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86–343—PDF 2013

S. HRG. 113–157 

PRESIDENT’S 2013 TRADE AGENDA 

HEARING 

BEFORE THE

COMMITTEE ON FINANCE 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

MARCH 19, 2013 

( 

Printed for the use of the Committee on Finance 

COMMITTEE ON FINANCE 

MAX BAUCUS, Montana, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

RON WYDEN, Oregon 

CHARLES E. SCHUMER, New York 

DEBBIE STABENOW, Michigan 

MARIA CANTWELL, Washington 

BILL NELSON, Florida 

ROBERT MENENDEZ, New Jersey 

THOMAS R. CARPER, Delaware 

BENJAMIN L. CARDIN, Maryland 

SHERROD BROWN, Ohio 

MICHAEL F. BENNET, Colorado 

ROBERT P. CASEY, Jr., Pennsylvania 

ORRIN G. HATCH, Utah 

CHUCK GRASSLEY, Iowa 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

MICHAEL B. ENZI, Wyoming 

JOHN CORNYN, Texas 

JOHN THUNE, South Dakota 

RICHARD BURR, North Carolina 

JOHNNY ISAKSON, Georgia 

ROB PORTMAN, Ohio 

PATRICK J. TOOMEY, Pennsylvania 

AMBER COTTLE, Staff Director 

CHRIS CAMPBELL, Republican Staff Director 

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

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

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

Hatch, Hon. Orrin G., a U.S. Senator from Utah ................................................. 3 

ADMINISTRATION WITNESS 

Marantis, Hon. Demetrios, Acting U.S. Trade Representative, Executive Office of the President, Washington, DC ............................................................... 6 

ALPHABETICAL LISTING AND APPENDIX MATERIAL 

Baucus, Hon. Max: 

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

Prepared statement .......................................................................................... 35 

Hatch, Hon. Orrin G.: 

Opening statement ........................................................................................... 3 

Prepared statement .......................................................................................... 38 

Marantis, Hon. Demetrios: 

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

Prepared statement .......................................................................................... 41 

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

COMMUNICATION

Tennessee Department of Economic and Community Development ................... 77 

(III) 

(1) 

PRESIDENT’S 2013 TRADE AGENDA 

TUESDAY, MARCH 19, 2013 

U.S. SENATE, COMMITTEE ON FINANCE, Washington, DC. 

The hearing was convened, pursuant to notice, at 10:33 a.m., in 

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

(chairman of the committee) presiding. 

Present: Senators Wyden, Stabenow, Menendez, Carper, Cardin, 

Brown, Hatch, Grassley, Roberts, Thune, Isakson, and Portman. 

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

Campbell, General Counsel; Bruce Hirsh, Chief International 

Trade Counsel; Hun Quach, International Trade Analyst; and Chelsea Thomas, Professional Staff. Republican Staff: Chris Campbell, 

Staff Director; Everett Eissenstat, Chief International Trade Counsel; Paul Delaney, International Trade Counsel; Gregory Kalbaugh, 

International Trade Counsel; and Rebecca Nasca, Staff Assistant. 

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

FROM MONTANA, CHAIRMAN, COMMITTEE ON FINANCE 

The CHAIRMAN. The committee will come to order. 

The English philosopher Sir Francis Bacon once said, ‘‘A wise 

man will make more opportunities than he finds.’’ By that standard, the United States has been very wise in crafting a significant 

trade agenda that provides many new opportunities for our Nation. 

We must now be aggressive, seize these opportunities, and create 

more than we find. 

An aggressive trade agenda is key to boosting our Nation’s economy and creating good-paying jobs in my home State of Montana, 

and all across America. Export-related jobs pay 13 to 18 percent 

more than the national average. These are good-paying jobs in factories and farms all across America. 

By being aggressive, we can build on the success achieved in the 

112th Congress. Working together, we passed three free trade 

agreements with Colombia, Panama, and South Korea; we extended the Trade Adjustment Assistance program; we renewed 3 

important preference programs; and we helped United States exporters take advantage of Russia joining the WTO. 

By working together, we can achieve similar successes now in the 

113th Congress. We can ensure that U.S. businesses, workers, 

farmers, and ranchers reap the benefits of expanded trade through 

the many promising opportunities now under way. 

These opportunities include the Trans-Pacific Partnership in 

Asia and the Trans-Atlantic Trade and Investment Partnership in 

2 

Europe. They also include a new services agreement and expansion 

of free trade in information technology. 

Given this ambitious agenda, the need for Trade Promotion Authority is clear. TPA is a key negotiating tool that will help bring 

these trade agreements to a successful conclusion. It has been more 

than a decade since we renewed TPA, and the world has changed 

in that time. Since 2002, U.S. exports of goods and services have 

more than doubled. America now faces a new set of economic priorities and challenges. The new TPA should reflect these realities. 

I am pleased that the administration has indicated its interest 

in working with Congress to get TPA done. Working together, we 

will pass this important trade legislation. 

While we are expanding markets abroad, a competitive American 

workforce must be ready to help U.S. companies seize these opportunities. Since 1974, Trade Adjustment Assistance, or TAA, has 

been the foundation for expanding trade. 

TAA has helped thousands of American workers, small businesses, farmers, and ranchers improve their competitiveness in the 

global market. Since 2009, approximately 800 workers at nearly 40 

companies in Montana have been approved to receive TAA benefits; 

nationally, more than 400,000 American workers have been approved for benefits. 

These are not statistics. We are talking about mothers and fathers with families to support. TAA gives these folks the skills and 

support they need to get ahead in today’s job market. TAA helps 

them land the good-paying jobs they deserve, and, when they land 

that job, they often excel and they succeed. In fact, 90 percent are 

still employed 6 months later. 

TPA and TAA are two sides of the same coin: making trade work. 

We need to renew and extend both of them this year. Looking at 

opportunities across the Atlantic, I see the European Union, our 

largest trading partner. Today, 21 percent of U.S. goods and services exports go to the E.U., supporting nearly 13 million American 

jobs. If we are aggressive, we can achieve much more. By simply 

eliminating tariffs, U.S. exports to the E.U. could increase by 17 

percent, generating even greater economic growth and more jobs 

here at home. 

To tap into the opportunities of an E.U. agreement, we must first 

overcome some serious challenges. These include access for U.S. agricultural exports such as beef and pork, and elimination of nonscience-based regulations. Unscientific and unfair barriers to U.S. 

agricultural products put U.S. jobs at risk. 

In Montana, 50 percent of our economy is tied to agriculture. 

One in five Montana jobs is connected to ranching and farming. I 

know America’s ranchers and farmers produce the highest quality 

products in the world, and that is why I will only support a trade 

deal with the E.U. if it gives America’s producers the opportunity 

to compete in the world’s biggest market. 

Looking at opportunities across the Pacific, I see Asia’s fastgrowing economies. The Trans-Pacific Partnership, or TPP, will 

strengthen our ties with some of the world’s most vibrant economies and burgeoning consumer markets. 

Over the past decade, U.S. exports to TPP countries nearly doubled, to almost $700 billion in the year 2011. Asia’s share of world 

3 

imports grew from more than 18 percent in 1983 to almost 31 percent in 2011. The TPP countries’ average GDP growth was more 

than 2 percentage points higher than the U.S. in 2010. With Japan’s recent announcement of its desire to join the negotiations, the 

TPP could soon account for nearly 40 percent of the world’s GDP. 

I was in Japan this past summer and met with former Prime 

Minister Noda and other leaders in an effort to strengthen trade 

ties. I am glad to see Japan is now interested in coming to the negotiating table on TPP. I look forward to working with the USTR 

to ensure Japan meets the high-level standards of this agreement. 

Japan’s inclusion would enhance the remarkable opportunity presented by the TPP to open a huge market to our world-class exports. I am hopeful we can build on the progress we recently made 

when Japan began accepting more U.S. beef exports. Now we must 

make every effort to conclude the TPP this year. 

While China is not part of the TPP negotiations, trade with the 

world’s second-largest economy also presents opportunities as well 

as challenges. I was encouraged to hear China’s new Premier, Li 

Keqiang, recently say his government is committed to strong relations with the United States and sees a strong outlook for trade 

and investment between our two countries. 

The U.S.-China relationship should be mutually beneficial, but 

for this to happen China must play by the rules. I continue to be 

concerned that China’s currency manipulation costs U.S. jobs, and 

so does China’s failure to end the wholesale theft of U.S. patents, 

copyrights, trademarks, and trade secrets. China has pioneered a 

practice, now copied by India and others, of requiring U.S. companies to transfer technology to domestic companies in order to gain 

access to its market. 

We need to be on the offense and fight these unfair practices. We 

need to enforce existing agreements and develop novel approaches 

and new agreements. We need to work with like-minded countries 

to push back against the theft of intellectual property. 

At the end of the day, America’s trade agenda is about one simple goal: jobs. At a time when job creation must be our numberone priority, a strong, aggressive trade agenda is one of the most 

powerful tools we have to put more Americans to work. The opportunities are laid out before us. America must now take action, seize 

the opportunities, and, as Sir Francis Bacon said, make more than 

we find. 

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

The CHAIRMAN. Senator Hatch? 

OPENING STATEMENT OF HON. ORRIN G. HATCH, 

A U.S. SENATOR FROM UTAH 

Senator HATCH. Well, thank you, Mr. Chairman, for holding today’s hearing. I am sure you will agree, congressional oversight is 

critical to ensuring transparency and, I might add, accountability 

in the executive branch, so I appreciate this opportunity to chat 

with the administration in a public forum about their trade agenda. 

Now, international trade is critical to our economy. Trade supports more than 38 million jobs in the United States, but we can 

4 

do better. Ninety-five percent of the world’s customers live outside 

the United States, and they account for 92 percent of global economic growth and 80 percent of the world’s purchasing power. 

If we are going to access these customers, we need an aggressive 

trade policy and the tools to help put that policy in place. Our 

record of bipartisan cooperation on trade is strong. During the last 

Congress, we worked together to pass seven trade bills, including 

our long-stalled free trade agreements with Colombia, Panama, 

and South Korea. 

We also worked closely together to develop legislation to grant 

permanent normal trade relations for Russia while holding Russia 

accountable for its actions. I am hopeful that we will be able to look 

back on a similar record of success at the end of the 113th Congress. 

There certainly is reason for hope. The administration is forging 

ahead to complete negotiations for a Trans-Pacific Partnership 

agreement this year. They also recently announced their intention 

to launch negotiations with the European Union on a comprehensive trade agreement. 

Furthermore, expansion of the information technology agreement, which would lower taxes and tariffs on information technology projects to zero, and of course conclusion of an agreement 

on trade facilitation, also hold great promise. Conclusion of an 

international services agreement could also expand opportunities 

for U.S. workers and job creators. The United States is a dynamic 

service provider. Unfortunately, to date U.S. exports of services 

have not even come close to reaching their full potential. This 

agreement could increase trade and services by another $600 billion per year. These are all ambitious undertakings and, if successful, they will make a major contribution to U.S. economic growth. 

Our future does indeed look bright, but there are also a few significant storm clouds on the horizon. Many of the toughest parts 

of the Trans-Pacific Partnership negotiation have yet to be resolved, including market access for dairy, sugar, and textiles. 

The administration is still contemplating including productspecific carve-outs within the agreement, a dangerous proposal that 

could be used as a precedent to exclude other products from coverage in this and future agreements, thereby diluting their commercial benefits. Such an irresponsible proposal threatens to undermine decades of U.S. trade policy for no discernible purpose I 

can see. The administration’s trade policies with regard to patent 

protection remain vague, particularly with respect to the term of 

protection for biologics. How these issues are resolved will go a long 

way towards determining whether I and my colleagues will be able 

to support the final TPP agreement. 

Additionally, while a potential E.U. agreement holds much promise, it must be comprehensive, result in real regulatory harmonization, and reflect the highest standards of intellectual property 

rights protection if it is to gain the strong support of Congress. 

Now, our past negotiations with the European Union have shown 

just how difficult this task can be. Let us hope that we can get it 

done this time. President Obama will make two key decisions in 

the near future which will help determine the success or failure of 

his trade agenda. 

5 

First, the President must nominate someone to serve as the U.S. 

Trade Representative who has the trade expertise, political savvy, 

and leadership skills necessary to effectively lead the agency. 

Today, morale at USTR is at an all-time low. Ill-conceived proposals by this administration that have the agency subsumed into 

the Department of Commerce reveal a complete lack of understanding regarding both the structure and the purpose of the agency. 

Sadly, rumors persist that the President may nominate as his 

next trade representative the chief architect of this proposal to end 

USTR as we know it. I hope he does not do that, but we will deal 

with whatever happens. I certainly hope that is not the case. 

Following through with this proposal would send a very negative 

signal to both our career negotiators and our negotiating partners. 

If the United States is to be taken seriously on trade policy around 

the world, we need a real leader at USTR who understands the 

agency and is capable of navigating the difficult shores of international trade negotiations. 

Second, the President needs to work with Congress to renew 

Trade Promotion Authority. Almost 1 year ago to the day, Ambassador Kirk testified before this committee that USTR would engage 

with Congress on the steps needed to implement a new Trade Promotion Authority. Now, despite my offer to begin negotiations that 

very day, no steps have been taken by this administration to engage Congress on Trade Promotion Authority: no meetings, no discussions, no exchange of ideas, nothing. 

Now, the President’s 2013 trade policy agenda says the President 

will work with Congress on Trade Promotion Authority. I take this 

promise as a sign of progress, but we have already wasted 4 years. 

TPA could have been done a long time ago, and we cannot afford 

to waste any more time. 

I cannot imagine any President not wanting that authority, because it makes it easier to do these agreements. TPA could have 

been done a long time ago. We cannot afford to waste any more 

time. There is much work to be done for this ambitious trade agenda to succeed. Launching negotiations is one thing; closing highstandard agreements that the Congress will support and pass is a 

completely different undertaking. 

I hope this President and this administration are up to the task. 

Ambassador Marantis, I look forward to your testimony today. I 

have high regard for you, and I think you have done a good job 

down there. I look forward to working with you and the next U.S. 

Trade Representative to advance our stated goals of opening foreign markets, enforcing our trade laws, and creating even greater 

economic opportunities for this and future generations. 

You would make a good U.S. Trade Representative yourself, because you are one of those people who has an open mind who is 

really trying to do the best job that you can. Frankly, I do not want 

to ruin your opportunities by saying nice things about you, but we 

all have respect for you, and you have worked well with this committee in the past and have worked well ever since you have been 

down there. So we are very grateful to have good people like you 

willing to give your time and serve our country, and to give service, 

especially service that all of us up here hopefully can support. 

6 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. 

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

The CHAIRMAN. In the interest of balancing things out, I will say 

nice things about Ambassador Marantis too. [Laughter.] 

Senator HATCH. Well, I am glad to hear that. 

The CHAIRMAN. I hope that neither of us complicates matters. 

I would now like to introduce our Acting U.S. Trade Representative, Demetrios Marantis. Ambassador Marantis, welcome back to 

the Finance Committee. You are no stranger here by any stretch 

of the imagination, serving as the committee’s Chief Trade Counsel 

very, very admirably. We made a lot of things happen. You are 

very, very good. 

It is always a pleasure to have you before us, so we are looking 

very much forward to your testimony. You know the rules. Say 

what you want to say, do not pull any punches, and your statement 

will be automatically included in the record. 

Please proceed. 

Senator HATCH. With all these good comments, I hope you do not 

screw up now. [Laughter.] 

STATEMENT OF HON. DEMETRIOS MARANTIS, ACTING U.S. 

TRADE REPRESENTATIVE, EXECUTIVE OFFICE OF THE 

PRESIDENT, WASHINGTON, DC 

Ambassador MARANTIS. Thank you very much, Chairman Baucus 

and Senator Hatch, and thanks to this committee. It is great to be 

back. 

[Interruption by protestor.] 

Ambassador MARANTIS. We are now 3 years—— 

[Interruption by protestor.] 

The CHAIRMAN. Ma’am? Ma’am? Ma’am? We are going to have to 

have an orderly hearing here now. If you do not—— 

[Interruption by protestor.] 

The CHAIRMAN [continuing]. Desist, or we are going to have to 

take extraordinary actions. 

[Interruption by protestor.] 

The CHAIRMAN. The committee will be in order. Comments from 

the audience are inappropriate and out of order. 

[Interruption by protestor.] 

The CHAIRMAN. Any further disruption will cause the committee 

to recess until the police can restore order. 

[Interruption by protestor.] 

The CHAIRMAN. I am sorry, ma’am. The hearing is now in recess, 

and we will proceed when we are able to proceed without disruptions. The committee is in recess until we can proceed without disruptions. 

[Whereupon, at 10:51 a.m., the hearing was recessed, reconvening at 10:52 a.m.] 

The CHAIRMAN. The committee will come to order. Ambassador 

Marantis, will you proceed? 

Ambassador MARANTIS. Thank you again, Chairman Baucus. 

The CHAIRMAN. Why don’t you proceed from the very beginning? 

7 

Ambassador MARANTIS. All right. Thank you. Thank you to both 

of you and to this committee. It is a real honor for me to be back 

here. 

We are now 3 years into President Obama’s National Export Initiative. Since 2009, increased U.S. exports have supported 1.3 million additional American jobs. Last year, U.S. exports overcame 

slackening global demand and a devastating drought to reach 

record highs. Since 2009, manufacturing exports are up 47 percent, 

agricultural exports are up 44 percent, and services exports are up 

24 percent. 

President Obama’s trade agenda for 2013 calls for continued 

progress and bold steps. It will support greater economic growth 

and jobs for more Americans, and bipartisan cooperation between 

Congress and this administration will remain critical to its success. 

Together, we can secure job-supporting opportunities for U.S. 

farmers, ranchers, businesses, workers, manufacturers, and service 

providers. So in 2013, the administration will continue to consult 

closely with you on U.S. trade negotiating objectives and on holding 

our trading partners accountable for their commitments. 

USTR’s current work builds on many efforts that became successful with your guidance and with your help. We are intensifying 

Trans-Pacific Partnership negotiations to secure a next-generation 

high-standard trade agreement in the world’s fastest-growing region. 

As President Obama announced in his State of the Union address, we are preparing to begin negotiations to further strengthen 

the world’s largest trade relationship through a Trans-Atlantic 

Trade and Investment Partnership with the European Union. 

In Geneva, we will soon begin negotiations regarding global trade 

in services, a sector where U.S. providers are highly competitive. 

At the WTO, we are advancing promising pathways for trade liberalization. These include trade facilitation and the information technology agreement. 

In support of our market-opening efforts, we look forward to beginning work with you on Trade Promotion Authority. This year we 

will seek to improve the effectiveness of U.S. trade preference programs and to ensure that U.S. businesses and workers benefit fully 

from the commitments of new WTO partners. We will address the 

expiration of Trade Adjustment Assistance this year, keeping our 

own commitment to Americans in trade-impacted industries and 

connecting them and other displaced workers with employment 

services. 

Your support for President Obama’s focus on trade enforcement 

is already ensuring that more Americans reap all of the benefits of 

U.S. trade agreements in the WTO and around the world. In conjunction with USTR’s Office of the General Counsel, the Interagency Trade Enforcement Center will continue to play a critical 

role in trade enforcement efforts. Since its inception, the ITEC has 

already helped to advance multiple enforcement actions and investigations. 

As we continue our market-opening and enforcement efforts, 

USTR will uphold this administration’s commitment to be responsive to American interests and American concerns. We will base 

trade policy on diverse American perspectives with a goal of supVerDate Nov 24 2008 17:23 Jan 28, 2014 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 R:\DOCS\86343.000 TIMD
8 

porting American jobs. In particular, we will continue to maintain 

open channels of communication and receive constructive public 

feedback on all trade negotiations. 

Working with you, this administration intends to seek highstandard trade and investment opportunities around the world. We 

intend to enforce our trade agreements to preserve and support additional U.S. jobs, and we intend to reflect and uphold American 

values in trade policy. 

However, it is important to note that continued budget cuts and 

resource constraints can significantly compromise USTR’s capabilities. Already we face the possibility that the sequester alone will 

hamper our ability to conduct trade negotiations and other marketopening efforts, as well as new enforcement disputes. 

In the continuing resolution that is currently moving through Congress, USTR’s budget would be cut by an additional $1 million 

on top of the $2.6 million sequester. A further $1-million hit could 

undermine USTR’s ability to conduct multiple trade negotiations 

simultaneously, as well as severely compromise enforcement. 

I thank this committee for your thoughtful consideration of critical trade issues and your continued support for an ambitious agenda. Working together, we can ensure that our trade policy continues to support jobs and opportunities for all Americans. 

The CHAIRMAN. Thank you, Ambassador Marantis. 

[The prepared statement of Ambassador Marantis appears in the 

appendix.] 

The CHAIRMAN. I would like you to talk to us a little bit about 

Trade Promotion Authority. I mean, it has lapsed, as you know. If 

we are going to conclude meaningful trade agreements, whether it 

is the E.U. or TPP, we are going to have to renew Trade Promotion 

Authority. There is some concern that maybe the administration is 

a little lax, a little slow in engaging Congress on TPA. 

I wonder if you could tell us the degree to which the administration is engaged—I hope fully, totally engaged—and also if you can 

begin to address some of the issues that are going to come up in 

Trade Promotion Authority, like localization perhaps, or stateowned enterprises; there are a lot of factors. The world has 

changed a lot, even since 2007. So, if you could touch on those, I 

would surely appreciate it. 

Ambassador MARANTIS. Sure, Senator. We have heard the calls— 

the strong calls—of you, of Senator Hatch, this committee, and others in Congress, to move forward with Trade Promotion Authority. 

It is in our mutual interests to use TPA as a tool to support a jobfocused trade agenda. 

I can tell you that we are ready to begin our work with you on 

TPA and to talk about the very issues, Senator, that you raised: 

what our trade negotiating objectives should look like, the extent 

to which we are addressing emerging challenges in the global economy like forced localization, and ensuring that private-sector companies compete on a level playing field with state-owned enterprises. So we are ready to begin our work with you. 

The CHAIRMAN. Do you have any thoughts, more precise 

thoughts? Several years ago we extended TPA, and we worked out 

an agreement with the House trade leadership, bipartisan, on labor 

standards, environmental standards, and investment provisions, I 

9 

think, were in there, too. There are some who perhaps want to 

weaken, some who want to strengthen. 

As I said, the world has changed a lot since 2007. You gave a 

general answer, but, if you could just be a little more precise and 

give us a little more guidance as to what the administration is now 

thinking, that would help. 

Ambassador MARANTIS. Sure, Senator. There are a diversity of 

interests on this committee and elsewhere on what our trade negotiating objectives under TPA should look like. It is a conversation 

that we need to have together, and we are ready to begin having 

that conversation with you now. 

The CHAIRMAN. I was a little bit surprised, and I guess I should 

have known, when you said your budget was cut $1 million in addition to the sequester cuts. Why? What did we do? What are we 

doing to you? What account is being cut that results in that extra 

$1-million cut? 

Ambassador MARANTIS. Senator, as you know, USTR’s budget is 

travel and people. We, over the past few years, have aggressively 

managed our budget. That, in part, has helped to blunt—in part— 

the effect of the sequester. 

As you and Senator Hatch pointed out in your opening statements, we have a lot of stuff going on right now. We have TPP; we 

are about to launch negotiations with Europe; we have negotiations 

on an international services agreement; we have a vigorous enforcement agenda. 

The sequester cuts, in addition to what is in the CR, the $1- 

million cut in the CR, can significantly hamper these and other efforts to support American jobs by opening global markets. Every 

dollar counts. One million dollars means a lot to USTR. We are a 

very lean agency. We are used to doing more with less, but there 

is no fat to cut. We are now at the bone. 

The CHAIRMAN. Could you give us a sense of the degree to which 

other countries support and have resources for their trade department, whatever it might be, on a proportionate basis? Is it about 

equal proportionately, or do other countries have a lot more firepower—although they are not any smarter, they have a lot more 

firepower than we? 

Ambassador MARANTIS. I mean, Senator, I could say anecdotally, 

whenever we travel, USTR is the lean and mean machine that has 

very few people who will go on negotiations. We are able to do more 

with less, I think particularly in comparison with our trading partners. That is why the sequester cuts and the contemplated cut in 

the CR are of real concern to us. 

The CHAIRMAN. I just recall back 30 years ago on this committee 

when Chairman Russell Long was noticing how we do not, as 

Americans, support our trade team as much as other countries support theirs. 

I think it is partly—let us take Canada, for example. On a proportionate basis back then, trade was much more important to 

Canada than it was the United States. Now that has changed a little bit, but not enough. 

It is my impression that many countries devote many more precise resources to trade and negotiating trade agreements than does 

the United States. We are kind of lax about it; we are a little casVerDate Nov 24 2008 17:23 Jan 28, 2014 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 R:\DOCS\86343.000 TIMD
10 

ual about it. We work hard, but the country itself—I am not talking about the agency, but the country itself, our country—does not 

have the same intensity in getting good trade agreements as is the 

intensity in many other countries. I would just say to you, good 

luck with what you are doing, and we will try to help you out. You 

need help, frankly, on the resource level. 

Senator Hatch? 

Senator HATCH. I agree with the chairman on that last point. 

Ambassador Marantis, the 21st-century economy is increasingly 

knowledge-driven, as you know. The U.S. bio-pharmaceutical industry is the poster child for this 21st-century economy, and to 

maintain our Nation’s competitiveness as a leading innovator of 

bio-pharmaceuticals, Congress approved legislation providing for a 

12-year regulatory data protection for biologics. That was a hardfought battle. It was a bipartisan decision by Congress. I would 

have preferred it to be a little bit longer, others thought it should 

be shorter, but it was a very, very hard-fought battle. President 

Obama signed this into law, and I am perplexed by the Obama administration’s refusal to commit to seeking 12 years of regulatory 

data protection for biologics in the TPP negotiations. 

Now, the administration insists that USTR is proceeding with 

the TPP negotiations ‘‘as if you had’’ TPA. The most recent version 

of the TPA from the 2002 Trade Act included substantive trade negotiation objectives. In the case of intellectual property rights, the 

TPA objective is clearly spelled out: to obtain a standard of protection similar to that found in U.S. law. 

Current U.S. law regarding data protection for biologics is clear: 

the period of regulatory data protection is 12 years. Now, when will 

you instruct your trade negotiators to work towards attaining 12 

years of regulatory data protection for biologics in the TPP, consistent with the law of our country? 

Ambassador MARANTIS. Thank you, Senator Hatch. We agree 

strongly with you that biologics is a vital area of pharmaceutical 

innovation. This is a tough issue in the context of the TPP, and we 

have not yet made a decision about how we are going to proceed. 

We have been discussing this with our trading partners, we have 

been discussing it with you and with members of this committee, 

and we have not yet made a decision. We know that there is a very 

strong view on your part and on others on 12 years, but we are still 

reflecting upon how to best proceed. 

Senator HATCH. I am the author of the Hatch-Waxman Act, and 

I take a tremendous interest in all of these very technical, but difficult issues. How is your decision, which appears to me to ignore 

U.S. law, consistent with negotiating ‘‘as if’’? You had the last 

iteration of TPA that requires you to pursue U.S. law with respect 

to IPR. Are you trying to change U.S. law in biologics through 

international trade negotiations? I hope that is not true. 

Ambassador MARANTIS. Senator, everything that we will do and 

that we do in any of our trade agreements is fully consistent with 

U.S. law. Again, the biologics issue is a challenge. We are trying 

to look and seek the appropriate balance between specificity and 

flexibility. I would appreciate your views and the views of this committee on how we can best strike that balance. 

11 

Senator HATCH. Well, we want to keep that world leadership 

going, and this will help us to do it. 

Now, after Prime Minister Abe and President Obama met in February, they issued a joint leaders’ statement regarding Japan’s possible participation in the TPP. I was concerned in reading that 

statement that ‘‘both countries have bilateral trade sensitivities, 

such as certain agricultural products for Japan and certain manufactured products for the United States.’’ 

Now, I do not recall a U.S. President ever declaring U.S. trade 

sensitivities in a leader’s statement. Doing so seems to imply that 

there is some form of equivalence between Japan, which has wholly 

excluded agriculture from any of its trade agreements, and the 

United States, which negotiates the highest standard trade agreements with the broadest market access coverage. 

If this statement reflects the standards for Japan in the TPP, it 

threatens to dilute the benefits of the entire agreement as other 

countries seek to carve out as many sensitivities as they can. 

Now, did the administration intend to signal equivalence between Japan’s sensitivities and our own? What specific manufacturing sensitivities was the President referring to in the statement, 

and are they in any way equivalent to Japan’s agriculture sensitivities? How do you intend to maintain the highest level of ambition 

for the TPP should Japan join? 

Ambassador MARANTIS. Senator, let me assure you that we are 

100-percent committed to negotiating the highest standard 21stcentury agreement in the context of TPP. In that joint statement 

that the President and Prime Minister Abe released, the statement 

made it very clear that, should Japan join the TPP, it will commit 

to this goal of seeking the highest-standard, comprehensive agreement, consistent with the goals that TPP leaders set out in November 2011. 

That includes putting all goods on the table, so we are currently 

working, as you know, with Japan to ensure that, should it join, 

it will be capable of meeting the highest standards possible. We 

have our own sensitivities, as we have set out, as that joint statement sets out, and we have issues of concern with Japan in the 

area of autos, insurance, and others that we are still working on. 

Senator HATCH. Mr. Chairman, I would just like to note that I 

was pleased with your testimony that you ‘‘look forward to beginning our work with you on Trade Promotion Authority.’’ I just want 

to know when that work is going to start. If you could let us know 

that, it would go a long way towards helping me to understand 

this. 

Ambassador MARANTIS. Senator, we stand ready to begin. I 

mean, this is a huge priority of yours. We have heard your calls 

on this issue loud and clear, and we are ready to begin our work. 

Senator HATCH. Thank you, sir. 

The CHAIRMAN. Thank you, Senator. 

Senator Stabenow? 

Senator STABENOW. Well, thank you very much, Mr. Chairman. 

First, I want to thank you for your words and your continued support of TAA as well, as part of the important balance for workers 

in this country. I want to follow up, Mr. Ambassador, as it relates 

12 

to Japan, and I know you understand the concerns that I have and 

many other members of this committee have. 

There is a letter that has been sent to the administration, signed 

by Senator Brown and I, Senator Schumer, Senator Casey, that relates to Japan. Let me just start by saying that 30 percent of the 

economic growth of our country last year in 2012 was auto sales. 

It is a big deal for us, the American automobile industry. 

Today, I do not know if you are aware of the numbers, but there 

are 120 vehicles sold into the United States for every one that we 

can get into Japan. This has actually been going on since the 

1930s. So, when we look at the history, I mean, in the 1930s Japan 

sought to build a protectionist auto industry that would drive their 

export-led growth agenda, which they did. It was impossible for us 

to get into their markets. 

Since then, even though they removed virtually all of their auto 

tariffs in the 1970s, we have gone on to see a non-existent market, 

to be unable to get into Japan. President Reagan tried to fix it in 

the 1980s; President Clinton tried to fix it in the 1990s. It is still 

there. 

It is still happening today with no confidence at all that it will 

end, given what they are doing on currency manipulation. In talking to one of our major CEOs yesterday, he indicated that it is as 

much as $2,500 added to the price of a vehicle, which is a big deal 

in terms of an unfair competitive advantage. So I would ask, as we 

look at Japan, why in the world would we believe at this point that 

this would be any different? 

Ambassador MARANTIS. Senator, thank you for raising this issue. 

We received your letter, and we share the concerns that you raised 

in the letter. We have a long history with Japan on automotive 

issues. It is of serious concern to the President, and we are working 

very hard to ensure that, should Japan join the TPP, we are able 

to address the long-standing issues that we have had in the auto 

sector. We have made progress with Japan, but our work continues. 

Senator STABENOW. But it has been 80 years. I appreciate very 

much the reasons, strategic reasons, for wanting to include Japan, 

but we cannot allow them to have more access to our market without also having access to their market in the major area in which 

they export to us, which is automobiles. This is very serious. It is 

the number-one issue that our American automobile industry is 

concerned about. 

Together with the administration, we have done very important 

work to make sure that tough decisions were made, sacrifices were 

made, to get them back on their feet. This could undermine all of 

that, so I cannot stress strongly enough the concerns that I have 

and that others have as well. 

Let me finally ask you, related to currency manipulation, we 

have recent reports that indicate Japan continues to be intent on 

further weakening the value of the yen in an attempt to boost its 

economic growth. As you go forward with TPP negotiations, do you 

believe there is a need for clear, enforceable objectives to address 

currency manipulation in the future? How is it that we recognize 

trade-distorting effects of currency manipulation and yet are doing 

13 

nothing at this point to address what is a clear, unfair trade advantage? 

Ambassador MARANTIS. Thank you, Senator. On exchange rate 

issues, the Treasury Department has the lead, but we are giving 

careful consideration to the potential benefits and the potential 

risks of addressing currency as one of our trade negotiating objectives in ongoing negotiations. We know that this is an issue of deep 

concern to you and to others on this committee, and we will continue to consult closely with you. 

Senator STABENOW. Mr. Chairman, thank you. I just want to indicate for the record that, unless we see changes on currency manipulation and efforts and benchmarks to Japan opening their markets, I cannot imagine why we would want to proceed with a 1- 

sided agreement as it relates to American manufacturing in the 

automobile industry. So, I look forward to working with the chairman on this. 

The CHAIRMAN. Thank you, Senator Stabenow. 

Senator Isakson? 

Senator ISAKSON. Thank you, Mr. Chairman. 

Ambassador Marantis, thank you for your call last week. I enjoyed discussing trade policy with you and appreciate the good job 

that you have done. 

In your prepared statement you addressed the African Growth 

and Opportunity Act (AGOA). Africa has been a great potential 

conduit for U.S. business and trade development over the years. 

Last year, we were late—in fact, we went to the last minute—on 

the third-party fabric agreement before we finally extended it at 

the end of the year. Because of supply chain issues, that disrupted 

a lot of business between Africa and the United States. 

A working group of members of the House and Senate has been 

formed to promote the extension of AGOA when it comes up for renewal before 2015. We need all the help we can get to not wait 

until the last minute like we did on the third-party fabric agreement. Can you discuss that for just one second? 

Ambassador MARANTIS. Yes, Senator. Thank you very much for 

your leadership on this issue, and thank you to this committee for 

acting to renew third-country fabric last summer. I agree with everything you said, Senator. AGOA expires in 2015, and we are 

strongly supportive of the seamless renewal of AGOA. 

That means we need to begin our work now so that we do not 

end up in a situation where there is a potential lapse in AGOA or 

where we go so far to the end before its expiration that orders dry 

up and trade is disrupted. We look forward to working very closely 

with you, with the new working group, and with this committee to 

do that, and we are beginning to formulate our ideas on AGOA and 

look forward to talking to you about them. 

Senator ISAKSON. I appreciate your attention to that. While we 

are on Africa, the East African Community Trade and Investment 

Partnership. Can you talk about the progress of that agreement? 

Ambassador MARANTIS. Sure, Senator. This is another very exciting new initiative that we are pursuing at USTR. The East African 

Community is a leader in Africa in terms of promoting regional integration among the five members: Rwanda, Burundi, Kenya, Tanzania, and Uganda. 

14 

We have launched a trade and investment partnership designed 

to do a couple of things. One is to negotiate a regional investment 

treaty which will help to provide high-standard investment protections. Second, we want to negotiate a trade facilitation agreement 

to work through many of the bottlenecks that inhibit trade in the 

region. Third, we want to work with the EAC on helping to enhance technical capacity-building so that they are able to do the 

kinds of things that we are hopeful to do with them. Fourth, we 

have launched a commercial dialogue between the private sectors 

in the U.S. and the EAC. So it is an exciting new initiative that 

could potentially serve as a model for how we approach other regional economic communities in Africa. 

Senator ISAKSON. Thank you. 

In your release last week regarding negotiations with Japan in 

the Trans-Pacific Partnership, you specifically mentioned 2 nontariff issues: automotive and insurance. Can you tell me how you 

are planning to address the level playing field issue and concerns 

expressed by U.S. industry in this regard? 

Ambassador MARANTIS. Sure, Senator. This is another longstanding issue we have had with Japan, which is seeking a level 

playing field in the insurance sector. The Japanese government is 

well-aware that this is a concern of ours, and we are working with 

them, as we are working with them on autos, to address these 

issues before we are able to feel comfortable that Japan is ready 

to meet the high standards of the TPP agreement. 

Senator ISAKSON. Thank you very much for that. 

My last question. I had the occasion this weekend at a St. Patrick’s Day celebration in Atlanta to end up having breakfast with 

Eamon Gilmore, who is the foreign minister of Ireland, who is also 

in his last 2 months as head of the European Union, so it was a 

propitious time to ask some questions regarding trade with the European Union. 

I brought up the issue of genetically modified organisms, which 

are used sometimes by some European countries as a negative towards agricultural products from the State of Montana, the chairman’s State, and the State of Georgia, here, which is a big issue 

for our State. 

Do you have any indications of what kind of flexibility some of 

those countries that have used GMOs as a trade issue might have 

in making an agreement with the United States? 

Ambassador MARANTIS. Senator Isakson, we are well-aware of 

these issues. The issue we have had, I think, with some of the E.U. 

member states has to do with approval of bio-tech products. We are 

working with the E.U. Commission and the member states to help 

speed up approval so there is not a backlog. 

Senator ISAKSON. Thank you very much. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. 

Senator Cardin? 

Senator CARDIN. Thank you, Mr. Chairman. 

Ambassador Marantis, first of all, thank you for your service. We 

appreciate it very much. We know that you have some challenges. 

I want to talk a little bit about TPP. The initiative there involves 

countries that are substantially different trying to come together 

15 

with a common agreement. I know also there is interest in that 

Japan may want to join, which would also, I think, make for challenges, some additional challenges, in bringing together an agreement. 

I want to get your assurances of reaching out to the stakeholders. I will just give you one example, and there are many, 

many more, in regards to the rule of origin and suit manufacturers 

in my State of Maryland and in the Nation. They are very concerned about rule of origin issues. 

I want to make sure that, as you go through the discussions, 

there is an effective way to get input from the industries here in 

the United States to avoid a problem that could very much make 

it more difficult to have a successful conclusion, either of TPA or 

as it relates to the TPP discussions. 

Can I get those assurances that you will be working very closely 

with those industries, particularly on the rule of origin issue? 

Ambassador MARANTIS. Senator, absolutely. Our whole goal in 

negotiating the TPP, as in all other trade agreements, is to create 

and support as many jobs as possible. We need, vitally, input from 

stakeholders in all sectors to ensure that we are doing just that, 

so I can commit to you 100 percent that we will do so. 

Senator CARDIN. Thank you. 

Suit manufacturing is challenged in this country in a lot of different ways. We are trying to get the wool trust fund resolved. 

There are a lot of different issues, and the rule of origin in regards 

to the Asian countries is a critically important matter. I appreciate 

your willingness to work with us. 

I know the chairman has talked about TPA, Trade Promotion 

Authority. I just really want to at least put down a marker. I have 

always been surprised that there has been a reluctance to allow 

our negotiators to negotiate in areas where the United States’ 

standards are much higher than in the international community. 

I understand the challenges of getting meaningful progress made 

in those areas, but why would we want to hamper your ability to 

negotiate in areas where the United States is a clear winner? The 

chairman mentioned environment and labor standards, where our 

standards are much higher than the countries that we are dealing 

with. 

So I would hope as we work, Mr. Chairman, through the Trade 

Promotion Authority, that we look at ways of giving additional leverage to our negotiators to be able to deal in areas where we think 

it is in our competitive advantage to have international standards. 

I would urge also—I know this is not even in the jurisdiction of 

this committee—addressing currency issues. 

We are finding more countries that are involved in currency manipulation. I do not know how that works into these discussions, 

but I would be very interested to know how we can make progress 

in that regard as we look at giving trade authority to the administration. 

The chairman at one time mentioned cyber-security issues and 

IT. These are all issues that are, I think, important. I know not everything can get done in one agreement. I am not suggesting that. 

But I would wonder how we can make progress in these areas as 

16 

we look towards multinational trade agreements and giving the administration Trade Promotion Authority. 

So I would like your creative help as we consider TPA, for those 

of us who would be willing to support TPA under the right conditions. How can we satisfy Congress about giving up its specific authority, as we do in TPA, in areas where it makes sense for us to 

get progress, where the United States needs more competitive circumstances internationally? 

Ambassador MARANTIS. Thanks, Senator Cardin. Again, everything that we do is with the singular goal of using our trade agreements to create and support jobs and the trade negotiating objectives that we consult with you on, whether it is in the context of 

TPP, whether it is in the context of launching the agreement with 

the European Union, or in TPA. That conversation on the range of 

trade negotiating objectives is something that we take very seriously, and we want to make sure that we get it right. 

Senator CARDIN. I just want you to be bolder in those trade objectives. Think about where the United States could use a level 

playing field; be more aggressive. 

Ambassador MARANTIS. And we will do so. I mean, you point out 

a very important area, Senator. You mentioned, and we talked 

about it the other day, with respect to cyber issues and the issue 

of the misappropriation of trade secrets, it is a new and emerging 

issue. And we are being very aggressive in how we are trying to 

handle this issue in the context of TPP, in the context of our annual Special 301 review, and in the context of our bilateral investment treaties. 

So I agree with you, we need to take every opportunity we can 

to tackle new challenges in ways that help to promote our competitiveness and address problems that we see with our trading partners. 

Senator CARDIN. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Cardin. I might say, this 

committee also has jurisdiction over currency. 

Senator CARDIN. We do? 

The CHAIRMAN. Yes. We just assert it. We also have had jurisdiction with respect to currency in past years. 

Senator CARDIN. I appreciate that correction. 

The CHAIRMAN. In addition to another committee. There is cojurisdiction. Thank you. 

Senator Brown? 

Senator BROWN. Thank you, Mr. Chairman. 

Ambassador, thank you for your testimony. I appreciate the focus 

on exports. I have heard Presidents of both parties over the last 2 

decades always talk about progress in exports, but sometimes we 

do not give enough focus to imports. 

It is a little bit like reporting on a baseball game where the 

Cleveland Indians scored 8 runs. Well, great, except the White Sox 

scored 11. So, it is good to really look at both of those, and the emphasis rarely is on the second of those. 

I raise that especially because, since NAFTA and especially since 

the year 2000, we have dug ourselves a trade deficit hole. We all 

talk around here about closing the budget deficit. We do not put 

17 

nearly the focus and the attention on the deep trade deficit and 

how it is a drag on our growth and how it deserves attention. 

The best example is, last week marked the first anniversary of 

the Korea Free Trade Agreement. Exports are up, as you say, but 

imports are up even more. Imported cars are up almost $2 billion 

from the year before the FTA with Korea. Hence the caution of 

Senator Stabenow and others in our letter from Congressman 

Levin that we wrote on Japan, not to refuse to talk to Japan or 

that they not enter into the Trans-Pacific Partnership, but that we 

pay special attention to what that can mean. Again, with Korea, 

the overall deficit with Korea grew in 2012. 

I know the administration and several of my colleagues want fast 

track. I look at any new trade initiatives, from fast track, to TPP, 

to U.S.-E.U., to what happens with Russian PNTR, which I supported, with these two questions: (1) how do we rebalance trade in 

looking at our trade deficit; and (2) how does it ensure that the 

benefits of trade are shared more broadly than they have been in 

the past? 

We know trade creates wealth, we know trade has significant 

winners. We just need to make sure, whether it is Montana, Maryland, Kansas, or Utah, that these benefits be distributed a little bit 

more widely to working-class families. 

So my question is this: how will fast track address this trade imbalance? Not just exports, but how will it address our trade imbalance? Honestly, what will be different this time from every other 

time an administration has come in front of this committee and 

said we need fast track, because trade has so many winners and 

so often ignores who does not win? 

Ambassador MARANTIS. Senator, thanks for raising that issue. It 

is an interesting issue, and I agree with you that it is oftentimes 

overlooked. It is very easy to calibrate the amount of jobs we create 

through exports: 5,200 jobs are created with a billion dollars of 

goods exports. But the case with imports is a lot less clear. Over 

50 percent of imports are used in the United States as intermediary products, and they are inputs that go into Made in America goods that are sold either here or are re-exported. But there are 

distortions—— 

Senator BROWN. Just a second. Let me interrupt, and I apologize. Is 5,200 jobs for $1 billion in exports a number the administration 

uses? 

Ambassador MARANTIS. Yes. 

Senator BROWN. Do you use it the other way: if we have a trade 

imbalance, a trade deficit, that it is 5,200 times that many billion 

dollars of trade deficit? 

Ambassador MARANTIS. No, because the picture with imports is 

not as clear-cut, because over 50 percent of the imports that come 

in are used here domestically or are used in goods that we then reexport, so there is not that same one-to-one correlation with imports as there is with exports. 

But there are distortions in imports, Senator, and you are right 

to point that out. We are responding very aggressively to that, 

(1) by vigorously enforcing our trade remedy laws here, but also 

taking action against practices that skew the level playing field 

with respect to imports. 

18 

For example, we have recently taken a WTO case against China 

for using prohibited export subsidies with respect to their auto and 

auto parts exports. We have challenged the use of prohibited subsidies in the green energy sector, and we are doing a lot on the import side too. So this is obviously an issue that we need to work 

closely with you and the rest of the committee on, but we take it 

very seriously. 

Senator BROWN. If I could ask one quick follow-up. Thank you for 

that. I appreciate, of course, the auto parts trade action, your relative aggressiveness as a USTR—ITC, Department of Commerce— 

on trade enforcement, but you are not aggressive enough but moving in that direction. 

Let me follow up on that question, though. Are there particularly 

new negotiating objectives that the administration would seek so 

we do not repeat past fast track authorizations that failed to balance trade? 

You have typically come in front of this committee, and the administration says, give the power of trade to us, meaning change 

the Senate rules on trade agreements in terms of passing them and 

give us all this authority to negotiate. Fine. What we want in return is maybe Trade Adjustment Assistance. Is there anything you 

are thinking of, new negotiation objectives the administration 

wants, so that we do not repeat those fast track authorizations that 

moved us away from trade balance instead of towards trade balance? 

Ambassador MARANTIS. Senator, this is something that we are 

going to need to consult closely on with you and others on this committee as we determine what our trade negotiating objectives 

should be for Trade Promotion Authority. It is a conversation that 

we are ready to have and look forward to having with you and the 

rest of this committee. 

The CHAIRMAN. Thank you, Senator. 

Senator Roberts, you are next. 

Senator ROBERTS. Thank you, Mr. Chairman. Thank you for 

bringing order to the committee. Mr. Ambassador, thank you for 

coming. Thank you for taking time out of your schedule to come up. 

There is one area where this country leads the world in regards 

to exports. My question to you—and the answer, by the way, is 

‘‘yes.’’ You can just nod your head. 

Where this country leads the world is in the manufacturing of 

general aviation, business aviation aircraft. Would you agree that 

the export of business aviation aircraft is a significant contributor 

to our balance of trade? Just nod your head. 

Ambassador MARANTIS. Senator, I am following your guidance 

and saying ‘‘yes.’’ 

Senator ROBERTS. Thank you. 

Why then does the administration on one hand acknowledge and 

promote this uniquely American product—business aviation aircraft and the over 1 million American jobs that are tied to this industry, 40,000 of which come from Wichita, KS, which is one of the 

homes of our President, or at least his mother—then on the other 

hand vilify and demonize this great American industry? 

19 

I am talking about the gatling gun approach during the campaign and now, referring to this industry as ‘‘fat cat corporate jets.’’ 

Boy, am I tired of hearing that. 

We are not talking about Beyonce coming back to lip-synch the 

Star Spangled Banner. We are not talking about Tiger Woods; we 

are not talking about somebody in a pin-striped suit from Wall 

Street going to Paris. We are talking about several farmers and 

ranchers going together and getting a business aircraft so they can 

fly anywhere they want to fly to with regards to agriculture and 

what they are about, or some manufacturer in Kansas, or any 

State, doing the same thing, sharing the aircraft. I just think that 

we could do better rather than keeping up with the reference to 

‘‘fat cat corporate jets.’’ 

Can you at least assure me that you could—well, you are just 

about half a block away there from the White House. I know you 

meet with the President. You could just slip over and tell him to 

put Kansas in the bracket for the NCAA March Madness and also 

say, will you please quit using the name ‘‘fat cat corporate jets’’? 

Would you do that for me? 

Ambassador MARANTIS. Go Jayhawks! [Laughter.] 

Senator ROBERTS. Well, actually it is Kansas State, but go ahead. 

[Laughter.] 

Ambassador MARANTIS. Senator, we strongly support aerospace 

exports, our aerospace workers. We have done a lot, from negotiating tariff reductions in this area as part of our trade agreements, 

to the largest trade enforcement case we ever brought against the 

E.U. on airbus subsidies. We take this very seriously and want to 

ensure that what we are doing for the aerospace industry helps 

to—— 

Senator ROBERTS. I know you are doing a good job. I just want 

the President to knock it off. 

Ambassador MARANTIS. I will carry that message back. 

Senator ROBERTS. Thank you. 

Agriculture. It is always the engine or the caboose. Chairman 

Baucus and our distinguished ranking member both understand 

the value of agriculture. We are either the caboose or—I do not 

want a picking and choosing situation in regards to USTR negotiations with the E.U., and that is always so terribly tough with regards to agriculture. 

Senator Isakson got into the GMO business, and that is always 

very difficult. We have a real problem with Japan. I am going to 

skip through here really quickly. They have signaled they want to 

protect their country’s agricultural sector when they join the TPP 

negotiations, and they are going to exclude our beef, our pork, our 

rice, our wheat, barley, sugar, and dairy from tariff reduction or 

elimination. What does this mean for U.S. agriculture exports? 

Now, I am skipping from the E.U. to Japan, but it is the same 

kind of issue in regards to agriculture. How do you plan to address 

this multitude of problems? I do not want a situation where we are 

picking and choosing in regards to the—well, all of the trade negotiations. I would point out to you that, in each and every case, agriculture has been a real problem. It can be a real opportunity, but 

it has always been a big problem. Would you care to comment? 

20 

Ambassador MARANTIS. Sure, Senator. I agree with both. We 

have significant export success in agriculture. We have record agriculture exports this year of $145 billion. That is up 44 percent 

since 2009. But we face real challenges with both the E.U. and 

Japan on agriculture—historic issues. 

With the E.U., we have an opportunity for the first time to address these challenges in the context of the Trans-Atlantic Trade 

agreement. It is something that we have been very clear about with 

the E.U., both from a tariff perspective but as well as from a nontariff perspective. 

With respect to Japan, they understand. The Japanese government understands that the whole goal of the TPP agreement is to 

negotiate a high-standard, 21st-century agreement that has the 

goal of eliminating all tariffs. We take this very seriously and will 

continue to work with you to fight for U.S. agricultural interests. 

Senator ROBERTS. I truly appreciate that comment. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. 

Senator Portman? 

Senator PORTMAN. Thank you, Mr. Chairman. 

Ambassador Marantis, thank you for joining us today. You know 

this committee pretty well, and that is one reason we like having 

you down there, because you understand the fact that members of 

the Senate, particularly this committee, like to play a significant 

role in trade. Some of us have been very concerned, as you know, 

about the lack of an aggressive trade agenda, particularly on the 

bilaterals, because of the lack of Trade Promotion Authority and 

negotiating authority. 

So I was delighted to see that the trade agenda says that the administration will work with Congress on TPA. I wish it had happened 4 years ago, or 3 years ago, or 2 years ago, but I think this 

is good. I know you have talked a little about it in response to the 

chairman’s question, and I applaud him for promoting this as well. 

But maybe you could lay out for us a little bit what you see as 

being part of TPA, as compared to the TPA that is not currently 

in effect but that has expired, and what the administration’s negotiating objectives are. I will say that the same commitment to move 

forward was made by your predecessor, and my understanding is 

that the committee reached out to begin negotiations, and nothing 

happened. So, I am assuring all of my staff that this time you are 

sincere and, again, just want to get a sense of what you see as 

some of the negotiating objectives. 

Ambassador MARANTIS. Sure, Senator. As I said earlier, we have 

heard your calls loud and clear on TPA. It is in our mutual interest 

to use TPA as a tool as part of our jobs-focused trade agenda. 

There is a lot that we are going to have to talk about with respect 

to trade negotiating objectives, and it is a conversation that we are 

ready to begin to have with you. I do not have any preconceived 

notions. We do not have any preconceived notions. It is a discussion 

that we want to have with you. 

Senator PORTMAN. We look forward to that discussion, and I 

hope you will be aggressive in reaching out, just as we will, because time’s a’wasting. I do not think you are going to get the last 

best offer on things like TPP to really get the barriers down, deal 

21 

with intellectual property, and other issues which I hope you will 

be a champion for, without having the ability to let other countries 

know that we have the ability to take those through the process 

without being amended to death. 

So on WTO, for a second: Doha has been disappointing, of course, 

because it was a great opportunity to give workers and farmers in 

Ohio access to new markets. It sounds like there is going to be, in 

Bali, an opportunity to make some progress on trade facilitation 

and a Customs agreement, and maybe even a government procurement agreement. 

Can you give us a little update on that as you prepare for that 

ministerial? Do you feel as though you are making progress? I have 

heard from some that the negotiations are not going great, that 

some of the issues at the border in some of these countries make 

it more difficult to trade, both for them and for us, and are not 

being resolved. Can you give us some assurance that you guys are 

on top of that? 

Ambassador MARANTIS. Yes, Senator. I mean, you know better 

than all of us the importance of the WTO and how it is the mainstay of multilateral liberalization. We are in the process right now 

of working to craft a practical and realistic package for Bali that 

includes, as you mentioned, trade facilitation. 

We are working on certain aspects of agriculture and development as well. At the same time, we are also accelerating our negotiations on the ITA, on the information technology agreement, and 

I am hopeful that we will be able to move that forward before Bali 

as well. 

Senator PORTMAN. On TPP, I think earlier—I had to run out to 

give a talk—but I think earlier there was discussion about our concern about autos in TPP. The bottom line is, Japan is a very closed 

market. If you look at it as compared to our market, we are at 

about, I think, 40 percent imports now. I think they are less than 

10 percent—in fact, less than 6 percent, I think. 

So clearly we are concerned that this is not going to be a level 

playing field if Japan is brought in and we do not aggressively address this auto issue. Can you give us an assurance today that the 

administration is going to ensure that, before Japan is a member, 

that there are certain commitments made on autos? 

Ambassador MARANTIS. Yes, Senator. I mean, this is, as we all 

know, a long-standing issue of concern. We have made it very clear 

to the government of Japan that we have serious issues to work 

through on the auto side. We are doing that now, and we will continue our close consultation with this committee. 

Senator PORTMAN. As you know, I spearheaded a letter last year 

and again this year on the U.S.-E.U. Trans-Atlantic agreement, 

maybe an FTA, maybe a trade and investment partnership agreement. Senator Hatch and Senator Baucus have been big supporters 

of looking at this issue because of the enormous amount of trade 

between our two regions and the fact that there are a lot of regulatory issues that could be addressed, some standardization uniformity that would help tremendously. 

One of my concerns has always been on the agricultural side. 

Again, for Ohio farmers, we want to have these agreements. This 

is the biggest market in the world, and we want to have access to 

22 

it for things like soybeans and corn, beef and pork, all of which 

have various non-tariff barriers attached to them. 

Are you making an effort with the Europeans up-front to ensure 

that those issues are addressed? 

Ambassador MARANTIS. Yes, Senator. We have a huge opportunity with the E.U. We have no illusions that agriculture trade is 

not going to be a difficult issue, but we are going into this with the 

expectation that we are going to work towards eliminating all tariffs, and that includes agriculture tariffs, and that we will address 

key non-tariff issues like sanitary and phytosanitary issues. So we 

are ready to go, and we look forward to working with you as we 

develop our trade negotiating objectives. 

Senator PORTMAN. Thank you, Ambassador. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. 

Next is Senator Carper. 

Senator CARPER. Thanks, Mr. Chairman. 

Welcome, Ambassador Marantis. Nice to see you. 

I want to put my questions in context, if I can. We are taking 

up the budget resolution here this week and hopefully will find 

some common ground with our Republican friends, but I think the 

people of the country are looking at us and are asking maybe three 

questions: (1) can they—that is, us—govern; (2) can we in our country be fiscally responsible again; and (3) can we provide certainty 

with respect to our tax code and that kind of thing? 

I gave a speech a little bit earlier this morning. I said I think 

there are about four things we need to do to strengthen our economic recovery as we come out of the recession, continue to come 

out of the recession, and at the same time pull back on spending. 

One of those is to try to invest a little money in workforce development, workforce skills, especially the STEM skills: science, technology, engineering, and math. 

The second area the President has called for investing in is infrastructure, broadly defined—not just roads, highways, bridges, but 

infrastructure broadly defined. A third area is research and development, R&D, that can be commercialized and lead to the development of products, goods, and services that we can sell all over the 

world. 

With that in mind, that takes us to where we are today, and that 

is the ability to grow exports by negotiating the kinds of free trade 

agreements that we are discussing here, both on the Pacific side 

and on the Atlantic side. 

A couple of people talked about cars. We used to build a lot of 

cars. We built more cars, trucks, and vans per capita in Delaware 

for decades than any other State. We lost both our GM plant and 

our Chrysler plant, but we still have a strong interest in the auto 

industry. We have talked about Japan. I should say I think their 

market penetration here is pretty robust. 

I know it is about 40 percent here, but we are at about 6 percent 

over there. When we were negotiating the South Korea Free Trade 

Agreement, for every 500,000 cars they sold to us, we sold about 

5,000 to them. We have passed the free trade agreement, negotiated it, ratified it, and my question on South Korea is, are we 

starting to see any kind of changes there with respect to that ratio, 

23 

500,000 Korean vehicles coming here to 5,000 of ours going there? 

Is that changing at all? 

Ambassador MARANTIS. Senator, actually we have good news to 

report. 

Senator CARPER. We are ready for it. 

Ambassador MARANTIS. Passenger vehicle exports to Korea in the 

past year have increased by 45 percent. That is in addition to a lot 

of the other good statistics we have seen with respect to Korea: 

cherries have increased by 88 percent; orange juice has increased 

by 130 percent; overall manufactured goods have increased by 1.3 

percent; services have increased by 10.3 percent. So we are seeing 

increases. 

Senator CARPER. That is good. All right. 

We have heard a good deal about the challenges that our American businesses face in India. That is an area that I think you 

know a little bit about. I remain concerned with the restrictive 

trade practices that particularly our poultry and other products 

face in that country which remove opportunities for market access 

in a growing economy of, I think, about 1.2 billion people. 

For instance, the non-scientifically based policies that do not conform to World Organization for Animal Health standards have shut 

out the U.S. poultry industry, as I believe you know. Additionally, 

the U.S. bio-pharmaceutical industry has had several patents disregarded, just disregarded, due to inappropriate use of compulsory 

licensing and patent revocation. 

I think India has been a big part of your focus at USTR. Let me 

just ask, what are USTR’s plans over the next year to address the 

increasing challenges our industries face in India, and are you concerned that not addressing these challenges will set a negative 

precedent among other nations? 

Ambassador MARANTIS. Thanks, Senator. We have a huge and vibrant trading relationship with India. It has the potential to really 

create new opportunities for us, but there are some very real frustrations that you have pointed to. 

On poultry, for example, we have brought a WTO dispute against 

India challenging their poultry ban. You point to issues with respect to compulsory licensing. We have deep concerns over deterioration in the innovation climate in India with respect to what you 

mentioned, Senator, as well as market access policies that are affecting electronics. 

I was in India in December and raised these issues very clearly 

with our counterparts, and we hope to work very closely with them 

to grow and develop the relationship and address the irritants that 

are unfortunately rising. 

Senator CARPER. All right. Thank you. 

One quick follow-up question, if I could. Is it correct to say that, 

as you look to begin negotiations on the other side, on this side of 

the ocean, this side of the country, the Trans-Atlantic Trade and 

Investment Partnership, that everything, including agricultural 

barriers, will be on the table? 

What other steps is USTR taking to address the challenges 

abroad that our poultry industry in particular faces? The reason 

why I focus on poultry is, for every person who lives in Delaware— 

probably for every person who lives on the Delmarva peninsula— 

24 

there are 300 chickens, so this is something that is of enormous 

value. We used to export very few chickens. Today, I think one out 

of every five is exported that we raise in America. So could you just 

respond to my question? 

Ambassador MARANTIS. Sure, Senator. 

Senator CARPER. Is everything on the table, all the agricultural 

barriers? Is that on the table? 

Ambassador MARANTIS. Yes, Senator, they are. And we have 

good news with respect to our poultry exports. They are at an alltime high of $6.3 billion, which is up 7 percent over 2011. But we 

are working in all contexts to address barriers in that sector. 

Senator CARPER. All right. 

Lastly, what other steps is USTR taking to address the challenges abroad that our poultry industry in particular faces? 

Ambassador MARANTIS. There are, as you know well, a number 

of challenges. I mentioned with India we have filed a WTO case. 

We are working with other countries to address non-scientific barriers to poultry exports, and we are working in the context of our 

trade negotiations to ensure a level playing field for our poultry exporters. We appreciate your pushing us as hard as you do to stand 

up for U.S. poultry exports, and we will continue to do so. 

Senator CARPER. Thanks so much. Thank you. 

Senator HATCH. Senator Grassley? 

Senator GRASSLEY. I was at the Judiciary Committee meeting on 

antitrust, so I missed what you said, but I want to say that I appreciate that you said that the administration wants to begin work 

on Trade Promotion Authority. This is long overdue, and I thank 

you and the President for moving in that direction. 

Like my predecessor, I have some questions on agriculture. I 

know that you have personally been involved with the discussions 

with Taiwan on ractopamine. This issue simply has not been resolved satisfactorily. While Taiwan sets a residue level for beef, 

they continue to discriminate against pork. This simply ignores 

science and plainly does not make sense. 

In addition, I will also point out that the Taiwanese promised me 

that they would fix this issue after their last presidential election. 

I think we are a year beyond that, and they have not kept that 

promise. So could you assure us in some way, and particularly 

Iowa pork producers, that this issue is going to get resolved and 

Taiwan is going to take down this unjustifiable barrier to U.S. 

pork? If you cannot do that—I mean, if you cannot assure us of 

that—tell us the extent to which we would take actions through 

the WTO. 

Ambassador MARANTIS. Senator, thank you for raising that issue. 

I was just in Taiwan a week ago discussing the range of our trade 

and investment relationship with our counterparts. We had good 

news on the beef side of the house with respect to establishing a 

Maximum Residue Limit for beef, but you are absolutely right that 

we are not there yet on pork. It is a priority for us, and it is an 

issue that we will continue to press with the Taiwan authorities. 

Senator GRASSLEY. And, if they do not take action, are there any 

plans to take a case to the WTO? 

Ambassador MARANTIS. I think what we would want to do is to 

work with the industry and you to determine what are the best 

25 

steps to encourage the Taiwan authorities to do the right thing on 

pork. 

Senator GRASSLEY. All right. I will just express my own view on 

that, and that is that I think we have been working on this so long, 

it is about time to throw in the sponge that there is going to be 

any faithful negotiation with them and that we need to take other 

action. I know that will be your decision, but that is my opinion. 

A number of U.S. companies have come to me recently to express 

frustration with what they see as a growing number of countries 

using discriminatory practices on local content requirements. For 

instance, India is attempting to implement such a requirement on 

some technology firms. 

Many of these countries, including India and Brazil, receive preferential treatment for their products under GSP. Has the administration considered using its GSP to limit or eliminate privileges for 

countries like India that impose these discriminatory measures on 

U.S. companies? 

Ambassador MARANTIS. Senator, thanks for raising the issue of 

localization and local content requirements. It is a huge problem, 

and we are seeing it proliferate in various markets. In India, as 

you mentioned, we recently filed a WTO case challenging local content requirements in India’s national solar mission. 

You asked about GSP, Senator. We have a variety of tools at our 

disposal and need to look very carefully at which ones are the most 

effective in addressing the proliferation of local content requirements in India and elsewhere. 

Senator GRASSLEY. All right. You have already been asked several questions about Japan and TPP, so I am going to pass over 

that and ask my last question. The European Union’s renewable 

energy directive now being implemented by some European countries poses a significant and unfair barrier to bio-diesel and our 

feedstocks from the U.S. The renewable energy directive imposes 

greenhouse gas emission reduction requirements and sustainability 

standards that are simply inappropriate. 

I understand there has been an effort by your agency to negotiate these issues bilaterally with the E.U. and DG Energy in Europe, and they have refused. Can you confirm for me that these 

issues with the E.U. renewable energy directive will be addressed 

during the U.S.-E.U. trade negotiations that have just been set up, 

or are starting to be set up? 

Ambassador MARANTIS. Senator, I am not familiar with this 

issue. I will check back with our staff and will get back to you this 

afternoon. 

Senator GRASSLEY. Can you give me a written response then, 

please? 

Ambassador MARANTIS. Yes. 

Senator GRASSLEY. Thank you very much. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. 

Senator Menendez? 

Senator MENENDEZ. Thank you, Mr. Chairman. 

Ambassador, last year I raised, and I think Senator Hatch did 

earlier, the issue of regulatory protection of biologics in the context 

26 

of ensuring that the TPP is truly a 21st-century trade agreement 

with the highest standards of protection for intellectual property. 

Correct me if I am wrong, but it is my understanding that negotiations on the pharmaceutical intellectual property text are still 

ongoing and that you have not yet tabled a proposal for 12 years 

of data protection for biologics. 

These protections enjoy strong bipartisan support from Congress, 

as our highly innovative pharmaceutical industry supports millions 

of high-quality jobs, and a lot of us would like to see a TPP agreement that builds on the strong IP protections in the U.S.-Korea 

Free Trade Agreement. 

As any renewal of TPA would likely include similar negotiating 

objectives, is it the administration’s plan for the TPP to table 12 

years of data protection for biologics as set out in U.S. law? 

Ambassador MARANTIS. Senator, we agree with you that biologics 

are a vital area of pharmaceutical innovation. I do not know yet 

what we are going to do with respect to the term of data protection 

in the context of TPP. We have been talking to our trading partners very seriously about that. It is an area where we have been 

in consultation with this committee. We do not have a position yet 

and are continuing to formulate it. 

Senator MENENDEZ. What type of opposition are you getting from 

the trading partners? 

Ambassador MARANTIS. There is a lot. It is a new area. It is a 

new area of innovation and different in how our TPP partners treat 

biologics. Some do not provide protection, some do, so we are trying 

to strike the right balance between flexibility and specificity. We 

look forward to working with you to strike that balance. 

Senator MENENDEZ. Well, it is one of the areas that I am going 

to be looking towards in terms of judging whether or not we can 

be supportive. 

Let me turn to another area that in past trade hearings I have 

emphasized: the importance of ensuring that our trading partners 

comply with the commitments they make. Our companies face discriminatory measures and market access limitations in countries as 

diverse as China, India, and Argentina. 

Theft of U.S. trade secrets is an increasingly urgent problem. We 

have the Wiley publishing company in New Jersey, one of the largest publishing companies in the world of scientific manuals. In a 

recent meeting with their board, they told me how their manuals 

get stolen in China with impunity. 

So, as our firms and workers face competition from large stateowned companies, like in Russia and China and elsewhere, that 

compete globally, they are not limited by the normal rules of business competition, unfortunately. So I would like to have you elaborate on your earlier comments regarding the administration’s efforts to enforce our trade agreements; particularly, what is USTR’s 

plan for using the International Trade Enforcement Center and 

other mechanisms to ensure trading partners fulfill their obligations, eliminate barriers, further open their markets, improve protections, particularly those markets such as China, Russia, India, 

and Argentina, with long histories of raising obstacles to U.S. companies. 

27 

As part of that answer, given comments in your testimony about 

lack of resources, how does the administration intend to organize 

its financing to continue prioritizing enforcement? An agreement— 

any agreement—is only as good as that which is enforced. Some of 

us believe that on the enforcement side, we have not been as aggressive as others. 

Ambassador MARANTIS. Senator, I could not agree with you 

more. Enforcement is—— 

Senator MENENDEZ. You can stop right there. [Laughter.] 

Ambassador MARANTIS. All right. 

Senator MENENDEZ. No, no. Go ahead. I am sorry. 

Ambassador MARANTIS. Enforcement is at the center of the President’s agenda. We open markets through trade agreements, but we 

have to make sure that Americans get the benefit of the bargain 

of those trade agreements, and that is through enforcement. We 

have had a very vigorous enforcement regime. We have brought 19 

WTO cases since 2008. 

With the creation of the ITEC, the Interagency Trade Enforcement Center, it has given us the ability to leverage interagency resources to be able to bring enforcement cases. ITEC’s role has been 

fundamental in our ability to launch a recent case against China 

affecting autos and auto parts, as well as a recent case against Argentina affecting import licensing for U.S. exports. We will continue to place a very strong priority on enforcement and look forward to working with you and this committee as we do so. 

Senator MENENDEZ. And you have the resources, you believe, to 

do it effectively? 

Ambassador MARANTIS. As I had mentioned before, Senator, we 

have so much on our plate—enforcement of the various trade 

agreements—that the sequester cuts and the additional $1-million 

cut in the CR has the potential to significantly affect our ability to 

carry out these trade agreements simultaneously, as well as continue the vigorous enforcement that has been a hallmark of the 

President’s trade agenda. 

Senator MENENDEZ. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. 

Senator Wyden? 

Senator WYDEN. Thank you, Mr. Chairman. 

Mr. Marantis, welcome. Thank you for always being so helpful. 

As you know, I chair the Finance Committee Subcommittee on 

Trade, and we were also trying to deal with timber this morning, 

so I apologize for being late. 

I want to get your sense about the next steps, particularly as it 

relates to solar and renewable energy, because my sense is we are 

really at a fork in the road with respect to our policy in this area. 

As you know, American companies basically have had to stand up 

for their rights. 

I mean, they have had to stand up to dumping and unfair subsidies and file all these cases. As a result, I think it is fair to say 

there is a fair amount of market uncertainty now with respect to 

renewable energy, and particularly solar. 

So it seems to me there could be some real value in the United 

States looking to put together what I have essentially called, in 

terms of my own thinking, kind of global resolution. I would like 

28 

to know if you think there would be some value in that, and what 

role you think the United States might play in pursuing something 

like that. 

Ambassador MARANTIS. Senator, thank you for your leadership 

on this issue. This is a new and emerging issue, and we in the administration are committed to creating and maintaining green jobs. 

We are eager to work with you and stakeholders in terms of determining how to address this issue holistically and look forward to 

doing so. 

Senator WYDEN. We will pursue that with you in greater detail, 

but I will just tell you, I think this is an extraordinarily important 

moment for the administration. I think that, if the United States 

says there would be real value in moving now to try to put together 

a global resolution, that alone would perhaps bring a little bit more 

certainty and predictability to what is ahead. I think the United 

States ought to be leading those kinds of discussions, so I look forward to following that up with you. 

Let us go to the question of TPP and start with digital trade. As 

you know, I think that the Internet is essentially the shipping lane 

of the 21st century. I think you look back at what hearings were 

in this room 25 or 30 years ago, and it is obviously very different 

in terms of the opportunities for digital goods and services. 

Our problem is, we take steps here in our country to protect our 

kind of key emerging industries in the tech sector from discrimination and ensure they have a set of rules that is going to allow them 

to prosper and grow, and then the threat is that we will essentially 

have a variety of practices, sometimes it is out-and-out censorship, 

but there are a whole host of other kinds of barriers that get imposed and, in effect, not only can unravel gains we have made in 

the United States, but hamper our ability to get our digital goods 

and services into other markets. 

Will the administration make this a priority to ensure that there 

is a pro-growth, non-discriminatory focus with respect to digital 

trade for the TPP? 

Ambassador MARANTIS. Senator, thank you for your longstanding leadership in this area and for pushing us so hard in it. 

Yes, absolutely, this is a huge priority of ours to pursue progrowth, non-discriminatory market-opening disciplines in the TPP, 

as well as in the international services agreement on digital trade. 

We look forward to working with you to ensure that they are as 

strong as they can be. 

Senator WYDEN. One last question. As you know, in our part of 

the world there is great concern about a number of other economic 

issues: footwear, clothing, and others. My sense is, in the past 

there has not been sufficient focus on the global supply chain as 

it relates to these kinds of industries. 

Can you assure the committee that the administration’s part of 

TPP—and it is not just footwear and clothing, which I have raised, 

but the global supply chain generally—will be a bigger part of future trade agreements starting with the TPP? 

Ambassador MARANTIS. Yes, Senator. The beauty of the TPP is 

we have the opportunity to rationalize supply chains with the most 

competitive region in the world, with the effect of creating and supporting more jobs for us here at home. So this is a big priority of 

29 

ours, and again, as in other areas, we look forward to working 

closely with you. 

Senator WYDEN. I think, Mr. Chairman, my time is about up. 

That is an area I would like to follow up with you on. I remember 

when you chaired the Trade Subcommittee that issues like the 

global supply chain, those certainly did not carry the same importance they do today. I would like to follow that up and work with 

you on it. 

The CHAIRMAN. Sounds good. Thank you, Senator. 

Senator Thune? 

Senator THUNE. Thank you, Mr. Chairman, for holding this hearing today, you and Senator Hatch. I also want to thank Ambassador Marantis for your willingness to testify. We all know the importance of trade and how vital it is to our economy and to improving America’s competitive position in the world. 

We always hear the statistic that 95 percent of the world’s population lives outside the United States, and yet the United States 

and Americans generate more than one-fifth of the world’s income. 

The only way that we are going to be able to maintain that level 

of income is to open new markets and expand the sale of Americanmade goods and services. 

So I want to commend the administration for recognizing the importance of expanding opportunities for trade. That said, I am troubled by the administration’s lack of commitment regarding a request for Trade Promotion Authority, which expired back in 2007. 

We all agree and recognize the importance of trade agreements 

like the E.U.-U.S. agreement, like TPP, but we also have to recognize how important Trade Promotion Authority is to ultimately getting those approved by Congress. If we do not have Trade Promotion Authority, a negotiated agreement may not be able to pass 

Congress, and we are not going to get any action on lowering tariffs, eliminating non-tariff barriers, or increasing American exports. 

So I would hope that the first order of business for the next 

Trade Representative will be to work really hard on getting Trade 

Promotion Authority put back in place. 

I was pleased to see the recent statement by the Japanese Prime 

Minister regarding Japan’s desire to join the TPP negotiations. 

They are the world’s 3rd-largest economy and have historically 

been a very important market for American agricultural exports, 

but there remain some significant outstanding issues that need to 

be addressed concerning persistent barriers that they put in place 

to certain segments of American agriculture. 

So I guess I would ask if you could talk about the potential benefits to the United States and our agricultural economy from Japan’s inclusion in the Trans-Pacific Partnership, and how will 

USTR evaluate whether Japan is truly ready to join those negotiations. 

Ambassador MARANTIS. Thanks, Senator. 

You point out Japan is the world’s 3rd-largest economy. They are 

our 4th-largest trading partner. There are huge opportunities, huge 

untapped opportunities, in our trading relationship with Japan. We 

do have concerns. They are concerns that we are all familiar with 

on autos, on insurance, on non-tariff measures, and on ensuring 

that Japan is able to live up to the high standards we are negotiVerDate Nov 24 2008 17:23 Jan 28, 2014 Jkt 000000 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 R:\DOCS\86343.000 TIMD
30 

ating in the Trans-Pacific Partnership. It is work that we are continuing to do with our counterparts in Japan. We have made 

progress, and we will continue that work in close consultation with 

this committee. 

Senator THUNE. Let me ask you another question that deals with 

the E.U.’s recent decision to impose a 10-percent duty on all imports of ethanol from the United States. Their ethanol production— 

people who are in that industry in this country believe that what 

the E.U. did in imposing a country-wide antidumping duty on all 

U.S. ethanol imports is both unprecedented and unsupported from 

a legal standpoint, and that it will completely close the E.U. to U.S. 

ethanol. 

What action is the USTR prepared to take to challenge this act 

by the E.U., and what impact do you think the E.U.’s decision 

might have regarding the future of our trade relationship with 

them? 

Ambassador MARANTIS. Senator, let me take that question back 

and get you an answer. I am not familiar with the issue as well 

as I probably should be to answer this question here, but we will 

get back to you today. 

Senator THUNE. All right. That would be great if you could. I 

think that is an issue that could have some bearing on some of the 

discussions that are going on about our opening up additional trade 

opportunities between the U.S. and Europe. 

Just a final point. I come back to where I started, and you probably answered this from a number of my colleagues already, but 

what is the administration’s current posture with regard to Trade 

Promotion Authority? I mean, why have we not received a request 

from the administration for TPA, and what is being done about 

that? 

Ambassador MARANTIS. Senator, we have heard—we had calls 

from you and others on this committee—loud and clear about moving forward on TPA. We discussed today so many great initiatives 

that we are pursuing as part of our job-focused trade agenda and 

the importance of TPA as a tool in furthering that. We stand ready 

to begin our work with this committee on TPA. 

Senator THUNE. Well, I would say the sooner, the better. 

Ambassador MARANTIS. All right. 

Senator THUNE. I hope we get that going. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator, very much. 

I just have a couple of quick questions. One is, with the OIE, the 

World Organization for Animal Health, now stating that U.S. beef 

is safe, which is a higher level of protection than before, how are 

we best utilizing that around the world? In what countries will that 

have the greatest potential? 

Ambassador MARANTIS. Senator, it is great news that the OIE 

has recommended that the U.S. be given a negligible risk status. 

We have had a good year on beef. Our exports are at an all-time 

high. Our beef agreement with Japan has just gone into effect. 

That will present hundreds of millions of new export opportunities 

for safe and delicious beef from Montana and elsewhere. 

The OIE negligible risk classification should help us in the remaining markets that are not open to U.S. beef, China and others, 

31 

and we will use this new certification to work very strongly with 

our trading partners to ensure that they give us access on beef. 

The CHAIRMAN. What leverage do we have on China? When you 

answer that question, I would note that China, Japan, and South 

Korea are trying to put together their own trade agreement while 

we are working on TPP, which is interesting, because Japan wants 

to be in both. But how does that effort of those three countries 

interact with TPP? The other question I would ask is, generally, 

how can we use the OIE to get access to China? 

Ambassador MARANTIS. On the beef side, Senator, I think the 

positive news that we have had in South Korea and in Japan and 

in Taiwan will help us in our beef talks with China. More broadly, 

with respect to our relationship with China, there is so much going 

on. I mean, you have always said it best: our relationship with 

China is full of opportunities but full of real challenges. 

We are moving on all cylinders with China with our resultsoriented dialogue as part of the JCCT and the Strategic and Economic Dialogue. We have filed 8 cases against China in the WTO 

since 2008, and we are working closely with China to develop 

strengthened regional and global rules, whether it is in the WTO 

or in APEC. So there is a lot of work that we intend to continue 

with China in close cooperation with this committee. 

The CHAIRMAN. Thank you. Could you also just indicate the importance of the Codex standard for safe use of ractopamine and 

how we can leverage that to sell more pork and other related products? 

Ambassador MARANTIS. Senator, thanks for asking that. I mean, 

as with the OIE certification of negligible risk for beef, Codex established a minimal risk level this summer on ractopamine, and 

that should help us strongly in our efforts to ensure that countries 

do not impose non-scientific bans on our products that are treated 

with ractopamine. 

Taiwan has recently established an MRL for beef on ractopamine, but, as Senator Grassley mentioned, it has not done so with 

respect to other meat products. It is an issue that we are focused 

on with Taiwan, with Russia, and with our other trading partners. 

The CHAIRMAN. Thank you. Thank you very much. 

Senator Hatch? 

Senator HATCH. Well, thank you. I will not keep you much 

longer. 

There is a lot of activity in Geneva at the World Trade Organization. Efforts continue to complete a trade facilitation agreement before the ministerial in December. Negotiations on a plurilateral 

international services agreement should formally begin in April, 

and many are pressing to expand the International Technology 

Agreement. 

The Doha Round is not going anywhere that I can see, but perhaps some of these initiatives can demonstrate that the WTO can 

still produce results through negotiations. Can you please give us 

the administration’s assessment of what deliverables are possible 

from the WTO this year? 

Ambassador MARANTIS. Senator, thanks for raising that. It is important always to remind ourselves how important the WTO is and 

32 

how important it is for us to ensure that it remains robust and the 

center of multilateral trade liberalization. 

The WTO does so much in the area of its committees and overseeing implementation of the various WTO agreements. We are 

working now, as we prepare for the WTO ministerial that will take 

place in Bali at the end of the year, to come up with a practical 

but robust package that includes trade facilitation, that includes 

certain elements of agriculture and development, too. 

You also, Senator, mentioned the ITA. We concluded that 16 

years ago, but a lot has happened in those 16 years in the information technology sector, and we need to update the product coverage. 

We are accelerating negotiations to do so. As we speak, the U.S. 

is hosting negotiations in Geneva on expanding the ITA, and I am 

hopeful that we should be able to get this done as well by the next 

WTO ministerial. 

Senator HATCH. Let me just ask one other question. That is, last 

year the administration announced a new model Bilateral Investment Treaty, or BIT program. I want to underscore our interest in 

ensuring that you and your colleagues continue to pursue strong 

investment disciplines around the world, both through the enforcement of existing BITs and through the negotiation of high-standard 

investment disciplines and new trade agreements such as the TPP. 

These investment disciplines are critical, at least in my view, and 

I think in the view of many others here on the committee, to the 

ability of U.S. companies to manage risks associated with overseas 

investment and to ensure that they have access to a neutral dispute settlement process. 

Now, I raise this issue because I have grave concerns regarding 

Ecuador. There are real questions as to whether Ecuador is upholding the awards of arbitral tribunals. In addition, the president of 

Ecuador has indicated that he intends to review Ecuador’s participation in various BIT agreements with a view towards withdrawing from them in the near future. 

Now, I would just like to know what you and the administration 

are doing to send a powerful message to Ecuador that you expect 

them to live up to their treaty obligations towards our country, the 

United States. Further, Ecuador is emblematic of some of the challenges we face in the region, from Venezuela, to Argentina, to 

Cuba. 

Now, apart from TPP, what is the administration’s plan for engaging economically with our neighbors in South and Latin America? 

Ambassador MARANTIS. Senator, thank you. I could not agree 

with you more about the importance of our Bilateral Investment 

Treaties and our investment provisions. The whole purpose of them 

is to level the playing field so that we can help ensure that investment creates jobs here in the United States. 

With respect to Ecuador, we share your concern. We regret the 

deteriorating investment climate in Ecuador and the recent moves 

by Ecuador to withdraw from our Bilateral Investment Treaty. We 

have a petition from a company before us right now that is asking 

us to consider the revocation of GSP in Ecuador because of its deteriorating investment climate. We are looking at that seriously. 

33 

On Latin America, Senator, we agree strongly with you that the western hemisphere is a critical trading partner. We have a $1.5- 

trillion, 2-way trade relationship. We are moving with Canada, 

Mexico, Chile, and Peru in the TPP. We are working with Panama 

and Colombia on implementing our trade agreements. The President recently, in 2011, announced with Brazil an agreement on 

trade and economic cooperation. We are working on IP-related 

issues in that context with Brazil, as well as investment. 

So, we have a lot on our plate in the western hemisphere, and 

in Latin America in particular, and we look forward to working to 

continue to deepen that relationship with them. 

Senator HATCH. Well, thank you so much. This has been a great 

hearing as far as I am concerned. I want to thank you again for 

heeding my calls on TPA. I think it is time to get this done, and 

we have to do that. As you know, it is always a hassle up here, 

but that helps us to get through the hassle a lot easier than if you 

do not get it. 

So I cannot imagine anybody not wanting that who has to deal 

in this area, but we are grateful to you, grateful for your service. 

We miss you on this committee, but know that you have gone on 

to higher and greater things; we accept that. But thank you for 

being here, and we appreciate the testimony you have given to us 

today. 

Thanks so much for that, and we will recess until further notice. 

[Whereupon, at 12:19 p.m., the hearing was concluded.] 

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A P P E N D I X 

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