measured in a timely manner, and that the 
appropriate amount of duties are collected so that these imports do not 
continue to injure domestic producers. If I am confirmed as the 
Secretary of Commerce, I will ensure that the Department continues to 
work vigorously to ensure that domestic industries are not injured by 
unfairly traded imports, including imports of cement from Mexico.

Hollings Manufacturing Extension Partnership
    Question 1. The manufacturing sector is important to my state's 
economy. Washington State has lost nearly 20 percent of its 
manufacturing workforce since February 2001. As you know, last March 
the Department announced the President's Manufacturing Initiative and 
released a report with 63 recommendations. One recommendation called 
for ``support of a newly coordinated Manufacturing Extension 
Partnership (with other Department programs) and creation of a national 
virtual network of centers of manufacturing excellence,'' but was 
silent on funding program-funding level.
    For over 15 years, the MEP program nationally has provided small 
and medium sized manufacturers with the help they need to make them 
more globally competitive. In Washington, the Washington Manufacturing 
Services (WMS) provides expertise and services tailored to meeting the 
needs of our smaller manufacturers--from introducing lean manufacturing 
to suppliers to the aerospace industry in the western part of the state 
to improving the efficiency of food processors in the eastern part of 
the state. In 2003, Washington Manufacturing Services completed 168 
projects, increasing sales of its clients by over $17 million and 
reducing their costs by over $11 million. This is a program that works 
for Washington's smaller manufacturers. Can you assure me that, if 
confirmed, you will do everything in your power to ensure full funding 
for this important and successful program?
    Answer. As someone who has spent his professional career with a 
U.S. manufacturer, I can assure you that I know how vital the role 
manufacturers large and small play in our economy. The national 
manufacturing network of the Hollings Manufacturing Extension 
Partnership is assisting our nation's small manufacturers and seeks to 
contribute to a strong economy. I will work with the members of the 
Commerce and Appropriations Committees to ensure that small 
manufacturers have access to the needed resources which allow them to 
remain competitive.

    Question 2. What are your plans to coordinate the Hollings MEP 
program with other Department programs?
    Answer. I have been informed that the Hollings MEP is working with 
other Commerce agencies as well as with other Departments that may be 
interested in the program's national manufacturing network. If I am 
confirmed as Secretary, I would support greater collaborations with 
other Departments which can use MEP to benefit their mission.

    Question 3. What are you plans to create a national virtual network 
of centers of manufacturing excellence?
    Answer. Since I have not yet been confirmed, I am not yet part of 
the budget process, so I cannot speak to any plans for a ``virtual 
network of centers.'' I am aware of the importance of manufacturing to 
the economy. If confirmed as Secretary of Commerce, I will support our 
nation's manufacturers in their efforts to become more competitive and 
productive in the global marketplace by ensuring that they have access 
to technical and information resources.

Digital Divide
    Question 1. This past fall, the NTIA in collaboration with ESA, 
released ``A Nation Online: Entering the Broadband Age.'' The report 
describes the results of NTIA's most recent in a series of biennial 
surveys on our Nation's access and use of the Internet and broadband. 
The report acknowledged that there remains a digital divide between 
urban and rural populations with respect to broadband connections, but 
was silent on whether there remains a digital divide with respect to 
race and ethnicity. Buried in Appendix Table I there are statistics 
that would indicate a digital divide remains with respect to race and 
ethnicity. While 65 percent of non-Hispanic whites use the Internet 
from any location, only 45 percent of blacks and 37 percent of 
Hispanics do. Additionally, there is roughly twice as many non-Hispanic 
whites living in households with broadband (25.7 percent) as there are 
black and Hispanic households (13.9 percent and 12.6 percent 
respectively). Given these survey results, I have serious doubts 
whether President Bush's goal that all Americans should have universal, 
affordable access to broadband technology by 2007 will be met. Over the 
years, the Department has funded these biennial surveys through the 
Technology Opportunities Program (TOP).
    As you know, TOP promotes the use of advanced telecommunications 
and information technologies to improve the provision of education, 
health care, or public information in the non-profit and public 
sectors. Unfortunately, the Administration did not request nor did the 
Congress provide any new appropriations for TOP in 2005. Funding from 
TOP also funded the biennial survey and reports. With the TOP ending in 
FY 2004, it is not clear that the Department intends to fund future 
surveys and reports. Do you believe there remains a digital divide for 
access to dial-up and broadband Internet with respect to race and 
ethnicity? With respect to rural and urban populations?
    Answer. It is my understanding that Internet usage and broadband 
usage have grown dramatically since President Bush took office. I have 
been advised that in the four years since the President took office, 
broadband subscribership has grown by over 300 percent, with the number 
of high speed lines growing from 9.6 million to 32 million, and today 
more Americans access the Internet through broadband than dial-up 
connections. The President has also worked to harness the forces of 
market competition to lower the costs of Internet access. For example, 
the price of computers themselves have fallen substantially to bring 
the Internet within the financial reach of most households. I have also 
been informed that while there may be some differences in use of the 
Internet across some demographic and geographic groups, this gap is 
closing rapidly and there has been tremendous growth in Internet and 
broadband usage across all racial, ethnic, and geographic groups.

    Question 2. What do you see as the federal role in reducing these 
so called digital divides?
    Answer. I share the President's vision of the role of government in 
addressing these issues. The President has stated that ``[t]he role of 
the government is not to create wealth; the role of the government is 
to create an environment in which the entrepreneur can flourish, in 
which minds can expand, in which technologies can reach new 
frontiers.'' If confirmed, I would look forward to working with the 
President to sustain an environment in which we can continue strong 
growth in Internet and broadband usage across all demographic and 
geographic groups.
    As you note in your question, President Bush has articulated a bold 
new vision for broadband in America by setting a national goal for 
universal and affordable access to broadband by 2007. I think that this 
is a very important goal, both for the Nation and on a global scale, in 
terms of our nation's competitiveness, and it is one that I 
wholeheartedly endorse and fully support.

    Question 3. What will be the Department's role in achieving the 
President's stated goal that all Americans should have universal, 
affordable access to broadband technology by 2007?
    Answer. If confirmed, I would look forward to working with 
President Bush to ensure that we create and sustain an economic and 
regulatory environment in which broadband can continue to grow. I would 
work with the President to ensure that proper fiscal policies, such as 
the moratorium on Internet taxes, which I have been informed that the 
President signed into law, are in place to promote broadband. I have 
been advised that the Department of Commerce plays an important role in 
the management of spectrum and development of spectrum policy. Should I 
be confirmed, I would continue the Administration's efforts to ensure 
that adequate radio spectrum is available for wireless broadband 
services and work to ensure that overly burdensome regulations do not 
impede the development of new broadband technologies, in order to make 
broadband service available to more Americans at affordable prices.

    Question 4. Can you assure me that, if confirmed, you will do 
everything in your power to continue funding the biennial surveys and 
reports on our Nation's Internet and broadband usage.
    Answer. I have been informed that the Department of Commerce has 
produced reports on Internet and broadband usage. If confirmed, I will 
be pleased to review the budget and get back to you on this matter. I 
have been advised that the preparation of the President's Fiscal Year 
2006 budget request is nearing completion and as I stated in the 
hearing I am not willing to commit to promises that I cannot keep as I 
have not been involved in the Fiscal Year 2006 budget to date. Should I 
be confirmed, I will be actively involved in the Department's budget 
and determining how the Department can best carry out its mission.

Unimpeded Market Access for U.S. Software Products in China
    Question. As you know, China has a huge trade surplus with the 
United States. China's Premier has stated that China will reduce this 
surplus by importing more American products. Yet it appears that the 
Chinese government is about to throw up a new barrier to market access 
for one of our most competitive exports by requiring government 
ministries to purchase only Chinese software. I understand that China 
is on the verge of releasing government procurement regulations that 
will bar most U.S. software products from the government market. What 
is the Administration's position on this issue, and what is its 
strategy for addressing it?
    Answer. I understand that the Administration has been monitoring 
China's development of its software government procurement policy since 
the issue emerged in early 2003, and has been actively engaging Chinese 
leadership to encourage China to allow U.S. companies to continue to 
provide software products and services. Secretary Evans intends to 
raise this issue with senior Chinese leaders when he travels to China 
during the week of January 10. This is a priority issue for the 
Administration and, if confirmed, I will continue to press the Chinese 
on this issue at senior levels.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to 
                          Carlos M. Gutierrez

    Question 1. In your view, have the policies of the Bush 
administration contributed to our huge trade deficit? Do you view the 
trade deficit as a problem that government has any role in correcting?
    Answer. No, I do not believe the policies of the Bush 
Administration contributed to our huge trade deficit. The trade deficit 
is a symptom of several developments in the world economy. For example, 
the trade deficit certainly reflects large disparities in the growth 
rates of the economies of the United States and its major trading 
partners. The strong U.S. economy has attracted imports, while slow 
growth in Japan and Europe has impeded growth in U.S. exports. 
Encouraging growth abroad and breaking down foreign barriers to U.S. 
exports, by negotiating new trade agreements and enforcing existing 
agreements, are important actions for the Government to continue to 
pursue. In addition, if Americans increase national savings, that would 
reduce our reliance on foreign sources of capital to fund U.S. 
investment. The Administration's recommended policies to increase 
national saving--by reducing the budget deficit and expanding tax-
deferred savings accounts--can play an important role in reducing the 
trade deficit.

    Question 2. During President Bush's first term, no net jobs were 
created. Why did the tax cuts fail to spur payroll employment? Doesn't 
the policy need to be changed?
    Answer. As I experienced firsthand at the Kellogg Company, the U.S. 
economy was affected by an unusual series of powerful shocks over the 
past four years--including the collapse of the high-tech stock bubble, 
the terrorist attacks of 9/11, corporate accounting scandals, and the 
wars in Afghanistan and Iraq. Those were considerable headwinds for the 
U.S. economy. Fortunately, the Administration's tax relief--along with 
aggressive action by the Federal Reserve--helped to moderate the impact 
of these shocks. As a result, the recent recession was the mildest on 
record--and U.S. economic growth has been faster than any other G-7 
country since the fourth quarter of 2000. Total employment as of the 
most recent reports in fact shows a net gain in employment since 
January 2001. In addition, I understand that according to the payroll 
survey, the U.S. economy has created 2.6 million new jobs over the past 
16 months and the unemployment rate is 5.4 percent.

    Question 3. Many observers on both sides of the aisle acknowledge 
that the role of cabinet secretaries in this Administration, 
particularly when it comes to economic policy, has been to cheerlead 
rather than to make policy. As a relative outsider to a very insular 
group of people, how will you make your voice heard?
    Answer. I plan to be actively involved in policy and decisionmaking 
that affects the Department of Commerce and the business community. I 
believe that my experiences running a business, hiring people, and 
selling products in the United States and overseas, will make mine a 
valuable voice advising the President. I will work closely with my 
colleagues in the Cabinet and Members of Congress to continue policies 
that foster the conditions for businesses and the economy to grow.

    Question 4. What business dealings did Kellogg's have with Cuba 
while you were CEO?
    Answer. Kellogg Company did not do business with Cuba while I was 
the Chief Executive Officer. In 2002, our Caribbean division considered 
participating in a Cuba Trade Show, but decided not to and no Kellogg 
Company employees participated.

    Question 4a. Do you believe sanctions against Cuba should be 
lifted?
    Answer. No, I fully support the policy of this Administration as 
established under the Cuban Democracy Act and other laws. The 
Administration has indicated that it is prepared to reduce sanctions 
against the Cuban government once Cuba has a transition government that 
is committed to the establishment of a fully democratic, pluralistic 
society. I understand the Administration has stated that the embargo is 
the best leverage to promote such change, and I agree.

    Question 5. In September of 2004, Kellogg's was cited in one of the 
five worst cases of corporate lawsuit abuse by the Foundation for 
Taxpayer and Consumer Rights. According to the Foundation, Kellogg's 
engaged in a multi-year harassment campaign against a small business, 
Toucan Golf, just because the Toucan bird was also used to sell 
Kellogg's Froot Loops. As Secretary of Commerce, you will have 
jurisdiction over the Patent and Trademark Office, which has a large 
role in resolving such disputes. How can we be assured you'll treat 
small companies fairly in disputes with giant corporations?
    Answer. As you know, the Secretary of Commerce has responsibility 
for many agencies, from the United States Patent and Trademark Office 
(USPTO) to the Minority Business Development Agency. If confirmed, I 
assure you that I will take all of these responsibilities seriously and 
make decisions in a fair and impartial manner, regardless of the size 
or type of business involved in any particular matter.
    The litigation mentioned above is not an action involving the 
Department if Commerce; it is an action between two private parties who 
have taken their dispute to the U.S. court system. The Department does 
not play a role in such matters. To the extent that the Department, 
through the USPTO, does hear disputes between private parties or ex 
parte appeals, its proceedings are fully transparent and subject to the 
rule of law, case precedents, and court review.

    Question 6. As you know, the Commerce Department has jurisdiction 
over the National Oceanic and Atmospheric Administration. I have 
introduced legislation to protect deep water corals. ``Deep water 
corals'' make up two-thirds of the ocean's corals and provide vital 
fishery habitats, but they are being destroyed by bottom trawling. The 
U.S. Commission on Ocean Policy has made several recommendations 
regarding the protection of deep water corals. If confirmed, would you 
work to get these recommendations implemented?
    Answer. As one part of the Administration's response to the U.S. 
Commission on Ocean Policy's report, the U.S. Ocean Action Plan, the 
President tasked the newly formed Committee on Ocean Policy with 
determining which agency or agencies should take the lead in 
coordinating the Federal Government's research and science activities 
related to deep-sea corals. I understand that the role of deep-sea 
corals in marine ecosystems, is an important emerging issue. I will, if 
confirmed, ensure that the Department, including NOAA, works with you 
and your staff and other Members of Congress on this important natural 
resource issue. I expect the Committee on Ocean Policy and its 
subordinate bodies will be taking a very careful look at this issue.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Mark Pryor to 
                          Carlos M. Gutierrez

Foreign Trade Barriers on Scrap Exports
    Question. Concerns about foreign trade barriers on the export of 
steel scrap have been brought to my attention. Specifically, I have 
been advised that the barriers on the export of steel scrap may be 
harming our manufacturing economy, including U.S. steel consumers, U.S. 
steel producers, and the manufacturing jobs associated with these 
companies. Scrap prices have tripled in the last two years, and while 
U.S. steel scrap exports continue to increase, our trading partners 
like Russia, the Ukraine, and Korea continue to restrict or even 
prohibit their own scrap exports to the detriment of U.S. steel 
consumers and producers. Today, nearly half of all scrap exported by 
the United States goes to countries that themselves maintain export 
taxes or other barriers on steel scrap. I am concerned that the 
reported barriers on steel scrap trade may constitute unfair subsidies 
that are harming our manufacturing economy. If confirmed as Secretary 
of the Department of Commerce, what will you do to address this crisis 
and to level this fundamental imbalance in the global steel scrap 
market?
    Answer. I share your concerns that foreign government restrictions 
on scrap exports are a problem for steel producers and consumers and 
their employees in the United States. I am especially concerned about 
the export duties imposed by Russia and Ukraine.
    I understand that Secretary Evans worked actively with Ambassador 
Zoellick to encourage these countries to remove these duties as soon as 
possible. In the World Trade Organization (WTO) accession negotiations 
with both countries, the Administration is seeking the elimination of 
the duties on steel scrap. I understand that the Commerce Department 
believes that the Administration's advocacy has helped keep Russia from 
raising further barriers to scrap exports requested by consumers there. 
I have been advised that the Korean government, which began monitoring 
scrap exports early in 2004, stopped doing so on September 30, 2004.
    I understand the Administration continues to monitor the scrap and 
steel price situation carefully, and raises the issue of foreign 
government export restrictions on steel raw materials in multiple 
international fora. Moreover, I have been advised that Commerce, 
working with USTR and the governments of Canada and Mexico, developed a 
joint NAFTA governments' statement for the January 12-13, 2005 OECD 
Global Steel Conference, urging governments of steel-producing 
countries to work with us to eliminate steel raw material export duties 
and restrictions.
    If confirmed as Secretary of Commerce, I will continue Commerce's 
close collaboration with USTR to seek the removal of foreign government 
restrictions that contribute to increased prices for steel raw 
materials for U.S. manufacturers.

Assessment of the Commerce Department's Application of Duty Drawback
    Question. I understand that the Department of Commerce has recently 
changed their practice as to granting duty drawback adjustments to U.S. 
price in antidumping investigations and reviews. Where a country 
imposes tariffs on imported products used as inputs in domestically 
sold products, and which are not collected on exported products, the 
statute directs the Commerce Department to adjust for the inclusion of 
these duties in costs and prices of the home market merchandise.
    However, I understand that Commerce has begun granting these 
adjustments in cases in which the subject foreign producers use no 
imports as inputs and pay no duties for products sold in the home 
market. Concerns have been raised that this contradicts a recent Court 
case, Hevensa v. U.S.; has resulted in low or no margins and increased 
dumped imports from these countries; and rewards countries for having 
high tariffs. As a result, the domestic industry has suffered economic 
injury and layoffs have occurred.
    Can you consult with the appropriate Department personnel and 
respond to me in writing regarding these actions at the Department?
    Answer. I have been advised that there has been no change in the 
Department's practice on granting adjustments for duty drawback and 
that the Department's practice is based on the language of the statute. 
I further understand that in the Hevensa case, the party at issue 
failed to satisfy the two-part test that the Department has 
traditionally applied and that the U.S. Court of International Trade 
has consistently upheld. I have been told that there has been no 
departure from that test or from relevant court precedent. One 
requirement of the two-part test is that there be sufficient imports of 
raw materials to account for the duty drawback. I understand the 
Department has not begun granting duty drawback adjustments where there 
were no imports of raw materials. Such a change to the Department's 
practice would require a change in the law. The Department continues to 
grant adjustments only if the respondent satisfies the court-sanctioned 
two-part test.

                                  
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