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91–367 PDF 2004

S. HRG. 108–301

PROPOSED UNITED STATES–CHILE AND UNITED

STATES–SINGAPORE FREE TRADE AGREEMENTS

HEARING

BEFORE THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

JULY 14, 2003

Serial No. J–108–23

Printed for the use of the Committee on the Judiciary

(

(II)

COMMITTEE ON THE JUDICIARY 

ORRIN G. HATCH, Utah, Chairman 

CHARLES E. GRASSLEY, Iowa 

ARLEN SPECTER, Pennsylvania 

JON KYL, Arizona 

MIKE DEWINE, Ohio 

JEFF SESSIONS, Alabama 

LINDSEY O. GRAHAM, South Carolina 

LARRY E. CRAIG, Idaho 

SAXBY CHAMBLISS, Georgia 

JOHN CORNYN, Texas 

PATRICK J. LEAHY, Vermont 

EDWARD M. KENNEDY, Massachusetts 

JOSEPH R. BIDEN, JR., Delaware 

HERBERT KOHL, Wisconsin 

DIANNE FEINSTEIN, California 

RUSSELL D. FEINGOLD, Wisconsin 

CHARLES E. SCHUMER, New York 

RICHARD J. DURBIN, Illinois 

JOHN EDWARDS, North Carolina 

BRUCE ARTIM, Chief Counsel and Staff Director 

BRUCE A. COHEN, Democratic Chief Counsel and Staff Director 

(III)

C O N T E N T S 

STATEMENTS OF COMMITTEE MEMBERS 

Page

Cornyn, Hon. John, a U.S. Senator from the State of Texas ............................... 6

Feinstein, Hon. Dianne, a U.S. Senator from the State of California, letter ..... 4

Graham, Hon. Lindsey O., a U.S. Senator from the State of South Carolina .... 16

Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah ............................ 1

prepared statement .......................................................................................... 28

Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont, prepared 

statement .............................................................................................................. 38

WITNESSES 

Ives, Ralph F., III, Assistant U.S. Trade Representative for Southeast Asia, 

the Pacific and APEC, and Lead Negotiator for the Singapore Free Trade 

Agreement ............................................................................................................. 8

Vargo, Regina K., Assistant U.S. Trade Representative for the Americas, 

and Lead Negotiator for the Chile Free Trade Agreement ............................... 6

SUBMISSIONS FOR THE RECORD 

Business Week, July 21, 2003, article ................................................................... 23

Congressional Research Service, Ruth Ellen Wasem, Washington, D.C., report ........................................................................................................................ 25

Ives, Ralph F., III, Assistant U.S. Trade Representative for Southeast Asia, 

the Pacific and APEC, and Lead Negotiator for the Singapore Free Trade 

Agreement, prepared statement ......................................................................... 32

Kennedy, Hon. Edward M., Hon. Dianne Feinstein, Hon. Maria Cantwell, 

November 5, 2002, joint letter ............................................................................ 37

New York Times, May 30, 2003, article ................................................................. 40

Temporary Entry Provisions of the Implementing Legislation for the Chile 

and Singapore Free Trade Agreements (FTAs) ................................................. 43

Vargo, Regina K., Assistant U.S. Trade Representative for the Americas, 

and Lead Negotiator for the Chile Free Trade Agreement, prepared statement ...................................................................................................................... 45

Zoellick, Robert B., United States Trade Representative, Executive Office 

of the President, Washington, D.C., letter ......................................................... 52

(1)

PROPOSED UNITED STATES–CHILE AND 

UNITED STATES–SINGAPORE FREE TRADE 

AGREEMENTS 

MONDAY, JULY 14, 2003 

UNITED STATES SENATE, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Committee met, pursuant to notice, at 4:06 p.m., in room 

SD–226, Dirksen Senate Office Building, Hon. Orrin G. Hatch, 

Chairman of the Committee, presiding. 

Present: Senators Hatch, Graham, Cornyn, and Feinstein. 

OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. 

SENATOR FROM THE STATE OF UTAH 

Chairman HATCH. Well, we are happy to convene this Committee 

hearing. We are here today for the Committee’s first hearing of 

what I hope will be many on international trade agreements and 

implementing language related to those areas in the agreements 

that concern matters under the jurisdiction of the Judiciary Committee. 

Specifically, today we will examine some of the provisions in the 

proposed bilateral Free Trade Agreements between the United 

States and Chile and the United States and Singapore. 

I would like to commend the administration in reaching these 

agreements with Chile and Singapore. Both Chile and Singapore 

are countries that represent economic stability and growth in their 

respective regions. The trade agreements will provide new market 

access for American products, including agricultural, manufactured 

products, telecommunications equipment, and other high-technology products. 

Both of these agreements contain chapters on matters of longstanding interest to this Committee. These include immigration, intellectual property, antitrust, e-commerce, and telecommunications. 

In all of these areas except immigration, no changes in any U.S. 

laws under this Committee’s jurisdiction require amendment. 

In many ways, the substance of the negotiations on matters of 

Judiciary Committee concern with respect to these two important 

treaties has focused on ways to encourage our trading partners to 

harmonize their law with current U.S. standards, and we should be 

proud of this dynamic. 

Today, I expect the Committee will focus its attention on the provisions in the agreements that relate to legislative language being 

drafted to implement the immigration aspects of the treaties. Key 

2

issues include provisions that relate to the temporary entry of investors, visitors for business, and temporary professional workers. 

As I understand it, over the last several months on six occasions 

the Office of the United States Trade Representative has briefed 

the Committee on immigration issues related to these agreements. 

I want to acknowledge and thank the USTR for consulting with the 

Committee. We need to continue this spirit of cooperation as we 

move forward on these and other trade agreements. 

In the last week, USTR staff and Committee staff have worked 

closely together as the immigration language has been circulated 

and revised. Last Wednesday, Committee staff and a representative from USTR, Ted Posner, met to identify and attempt to resolve 

issues related to immigration. Many of us know and respect Ted 

from his days as one of Senator Baucus’ trade counsels on the Finance Committee. I should also mention the good work of Kent 

Shigetomi on the immigration portions of these agreements. 

In any event, since the Wednesday meeting that walked through 

the proposed language, a series of informal staff-level consultations 

have occurred. In fact, it was my hope that the Committee would 

be able to hold what is known as a mock markup last Thursday. 

But as anyone who follows the Judiciary Committee knows, we 

spent another 12 hours on asbestos and we were unable to get to 

the trade agreements. 

My colleagues on the Committee will recall that Senator Grassley, who, in addition to serving on this Committee, chairs the Finance Committee, urged us to take up these trade matters in the 

hope that the full Senate can adopt these treaties before the August recess. I wholeheartedly agree with Chairman Grassley that 

the full Senate should act on the Chile and Singapore Free Trade 

Agreements before we adjourn in August, if at all possible. 

Under the Trade Promotion Act of 2002, implementing legislation 

for trade agreements are fast-tracked, which means that once the 

administration transmits the language, we can vote for or against 

it, but cannot amend it. 

The TPA legislation also calls for close consultation between the 

administration and Congress. This consultation takes place in a 

number of forms. It includes the statutorily created Congressional 

Oversight Group on Trade, on which Senator Leahy, Senator 

Cornyn and I serve to represent the interests of our Committee. 

The informal staff briefings between USTR and other agencies 

and Congressional staff are another type of constructive interaction. While not statutorily required, the so-called mock markup 

is another prudent mode of inter-branch of Government communication. This amounts to an occasion for the relevant committees 

to give the administration their informal advice in the very formal 

setting of an executive business meeting on any implementing language that the administration is developing for subsequent submission to the Hill under the fast-track procedures. 

Unfortunately, we were unable to reach the mock mark item on 

last Thursday’s agenda. We have had the benefit of several more 

Judiciary Committee staff and USTR staff interactions over the 

last several days. 

I would suggest that another function of today’s hearing will be 

for members of this Committee to convey any unresolved concerns 

3

they would have raised on Thursday directly to the senior USTR 

officials responsible for negotiating these two agreements. 

I have heard, and to some extent share the concerns that some 

members of the Committee, including Senator Feinstein, have 

about the truncated schedule we are operating under and the 

somewhat fluid nature of the language over the last week. 

I do appreciate U.S. Trade Representative Robert Zoellick’s attempt to gain our views and to keep this Committee apprised of the 

status of progress on these agreements and the development of the 

implementing language that the administration plans to introduce 

shortly. 

I want to emphasize that members of this Committee will expect 

satisfactory answers and resolution to the questions and concerns 

that may be raised during today’s hearing. If there are reasons why 

our input cannot be accommodated, we expect to know why. 

We live in a global economy where free trade is vital to our Nation. An integral part of this global economy is the flexibility to 

move existing personnel from one country to another in order to 

provide much needed support of the companies that conduct business abroad. Further, if we want our trading partners to allow 

American citizens to enter their borders to conduct business, we 

must also reciprocate by granting their citizens the same type of 

privileges. 

While I support the principle of free trade and understand the 

benefits of agreements such as these to the U.S. economy and job 

market, I will never agree to legislation that does not reflect sound 

immigration policy, just as I would never agree to any compromise 

of national security for the sake of selling more products overseas. 

I would never sacrifice the well-being of hard-working Americans 

and their families by weakening our immigration laws. 

Prior to today’s hearing, members of this Committee raised several concerns about a variety of immigration issues. These include 

the potential for indefinite stay by the foreign workers and the risk 

that foreign workers may be brought into the United States to 

interfere with labor disputes. Another concern that I have heard is 

whether this agreement and implementing language could be 

viewed as circumventing the existing sensitive numerical limits on 

H1–B professional workers’ visas. 

I understand that many of our colleagues on the House Judiciary 

Committee have made it clear that trade agreements may not be 

the best place to change immigration law and policy. 

I want to make sure that our two representatives from USTR 

today, Ms. Vargo and Mr. Ives, will go back and give Ambassador 

Zoellick a message: Presenting the Judiciary Committee with implementing language related to particular trade agreements that 

raise general issues of immigration policy may not be the best path 

to travel in future trade agreements. 

Having said that, I wish to emphasize that many on this Committee have worked together and with USTR to resolve their concerns with and improve the immigration implementing legislation. 

I am hopeful that when the administration transmits its formal 

legislative package, members of the Judiciary Committee will be 

satisfied with the outcome with our consultations with USTR. 

4

Despite the fact that we were unable to hold a mock markup last 

Thursday, I hope that today’s real hearing can serve that same 

type of formal mechanism for the Judiciary Committee to give the 

administration our informal comments before the fast-track procedures are instituted. 

With that, I will turn to the distinguished Senator from California for any remarks she would care to make. 

STATEMENT OF HON. DIANNE FEINSTEIN, A U.S. SENATOR 

FROM THE STATE OF CALIFORNIA 

Senator FEINSTEIN. Thank you very much, Mr. Chairman. I 

would like to ask you to submit to the record the statement of the 

ranking member, Senator Leahy, on this issue. 

Chairman HATCH. Without objection. 

Senator FEINSTEIN. I would like to submit some documents for 

the record—the Congressional Research Service document entitled 

‘‘Immigration Issues in Free Trade Agreements’’; secondly, temporary entry provisions of the implementing legislation for the 

Chile and Singapore Free Trade Agreements; thirdly, ‘‘Special 

Visas Used for Tech Workers Is Challenged’’; and, finally, an excellent commentary piece, ‘‘Is a Stealth Immigration Policy Smart?’’ 

Chairman HATCH. Without objection. 

Senator FEINSTEIN. I mention that last one because I think that 

is what has happened with respect to this bill, and I very much regret I cannot support this as it stands right now. 

I believe that the USTR has negotiated a whole new immigration 

program with no authority of this Congress to do so. Specifically, 

the legislation before us would create new categories of non-immigrants for free trade professionals, permit the extension or renewal 

of these visas each year, require the entry of spouses and children 

accompanied or following to join those professionals; require that 

the United States submit disputes about whether it should grant 

certain individuals entry to an international tribunal. I would 

never find that acceptable. 

The definition of specialty occupation that is contained in this 

legislation is vague and unclear. It will likely be very broadly interpreted. Such interpretation could make it difficult to ensure that 

temporary workers are entering under the new visa category specifically to fill a skills shortage. 

As drafted, visas for the temporary foreign workers could be indefinitely renewable. This, in effect, could transform what on paper 

is a temporary visa entry program into a permanent visa program. 

This is unacceptable. 

Under this legislation, employers could renew their employees’ 

visas each and every year with no limits, even while they are also 

bringing in new entrants to fill up annual numerical limits for new 

visas. This effectively would hamstring Congress’ ability to limit 

such entries when it is in the national interest to do so. 

The legislative language would weaken the labor certification attestation process which is now required from employers under the 

H1–B program. In fact, it would prohibit any approval procedures 

or labor certifications or labor market tests the Labor Department 

might ordinarily impose before approving the entry of foreign workers. 

5

Today, the labor certification process is one of the only safeguards in the H1–B system for ensuring that employers do not 

abuse temporary workers or undermine the U.S. labor market. This 

weakening is unacceptable. 

Unlike the H1–B visa, the legislation would not require that employers seeking temporary workers attest that they are actively 

trying to recruit U.S. workers for the positions filled by the foreign 

workers. Thus, if employers do not like the more stringent requirements of the H1–B program, they can simply recruit foreign nationals from Chile and Singapore to circumvent the H1–B visa program’s requirements. 

The provisions would not provide the Department of Labor authority to investigate instances of U.S. worker displacement and 

other labor violations pertaining to the entry of foreign workers. 

Again, this is unacceptable. 

In the last two fiscal years, the Department of Labor investigated 

166 businesses with H1–B violations. As a result of those investigations, H1–B employers were required to pay more than $5 million 

in back pay awards to 678 H1–B workers. This suggests to me that 

there is substantial fraud being practiced in this program. 

Finally, I am deeply concerned about a provision in the trade 

agreement that would require the United States to submit to a 

panel comprised of international arbiters certain cases when the 

United States denies a temporary work visa to an individual. This 

is unacceptable. 

Now, Mr. Chairman, the United States Constitution gives the 

Congress plenary power over immigration. The negotiation of such 

visa provisions demands Congressional oversight and input, and 

public scrutiny, especially during a time when security issues are 

of such paramount concern to us all. 

I do not believe that this Committee, indeed this Congress, 

should relinquish our plenary power over immigration to any administration or to any panel of international arbiters. I do not believe that an immigration program belongs in a free trade bill. So 

either these immigration provisions come out or I am certainly not 

going to support this bill and I will do everything I can to prevent 

it from being passed in the Senate. 

Thank you very much. 

Chairman HATCH. Well, thank you, Senator. 

Senator Cornyn is going to conduct this hearing, and so he would 

like to make a statement and I am going to turn the Chair over 

to you, Senator Cornyn. 

Maybe I could just recognize the ambassadors who are here. I 

would like to acknowledge the presence of the Chilean Ambassador, 

Andres Bianchi, in the back there—Ambassador, we are so happy 

to have you here and I apologize for the other day not being able 

to make our appointment together; please forgive me—and Singaporean Ambassador Chen Heng Chee. We welcome them both. We 

are pleased to have both of you here with us this afternoon, and 

it is my hope and the hope of many that the ratification of these 

treaties will strengthen our relationship between our governments, 

and more importantly our citizens. In any event, we are honored 

with your presence and we appreciate having both of you here. 

Senator Cornyn.

6

STATEMENT OF HON. JOHN CORNYN, A U.S. SENATOR FROM 

THE STATE OF TEXAS 

Senator CORNYN [PRESIDING.] Thank you, Mr. Chairman. There 

are obviously some substantive concerns that have been raised 

about the temporary entry provisions and I think we have already 

heard about those, the temporary nature of the visits, funding for 

new visa programs, and the protection of American workers, time 

limitations for these temporary visas and numerical limitations. 

The draft of the proposed language distributed throughout the 

Committee represents the latest negotiations between the members 

of both parties on this Committee and the U.S. Trade Representative. 

With regard to the substance of the immigration provisions, 

there have been and continue to be concerns, but I believe there 

is largely agreement. Indeed, we want to promote trade, but we 

want to protect American workers from those who abuse our immigration laws. 

I want to applaud the U.S. Trade Representative’s Office for its 

effort in reaching these agreements with Chile and Singapore. The 

U.S.–Chile Free Trade Agreement will provide numerous opportunities for United States workers and manufacturers. U.S. companies currently operate at a disadvantage because competitors such 

as Canada, Mexico, and the European Union have free trade agreements with Chile. Our lack of an agreement costs American exporters $800 million per year in sales, affecting approximately 10,000 

United States jobs. 

The agreement with Chile will eliminate tariffs immediately on 

more than 85 percent of consumer and industrial goods, and most 

remaining tariffs will be phased out within the next 4 years. The 

result will be a $4.2 billion increase in the U.S. GDP and a $700 

million increase in Chile’s GDP. 

The U.S.–Singapore Free Trade Agreement will have a similar 

effect on trade and economic liberalization in Southeast Asia. Despite its small size, relatively speaking, the economy of Singapore 

is robust and highly competitive. Approximately 1,300 American 

firms have a significant presence in Singapore, including 330 regional headquarters. The establishment of a free trade agreement 

with Singapore will further increase opportunities for American 

workers through improved market access. 

We look forward to hearing the testimony of the two representatives here today from the USTR, Ms. Vargo and Mr. Ives. 

Have you agreed on who should go first? 

Mr. IVES. Ladies first. 

Ms. VARGO. I guess we just did. 

Senator CORNYN. I guess you won the flip of the coin, so we will 

be pleased to hear from you. 

STATEMENT OF REGINA K. VARGO, ASSISTANT UNITED 

STATES TRADE REPRESENTATIVE FOR THE AMERICAS, AND 

LEAD NEGOTIATOR FOR THE CHILE FREE TRADE AGREEMENT 

Ms. VARGO. Thank you very much. With your permission, I 

would like to make a written submission for the record. 

Senator CORNYN. Without objection. 

7

Ms. VARGO. Mr. Chairman, Senators Cornyn and Feinstein, and 

members of the Committee, I am honored to appear before you 

today to discuss the benefits that a U.S.–Chile free trade agreement will offer American businesses, workers, farmers, and consumers. At the outset, I want to thank each of you and your staffs 

for the suggestions and the support you provided during the negotiation of this agreement. 

The agreement, the result of a long-term bipartisan effort and an 

open, transparent negotiating process, makes sound economic sense 

for the United States and Chile, and represents a win-win, stateof-the-art agreement for a modern economy. 

This agreement makes sound economic sense for the United 

States. Over the past 15 to 20 years, Chile has established a thriving democracy and an open economy built on trade. It is one of the 

world’s fastest growing economies and its sound economic policies 

are reflected in its investment-grade capital market ratings, unique 

in South America. 

Last year, our bilateral trade stood at $6.4 billion, with $2.6 billion in U.S. exports, but we can do better. Chile already has FTAs 

with Mexico, Canada, MERCOSUR, and, since February, the European Union. This has disadvantaged U.S. exporters. 

The National Association of Manufacturers, for example, estimates the lack of an FTA with Chile as costing the United States 

at least $1 billion in lost exports annually. An FTA with Chile will 

ensure that we enjoy market access, treatment, prices, and protection at least as good as our competitors. Consumers will benefit 

from lower prices and more choices. The agreement will also help 

spur progress in the Free Trade Area of the Americas, and will 

send a positive message particularly in the Western Hemisphere, 

that we will work in partnership with those who are committed to 

free markets. 

The U.S.–Chile FTA is truly a bipartisan effort. Negotiations 

were launched under the Clinton administration in December 2000. 

After 14 rounds, negotiations were concluded under the Bush administration in December 2002. The agreement was signed on June 

6 in Miami, in an historic ceremony with Ambassador Zoellick and 

his Chilean counterpart, Minister Soledad Alvear. 

Let me just add that throughout the negotiations, we conducted 

an extensive consultative process of public hearings and briefings, 

and frequent consultations with Congressional staff, private sector 

advisers, and civil society groups to develop positions and provide 

regular updates on progress in the negotiating rounds. 

The result of this process yielded an exemplary agreement. Four 

features distinguish the U.S.–Chile FTA from the other 150 or so 

FTAs that other countries and the EU have concluded. 

First, it is comprehensive. All goods will be duty- and quota-free 

within 12 years, with 87 percent of bilateral trade receiving immediate duty-free access. Second, it promotes transparency. Transparency provisions, both in the transparency chapter and throughout the agreement, promote open, impartial procedures and underscore Chile’s commitment to a rules-based global trading system. 

Regulatory procedures require advance notice, comment periods, 

and publication of all regulations, similar to our Administrative 

Procedures Act. There is an explicit provision that requires bribery 

8

in government procurement to be treated as a criminal offense. 

Dispute settlement provisions, both state-to-state and investorstate, provide for open hearings, public release of submissions, and 

the opportunity for interested third parties to submit views and objectives that the United States has long sought in the WTO. 

Third, it is modern. Strengthened protection for intellectual property rights in investment, the broad scope of services obligations, 

and new provisions on telecommunications, electronic commerce, 

express delivery, and professional services recognize the digital age 

and the emergence of new industries. 

Finally, in keeping with TPA mandates, it uses an innovative approach that supports and promotes respect for the environment and 

workers’ rights, with enforceable obligations in the agreement subject to effective dispute settlement designed to encourage compliance. 

The conclusion of a Chile FTA has provided momentum to other 

hemispheric and global trade liberalization efforts by breaking new 

ground on new issues and demonstrating what a 21st century trade 

agreement should be. 

Thank you, and I would be happy to answer any questions you 

may have. 

[The prepared statement of Ms. Vargo appears as a submission 

for the record.] 

Senator CORNYN. Thank you, Ms. Vargo. 

Mr. Ives. 

STATEMENT OF RALPH F. IVES, III, ASSISTANT UNITED 

STATES TRADE REPRESENTATIVE FOR SOUTHEAST ASIA, 

THE PACIFIC AND APEC, AND LEAD NEGOTIATOR FOR THE 

SINGAPORE FREE TRADE AGREEMENT 

Mr. IVES. With your permission, I would like my full statement 

to be in the record. 

Senator CORNYN. Without objection. 

Mr. IVES. Thank you, Mr. Chairman, Senator Cornyn, Senator 

Feinstein, and other members of this Committee, for inviting me to 

testify today on the U.S.–Singapore Free Trade Agreement, and for 

this Committee’s guidance during the negotiating process. I welcome this opportunity to review the FTA and present the administration’s request for favorable consideration of legislation needed to 

implement the FTA. 

The U.S.–Singapore FTA reflects a bipartisan effort to conclude 

a trade agreement with a substantial and important trading partner. The FTA was launched under the Clinton administration in 

November 2000 and signed by President Bush and Singaporean 

Prime Minister Goh on May 6, 2003. 

The U.S.–Singapore FTA will enhance further an already strong 

and thriving commercial relationship. Singapore was our 12th largest trading partner last year, with two-way trade exceeding $40 billion and U.S. investment in Singapore of over $27 billion. 

The comprehensive U.S.–Singapore FTA is the first FTA President Bush has signed with any country and our first with any 

Asian nation. It can serve as a foundation for other possible FTAs 

in Southeast Asia, as President Bush envisaged under his Enterprise for ASEAN Initiative. 

9

Let me summarize some of the highlights of the U.S.–Singapore 

FTA, which is comprehensive in scope covering the full range of 

areas in an FTA. 

Under this FTA, Singapore will provide substantial access for all 

types of services, treat U.S. service suppliers as well as it treats its 

own, ensure we receive the best treatment as any other foreign 

supplier receives, and allow our business persons temporary entry 

to engage in business activity. The FTA uses an approach that ensures the broadest possible trade liberalization. 

This FTA also provides important protection for U.S. investors by 

ensuring a secure and predictable legal framework. The FTA’s provision on intellectual property rights provides strong protection for 

new and emerging technologies, and reflects standards of protection similar to those in U.S. law. 

Enhanced transparency is another important feature of this FTA 

in the form of an entire chapter devoted to transparency and specific transparency provisions in many other chapters. 

The chapter on electronic commerce breaks new ground in its 

treatment of digital products, for example, establishing for the first 

time explicit guarantees that the principle of non-discrimination 

applies to products delivered electronically. Similarly, the telecommunications chapter covers the full range of telecommunications issues, while recognizing the U.S. and Singapore’s respective right to regulate these sectors. 

The FTA contains a number of provisions to ensure that the 

United States and Singapore are the actual beneficiaries of the 

agreement. For example, the FTA contains obligations on how customs procedures are to be conducted to help combat illegal transshipments. 

Finally, the dispute settlement provisions of the FTA encourage 

resolution of disputes in a cooperative manner and provide an effective mechanism should such an approach not prove to be successful. This FTA commands wide support in our private sector. 

The administration looks forward to working with this Committee 

and the full Congress in enacting the legislation necessary to implement this agreement. 

Thank you, Mr. Chairman. I would be pleased to respond to 

questions. 

[The prepared statement of Mr. Ives appears as a submission for 

the record.] 

Senator CORNYN. Thank you very much, Mr. Ives. 

We have heard in both your opening remarks that trade is positive for the American economy, and I agree. However, I hope you 

have gotten the message that you are on shaky ground when the 

executive branch makes agreements on immigration matters in 

these agreements. 

Will you explain for the Committee why it was important to include immigration provisions in each of these agreements? 

As you can tell, there is some concern about infringement of Congress’ plenary powers on immigration matters. Do you believe you 

have consulted with the Congress adequately in this process prior 

to entering into the agreements with Chile and Singapore, and can 

you tell us to what extent you have worked with members of this 

10

Committee, as you undoubtedly have, in preparing the implementing language for these agreements? 

Ms. Vargo, would you respond first, please? 

Ms. VARGO. Thank you. I would like to begin by noting that what 

we are talking about here is the temporary entry of business persons and not permanent immigration or employment, and that both 

FTAs specifically exclude citizenship, permanent residence, or employment on a permanent basis. 

Temporary entry relates to the ability of business persons to 

enter for a temporary period in order to engage in activities related 

to business, and American businesses need to be able to send their 

employees to other countries to conduct meetings, negotiate contracts, make sales, establish offices, provide services, or administer 

investments. The ability of U.S. business persons to enter foreign 

countries quickly and dependably is directed related to our competitiveness overseas. 

Now, with regard to this specific agreement, we provided in our 

notice of intent to enter into negotiations with Singapore and Chile, 

which we provided to the Congress in October of 2001, I believe, 

a specific interest in negotiating in this subject area. 

In particular, we said that we would seek appropriate provisions 

to ensure—and this was both in Chile and in Singapore—that we 

would facilitate the temporary entry of U.S. business persons into 

their territories, while ensuring that any commitments by the 

United States are limited to temporary entry provisions and do not 

require any changes to U.S. laws and regulations relating to permanent immigration and permanent employment rights. 

Now, over the course of the negotiation we held regular communications with Congress as we tabled each new provision in the 

agreement. But I would particularly note that during the period between about October and December of 2002, as we were nearing 

conclusion, we held about 20 different consultations with the Congress on this topic of temporary entry. 

During those consultations, three particular issues were brought 

to our attention as being of keen concern. One of those was that 

we would require a labor attestation. And, in fact, we did provide 

in the agreement that that can be done, and indicated in the side 

letter that it would be modeled off of the current H1–B labor condition application. 

The second important point we heard was that there was a desire for a numerical limit, and so we negotiated a limit in both the 

Chile and the Singapore agreements that were several multiples of 

their current use of H1–B, while we managed to avoid having either country place a limit on the U.S. use of temporary entry into 

their markets. 

And then, thirdly, there was a concern about a fee, that the H1–

B program provided for a $1,000 fee. It goes largely into worker retraining, job retraining, and scholarship programs which we had 

not contemplated up to that point under the agreement. And so we 

made sure to change the language in the agreement to the broader 

standard, which was to not unduly impair or delay trade in goods 

or services, or the conduct of investment activities under this 

agreement. 

11

So we thought that with those three particular areas that we 

had, in fact, met the major points of concern that had been brought 

to our attention. Obviously, in the last week or two we have been 

engaged in much more extensive discussions with the Judiciary 

Committees, and under those discussions we identified more than 

a half dozen different areas where we think we have been able to 

step up and meet virtually every issue that has been brought to 

our attention. 

If you would like, Senator, I can elaborate on what those are 

right now. 

Senator CORNYN. Why don’t we save those perhaps for follow-up 

questions? 

Ms. VARGO. Fine. So I think at this point that, yes, we have 

heard very much the concern that has been stated by this Committee that immigration policy is the prerogative of the Congress. 

And I think that through the clarifications in the statement of administrative action and the provisions that we will be putting forward in the implementing legislation, we will have narrowed the 

scope of the activity that we are talking about here so that it really 

relates to that which is part of our international services negotiations, or what is called Load 4, providing services through people 

located in the other person’s territory. 

Thank you. 

Senator CORNYN. Mr. Ives, do you have anything you would like 

to add with regard to the question of engaging in negotiations 

which would appear to get involved in the Congress’ business on 

legislating on immigration matters, what you have done in terms 

of your consultation and discussion with the Congress? 

Mr. IVES. Thank you, Senator. I think Ms. Vargo answered the 

question quite thoroughly. The only additional points I would like 

to make are the fact that the text of at least the Singapore FTA, 

and I believe the Chile FTA, was available to Congress in December of last year and we published the Singapore FTA on the Internet in March and the Chile FTA in April. So they have been widely 

available not only just to members of Congress but the public for 

quite some time. 

Thank you. 

Senator CORNYN. Mr. Ives, let me ask you, then, it appears that 

the temporary entry provisions are reasonable. Can you tell us 

whether Singapore or Chile are currently extending the similar degree of courtesy and convenience to our professional workers when 

they enter their country? 

Let me then ask you to also tell us what are the consequences 

if we choose not to reciprocate in terms of the convenience and 

courtesy that has been negotiated to this point in these agreements. 

Mr. IVES. Well, I can answer with respect to Singapore. Singapore currently does extend the courtesy of allowing our professionals and business visitors to enter Singapore and conduct their 

business. So we do have that privilege currently with Singapore. 

I wouldn’t want to suggest that Singapore would act otherwise 

should we not pass this, but the agreement would provide us greater security that Singapore would continue to offer this privilege for 

us. 

12

Senator CORNYN. Ms. Vargo, do you have anything else to add 

in that regard? 

Ms. VARGO. Yes, thank you. Besides the nature of enjoying the 

reciprocal obligations on the part of Chile—and I will note again 

that they have no numerical caps on their professionals—professional services from the very beginning was one of the major objectives of Chile in our U.S.–Chile FTA. 

They regarded very much their ability to come along and meet 

us on issues of concern to us, like telecommunications or financial 

services or e-commerce, as having a direct bearing on our ability 

to be able to address with them new opportunities for them in the 

professional services area. So it was a key area. 

Senator CORNYN. Thank you very much. 

Senator Feinstein. 

Senator FEINSTEIN. Thanks very much. I would like to just clear 

something up, if I may. 

On November 5 of last year, Senator Kennedy, Senator Cantwell 

and I wrote a letter to Mr. Zoellick and we pointed out in that letter that we believed these proposals may have far-reaching consequences that would permanently alter U.S. immigration policy. 

We named a number of other countries with whom we believed the 

administration was seeking to develop similar agreements. 

Then we said, ‘‘We urge you to more effectively communicate 

with Members of Congress and other stakeholders, including worker representatives.’’ These proposals have been made available only 

recently. Although representatives from your office for Committee 

staff on Friday, November 1, the information that was provided 

was limited and lacking in specificity. My staff reports to me that 

there were indeed briefings, but either the wrong briefer was 

present or couldn’t answer the question, or they were, in general, 

unsatisfactory. 

On March 19, we received a response to our letter from Mr. 

Zoellick which I would like to place in the record, but it makes 

some comments about these consultations and then it mentions 

three specific concerns that came up. First, staff wanted to be able 

to require a labor attestation similar to the labor condition application required under the H1–B program; second, et cetera, and 

third. 

However, the final bill, Annex 14.3, number 3, says this: ‘‘Neither 

party may, as a condition for temporary entry under paragraph (1), 

require prior approval procedures petitions, labor certification 

tests, or other procedures of similar effects’’—this is what is before 

us, this is the bill—‘‘or, (b), may impose or maintain any numerical 

restriction relating to temporary entry under paragraph (1).’’ 

What we have here is a template that will, if carried out—and 

I believe the administration intends to carry it out with other nations—totally undermine the Congress of the United States with 

respect to immigration policy. It is a way of getting around it, clear 

and simple. 

The negotiating objectives that Congress laid out for the USTR 

in the Trade Act of 2002 do not include even one word on temporary entry. There is no specific authority in TPA to negotiate 

new visa categories or impose new requirements on our temporary 

13

entry system. Yet, that is exactly what USTR has done in these 

two agreements. 

So my question is under what authority did the USTR include 

immigration law provisions in the trade agreements? I have sat on 

the Immigration Subcommittee for 10 years. No one ever picked up 

the phone and called me, nor was my staff asked for any input. 

I come and represent the State in the Union that is most affected 

by all of this and no one has given me any opportunity, other than 

we wrote this letter and still there was no opportunity. 

So my question is under what authority did USTR include these 

immigration law provisions in these agreements? 

Ms. VARGO. Thank you. While it is true that the TPA negotiating 

objectives do not specifically address temporary entry, there are a 

number of aspects of the TPA objectives that are relevant to temporary entry of professionals with respect to the opening of foreign 

country markets for U.S. services and investment. 

The TPA Act calls for reduction or elimination of, quote, ‘‘barriers 

of international trade in services, including regulatory and other 

barriers that deny national treatment.’’ 

Senator FEINSTEIN. How does that affect a temporary worker 

program which becomes a permanent program? 

Ms. VARGO. Well, I would be happy to address separately why it 

is not a permanent worker program. It is a temporary— 

Senator FEINSTEIN. No. I would really like to know what your 

authority is, your legal authority, to negotiate an immigration program in a trade agreement. 

Ms. VARGO. Well, as I began my remarks, we do not believe that 

this is a negotiation of immigration policy, since it does not relate 

to citizenship, permanent residence, or permanent employment. 

There are two aspects to the TPA objectives—equal access for 

small business and reducing barriers to trade in services—that we 

feel are relevant, that provisions of temporary entry are relevant 

to the ability of U.S. service providers to conduct business through 

services that they provide and professionals that are listed overseas. 

I do understand the concern that you have raised about the idea 

that through the renewal program that that might suggest that 

there would be a possibility of continuing to roll over the application to stay here for temporary employment. 

I think it is worth noting in that regard two things. One, there 

is now a provision in the implementing legislation that says that 

any time the annual renewal enters into its sixth year, it will count 

against the broader numerical limit that is under the H1–B program. 

The second thing that we have done is we have also applied a 

higher threshold to these workers. They will have to indicate that 

they are here in the United States, that their stay is temporary, 

that they are not seeking permanent employment here, and that, 

in fact, they have a permanent residence overseas. That is a higher 

threshold than is required on a routine basis off of the H1–B program. 

Senator FEINSTEIN. I would counter that by saying these agreements do govern the entry of foreign nationals, and that is a power 

that has been reserved for the Congress. 

14

I would like to mention a GAO report which was issued on immigration benefit fraud, and the report detailed ongoing 

vulnerabilities of the H1–B visa program and reported that there 

was widespread fraud within the L1 visa programs. 

The former Immigration and Naturalization Service’s California 

Service Center found through a series of investigations and analyses widespread L1 visa fraud by foreign companies, particularly in 

the Los Angeles area, and identified this fraud as a growing problem. In one study, an official in the Operations Branch stated that 

follow-up analysis of 1,500 L1 visa petitions found only 1 petition 

that was not fraudulent. 

I would like to ask this question: What was the rationale to submit any denial of a worker’s permit to an international tribunal? 

What was the rationale for that? 

Ms. VARGO. If I could address the first concern you raised about 

the investigative authority, because clearly this is an important 

issue, it was not included directly in the free trade agreement because that investigative authority was set to sunset and we did not 

want to be placing obligations on our trading partners that were 

more onerous than those countries might bear who did not have 

free trade agreements with us. 

There will be a clarification in the statement of administrative 

action that if Congress reauthorizes any of the expiring H1–B program provisions, it may apply them to the H1–B(1) visas as long 

as they are consistent with U.S. obligations under the agreement, 

and this investigative authority certainly would be consistent. 

With regard to your second question, Senator, since these are 

provisions relating to the temporary entry of business persons, 

which we see as relating to the way international services are negotiated—it is part of our broad GATS structure—these obligations 

are subject to dispute settlement under the agreement, which could 

mean an independent panel would rule on them. But I want to 

make it quite clear that any independent— 

Senator FEINSTEIN. Independent international panel. 

Ms. VARGO. No. It would be a panel that would be a roster of 

people selected by the United States and Chile. So it is not the 

same thing as going to any international panel. It would be a binational panel, people that each of us had selected. 

Senator FEINSTEIN. So in other words, the sovereignty of the 

United States and the elected representatives of the United States 

would be subject to an international panel? 

Ms. VARGO. They could rule on the issue, but they could not require us to implement their ruling. That would be our own choice, 

so we do not lose our sovereignty in that area. If we chose not to 

implement, they would be entitled to take steps that would rebalance the obligations in the agreement, but they could not force us 

in any way to implement the ruling. 

Mr. IVES. Senator, may I expand on the dispute settlement issue? 

Senator FEINSTEIN. Yes. 

Mr. IVES. One of the concerns that I heard you raise is that individual cases could be brought to a dispute settlement panel. The 

FTA makes clear that it is not individual cases, but it has to be 

a pattern of practices that are not in compliance, and also that the 

business person has exhausted the available administrative remVerDate 0ct 09 2002 14:27 Feb 12, 2004 Jkt 091367 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\91367.TXT SJUD4 PsN: CMORC
15

edies regarding the particular issue. So it is not individual cases. 

There has to be a pattern before any panel would consider this. 

Senator FEINSTEIN. Then I don’t know why the panel is even 

there if it is not meaningful. I don’t know what game is being 

played by putting a panel in that makes a decision that the United 

States doesn’t have to abide by in a trade bill. It doesn’t seem to 

make much sense to me. 

I am curious about another thing. Why isn’t the H1–B program 

sufficient? Why can’t people come in under an H1–B program as 

opposed to the L program? 

Mr. IVES. Well, in the case of Singapore I think it is worthwhile 

to point out that currently, as we understand it, approximately 660 

Singaporeans currently use the H1–B program. So it is not a large 

number from Singapore. The purpose of the agreement is to provide a certain degree of security for our trading partners, just as 

we hope to receive a certain degree of security from them by putting it in a trade agreement. 

Senator FEINSTEIN. Well, how would that provide security? 

Mr. IVES. Well, in the sense that because the provision is subject 

to dispute under the agreement, if there is a pattern or practice, 

then, as Regina Vargo indicated, there would have to be a rebalancing if we did not have a pattern or practice of providing professional Singaporeans entry into the United States. 

Senator FEINSTEIN. It wouldn’t be because the company doesn’t 

have to even look for an American worker before they hire a foreign worker first? It couldn’t be because this entitles the individuals to bring their families in, and it couldn’t be that the way it 

is set up it can easily become a permanent immigration program? 

Mr. IVES. Well, again, we did not see it as that when we negotiated the agreement. 

Senator FEINSTEIN. Mr. Chairman, the bottom line is I think the 

immigration section should be removed from the bill and that this 

should just be a trade agreement. I suspect that when you actually 

read the agreement, there is going to be substantial objection on 

our side because the Business Week commentary clearly establishes that this is some form of prototype for future trade programs 

which also incorporate immigration programs. 

Perhaps we erred in not really airing a lot of this when the 

North American Free Trade Agreement came through. But now 

this is a small program, it is true, but if you read this, ‘‘The administration hopes to use the new visa idea as a template for continuing trade talks with Australia, Morocco, and countries in Central America. At the same time, developing nations, led by India 

and China, are clamoring to make the new visa provisions available to all 146 nations in the World Trade Organization. The result 

could be a vast influx of foreign professionals from many low-wage 

nations competing with American citizens for high-paying jobs.’’ 

My State has a 7-percent unemployment rate. Very shortly, people are going to exhaust unemployment compensation in large 

numbers, over a million of them. And yet we will be absorbing tens 

of thousands of L visas and H1–B visas. It doesn’t make sense. 

Thank you, Mr. Chairman. 

Senator CORNYN. Senator Graham, do you have questions you 

would like to ask at this time? 

16

STATEMENT OF HON. LINDSEY O. GRAHAM, A U.S. SENATOR 

FROM THE STATE OF SOUTH CAROLINA 

Senator GRAHAM. I know this is not really on point in terms of 

the country we are talking about, but I was coming in today and 

I represent what is left of the textile industry in the South. A good 

part of it is in South Carolina. 

I know we are here talking about immigration, but generally 

speaking two out of three textile jobs will be lost to overseas competition in some form, and that very much disturbs me because 

those are jobs that provide health benefits and a decent place to 

work and a decent wage to many people in South Carolina and 

throughout the South traditionally. 

One thing that struck me coming over today was the infusion of 

engineers that are coming our way from India. Apparently, India 

in any particular year produces as many computer engineers as the 

world combined and it is having an effect on our market in the 

sense that companies are outsourcing dramatically computer services that were originally based in this country to India. 

When you combine that outsourcing with the ability in trade 

agreements for companies to bring in highly skilled workers, I just 

wonder where this takes us. You know, 10 years down the road 

when you have labor forces being such that you can take a very 

high-skilled or medium-skilled job and perform it elsewhere outside 

this country because there are no environmental laws to worry 

about, there is no minimum wage, there is certainly not nearly as 

complex tax treatment, where do you see this going in terms of, as 

she has mentioned, the immigration aspect of trade? 

What impact will that have on our economy in terms of people 

coming from Singapore and Chile to compete with Americans or to 

outsource? What ability do we have in Congress to look into this? 

What have you done in terms of fashioning these agreements to 

look at the consequences to a more liberal policy of allowing people 

to flow back and forth in terms of job markets? 

We will start with Singapore. 

Mr. IVES. Senator, in terms of Singapore, as I indicated, the 

number of Singaporeans using this provision is likely to be relatively small. Currently, as I said, only 660 Singaporeans used the 

H1–B program. In response to Congressional concerns, we put a 

total cap on Singaporeans using the professionals category of 5,400. 

So the impact of Singaporeans coming in should be quite modest. 

At the same time, the United States has investments of over— 

Senator GRAHAM. But we agree the reason we are putting in 

these caps is what? 

Mr. IVES. In response to Congressional concerns. 

Senator GRAHAM. Do you share those concerns? 

Mr. IVES. After listening to this Committee, and we also had the 

opportunity to listen to members of the House Committee, we 

share those concerns. 

Senator GRAHAM. Based on your knowledge of just immigration 

and trade, in general, do you see this concern being just as real in 

a situation with India or China or other large nations? 

Mr. IVES. Well, I can really only speak regarding Singapore, and 

given the relative size, I would assume the concerns would be 

greater with larger countries. 

17

Senator GRAHAM. What about Chile? 

Ms. VARGO. Well, first, I think I would say that there is nothing 

in the FTA that directs itself to outsourcing. But with regard to 

aliens coming into the United States, certainly one of the important 

provisions is that they must be paid the prevailing wage. 

We kept the four basic core elements of the H1–B that there be 

no strike or lockout, that they have safe working conditions, that 

they get the prevailing wage, and I am trying to think for a moment what the fourth one is. 

Senator GRAHAM. Would that apply to professionals? 

Ms. VARGO. Pardon me? 

Senator GRAHAM. Would that apply to professionals? 

Ms. VARGO. That specifically applies to professionals. 

The second point I would make is, again, the numbers for Chile 

here are small, 1,400. And in our consultations with Congress, 

hearing of the concerns that you have in this area, we have indicated that those limits for Chile and Singapore will now count 

under the total H1–B cap, and that after 5 years renewals under 

those temporary entry applications will count against the total cap. 

Senator GRAHAM. What kind of worker are we talking about coming in, generally speaking, from Chile? What type? 

Ms. VARGO. An engineer, an accountant, a lawyer, computer programmer. 

Senator GRAHAM. The same in Singapore? 

Mr. IVES. Yes. 

Ms. VARGO. The basic definition is still the same as the H1–B, 

a bachelor’s degree— 

Senator GRAHAM. Is there a shortage of lawyers in America? 

Senator CORNYN. I wasn’t worried until I heard about that. 

Ms. VARGO. Well, if you wanted to interpret the provisions of this 

agreement and you wanted to now how it would rest under Chilean 

law, you might want a Chilean lawyer to come up here for a little 

while to advise you. 

Senator GRAHAM. That is true. That is a good point, but primarily that is what you are talking about, expertise related to 

trade? 

Ms. VARGO. Yes. 

Senator GRAHAM. But it is not limited to that, is it? 

Ms. VARGO. Well, I don’t want to say expertise related to trade. 

It is trade in services. I mean, when you say trade, I heard just 

trade in goods. Trade in services, which is very big for the United 

States; two-thirds of our economy is services, 80 percent of our employment is services. 

Senator GRAHAM. What would be the average difference in pay 

between an engineering graduate in Chile and the United States? 

Ms. VARGO. I don’t know the answer to that question, but if he 

came up to the United States, he would have to be paid the prevailing U.S. wage or higher under this temporary entry procedure. 

Senator GRAHAM. That is true of every category? 

Ms. VARGO. Yes. 

Senator GRAHAM. Thank you. 

Ms. VARGO. True of every professional category. I don’t know as 

much about the traders, investors, business visitors, but some of 

18

those categories are just different. Visitors can’t even earn an income here. 

Senator CORNYN. Ms. Vargo, in attempting to distinguish the 

temporary entry provisions under these agreements, you attempted 

to distinguish them from traditional matters that immigration laws 

deal with—legal permanent residency, citizenship. 

Remind us, what is the term of the temporary entry that would 

be provided for under these agreements. 

Ms. VARGO. It is a 1-year term. It is renewable each year. As I 

mentioned, we have added a higher threshold now in that renewal 

to have to establish that it is temporary, that they are not seeking 

permanent employment. I think this is what is called the presumption of immigrant intent; that the work is temporary, that 1 day 

they will leave. They have a permanent residence abroad. 

And then as I mentioned, after 5 years now, a renewal will count 

against the cap the same as the initial application in each year, 

which is a point that Senator Feinstein made as a concern. 

Senator CORNYN. So it is an annual period renewable for a period 

up to 5 years? 

Ms. VARGO. No, it has no limit as to how long it can be, but in 

the sixth year it will begin to count against the cap. 

Senator CORNYN. I believe Senator Feinstein was asking about 

consultations with the Committee, and I just would like for you to 

confirm for the record that consultations with the Committee 

staff—and that would be on a bipartisan basis—occurred on November 1, 2002, November 25, 2002, December 12, 2002, and January 24, 2003. 

There was a conference call. I assume that was in the nature of 

a briefing or interaction—and if you have more information, I will 

ask you to provide confirmation that it occurred on April 28, 2003. 

And then there was a briefing on July 9, 2003, with staff. 

Can you confirm those consultations and what process was involved in consulting with the Congress, and specifically this Committee and its staff? 

Mr. IVES. Senator, I am not sure of these exact dates, but we will 

go back and confirm that these were the dates. We know we consulted extensively with this Committee, as we did on the House 

side, but we can confirm these exact dates as soon as we get back 

to USTR. 

Senator CORNYN. Thank you. If you would do that, I would appreciate it very much. 

Ms. VARGO. It is my understanding, Senator, that those dates are 

correct. 

Senator CORNYN. One of the concerns for various members of this 

Committee, obviously, is the protection of American workers and 

their families. In the agreement language for both of these countries, it appears there is room to provide adequate labor protection 

for the American workers in your implementing language. 

Can you explain to what extent you intend to provide labor protection in the implementing language, Ms. Vargo? 

Ms. VARGO. Well, when we say labor protections, I would imagine 

you are talking about the kind of attestation requirements that are 

contained in the current labor condition application under the H1–

B. 

19

Senator CORNYN. Could you explain— 

Ms. VARGO. What that is? 

Senator CORNYN. —what that is, please? 

Ms. VARGO. Yes. First of all, a U.S. company is required to make 

this labor attestation. That company would have to certify that it 

is going to pay the temporary entrant the prevailing U.S. wage or 

higher, that there is not currently a strike or a lockout at the workplace, that the workplace is a safe workplace that meets U.S. workplace requirements. I presume that is OSHA and other things. 

Lastly, they also have to notify the other workers in the workplace 

of their intent to hire a foreign worker. 

Senator CORNYN. I understand, after hearing Senator Feinstein 

explain her concerns, why she is concerned about these agreements 

perhaps providing a template for further agreements which would 

appear to encroach on Congress’ plenary authority to legislate in 

immigration matters. I can tell that it will be a concern not only 

of Senator Feinstein, but other members of the Committee as well. 

Can you speak to that concern about to what extent the agreements that you have negotiated here for these two countries, which 

in and of themselves involve rather limited numbers of temporary 

entrants into the country—in the case of Singapore, 5,400, I believe 

the figure was, and in the case it was 1,400. Obviously, if this template is going to be extended to other countries, those numbers 

could increase significantly. 

Could you address that, please? 

Mr. IVES. I can only authoritatively speak regarding the Singapore FTA, but I can assure you, Senator, in working with this Committee for the past several months on the temporary entry provisions, USTR has heard very clearly and understands the strong 

concerns of this Committee and other Members of Congress regarding the provisions of the temporary entry provisions in this FTA 

and regarding the concerns about including that in future FTAs. 

Those concerns are very important to us and we will examine those 

concerns in terms of how we proceed for future FTAs. 

Senator CORNYN. Well, I think what threatens American workers 

and a concern I would have specifically is not the arrival of temporary professional workers, but exploitation by some employers of 

foreign workers by offering them wages below the prevailing wage 

rate. 

I think that legitimate American businesses have no incentive to 

hire a foreign worker over an identically qualified American. In 

fact, what our free market system thrives on is the competition on 

a level playing field and I don’t see how this would be undermined. 

I do still have the concern, I must say, that Senator Feinstein 

raised, and we will look forward to continued discussion both here 

and perhaps on the floor on that subject. But in the end, I think 

even with the ease of the application process provided in this 

agreement, I would imagine that it is administratively much easier 

for an American employer to hire an identically qualified American 

worker than it would be to hire someone from abroad. 

So I don’t know to what extent it is a concern, and I am glad 

to hear that you have provided for protection against exploitation 

at sub-standard wages of these temporary workers. 

20

Senator Feinstein, if you have other questions, we will turn to 

you. 

Senator FEINSTEIN. Well, I do, and I have a number I would like 

to send in writing, but let me ask a question on the caps. 

USTR originally sought to create the new Singapore and Chile 

visa categories without any numerical caps, until Members of Congress raised strenuous objections. Now, both agreements include 

caps on the number of professionals, the 1,400 for Chile and 1,500 

for Singapore, that are separate from and in addition to the global 

H1–B cap. 

The USTR seems to want to reject part of the amendment they 

agreed to from the House Judiciary Committee on this issue and 

would like to allow workers to still come in under the Singapore 

and Chile caps even if the global H1–B cap has been filled. This 

would upset the balance reached in determining the appropriate 

caps for H1–B workers. 

Why do you believe your office was justified in establishing new 

visa programs that allow employers to circumvent the H1–B cap 

established by Congress? 

Mr. IVES. Well, Senator, first of all, when we initially negotiated 

the agreement, we recognized we were, in the case of, I think, both 

Singapore and Chile, dealing with countries that had highly qualified professionals and there would probably not be a large use of 

this program. I indicated the number of Singaporeans currently 

using this program. 

When Congress expressed a concern about this, we did establish 

caps that are in the agreements themselves, and that was an attempt to be responsive to Congressional concerns. In addition, in 

recent consultations with Congress we agreed that those caps 

would be part of the H1–B program. So, again, we are trying to be 

responsive to the concerns of Congress. 

Finally, an additional attempt to be responsive is, as Ms. Vargo 

indicated, after 5 years those Singaporean and Chilean H1–B visas 

would be part of the overall H1–B global limit. So we have attempted to address Congressional concerns regarding this issue. 

Senator FEINSTEIN. Okay, thank you. I want to ask you this. You 

keep going to the point that this is a temporary work program, and 

yet as I understand it, it can be extended, renewed, every year, for 

infinity. Additionally, workers can bring their families. Therefore, 

to me, it is a permanent program. 

The indefinite renewability of 1-year visas increases the power of 

employers to intimidate guest workers and resist their demands for 

better wages or benefits. Under the H1–B program, by contrast, 

workers are granted a 3-year visa that can be renewed only once, 

for a total of 6 years. 

So my own view of reading this thing is that you have decided 

a way of getting around the H1–B program, and you have done 

these L visas and they form a permanent foreign worker program. 

That is really of deep concern to me. Now, tell me why I shouldn’t 

believe that if you can renew them every year for any number of 

years. 

Mr. IVES. Well, again, Senator, if the number of Singaporean and 

Chilean professionals comes in under the overall H1–B cap, then 

the total number of H1–B visas is capped. 

21

Senator FEINSTEIN. But that is a product of the House, right? 

The original intent of USTR was to establish this. 

Mr. IVES. Well, again, we didn’t know the concerns of the Congress until fairly recently in terms of that particular aspect and we 

addressed them as soon as we understood the concerns. 

Senator FEINSTEIN. There is a Labor Advisory Board. Did you 

consult with the Labor Advisory Board in developing this agreement? 

Mr. IVES. I believe we consulted with all the committees in developing this agreement. 

Senator FEINSTEIN. Is the answer you did consult with them? 

Mr. IVES. Yes. We consulted with all the—there are 31, I believe, 

advisory committees. We consulted with all 31 committees. 

Senator FEINSTEIN. Is that the same thing as the briefings you 

gave our staff? 

Mr. IVES. I am not sure. 

Senator FEINSTEIN. The thing that bothers me about this—and 

I will be very candid—in my history, I have always had a relationship with USTR where either the head or the second hear would 

pick up the phone and call me and say there is something you 

should know in an agreement. I really appreciated that and I guess 

I forgot how much I appreciated it until this administration. 

I don’t think consultation is having a staff briefing. Consultation 

is talking with the member. The staff doesn’t vote; the member 

votes. The member makes the decision; at least I make my own decisions. So because you had my staff to a briefing doesn’t mean that 

you have talked with me about it, and I am really surprised on 

something that sets as big a precedent as this agreement does. 

Now, perhaps you have talked with other members, but I certainly 

wasn’t one of them. 

Mr. Chairman, rather than take your time, I have a number of 

questions I would like to submit in writing and hopefully can get 

a response to them before this matter comes before the Committee 

for markup. 

Senator CORNYN. Certainly, and I know the witnesses will respond promptly to those written questions by Senator Feinstein or 

any other member of the Committee who may have had a conflict 

and is not here or any of those of us who are present. 

Senator Graham, do you have anything? 

Senator GRAHAM. Just one last question, basically, trying to find 

out the forces that pushed this. When it came time to talk about 

this trade agreement, what were the forces that were pushing the 

liberalization or the ability to get workers from Chile and Singapore in professional categories to come to the United States? What 

are those forces? Why do we need this? Why is this essential to the 

trade agreement? 

Ms. VARGO. I think our service providers, in particular, are concerned that they would have easy access or sufficient access to the 

Chilean market to be able to conduct their business. In the course 

of the negotiations that we had here, Chile did some things, such 

as liberalize. They had a particular provision that required that 85 

percent of any business start-up had to be nationals, which they 

modified in the course of the agreement, a few things that our businessmen felt made it easier for them to do business in Chile. 

22

As I mentioned, from Chile’s position, they are a very small country and one of their key areas of interest was professional services. 

They felt that this particular area would have a lot to do with 

whether or not they would be able to engage in this area to the full 

extent possible, especially given the distance that Chile is from the 

U.S. 

Senator GRAHAM. So are we responding to Chile or are we responding to American companies? 

Ms. VARGO. No. I think at the first order, we are responding to 

the concerns raised by U.S. companies about being able to get into 

these other markets. But I wanted to make the additional point 

that in this particular negotiation, which is not necessarily true of 

all negotiations, this was a matter of considerable interest to Chile 

as well. And our ability to address that, I think, also increased our 

ability to get Chile to seriously entertain obligations in areas like 

e-commerce and telecommunications and financial services and 

other areas that they saw were basically of interest to the U.S. 

Senator FEINSTEIN. Would you yield for a moment? 

Senator GRAHAM. Absolutely. 

Senator FEINSTEIN. I just met with the Chilean ambassador, who 

is in this room now, and that is not what he told me. 

Senator GRAHAM. Well, I didn’t mean to create a problem, but I 

was curious. I will let you all work that out. 

Singapore? 

Mr. IVES. Well, in terms of Singapore, I think it was first and 

foremost a question of U.S. service providers indicating that the 

ability to go in and out of Singapore, while currently available, 

they would like that assurance in the agreement. So in the first instance, we were addressing the concerns and requests of U.S. businessmen. 

Senator GRAHAM. To expand the professional category of immigrants? 

Mr. IVES. I am not sure they were that specific. They just 

thought the professional category should be more flexible than it is 

in the NAFTA, which has very specific categories of professionals. 

This is a little bit more flexible, but still requires a high degree of 

professional expertise. 

Senator GRAHAM. Has Singapore suggested that this is important 

to them that we expand the number of professional workers that 

can come here? 

Mr. IVES. I think Singapore was satisfied with the conditions as 

they were negotiated. It was not a huge issue with Singapore, but 

it was important for the overall package. 

Senator GRAHAM. Thank you. 

Senator CORNYN. Senator Feinstein, do you have anything further? 

Senator FEINSTEIN. No, Mr. Chairman. 

Senator CORNYN. Well, thank you very much for appearing here 

today to answer the questions we have. I think the concerns are 

obvious and will be explored further. 

With that, this hearing of the Senate Judiciary is now adjourned. 

[Whereupon, at 5:27 p.m., the Committee was adjourned.] 

[Submissions for the record follow.]

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