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S. HRG. 112–769 

PRESIDENT’S 2012 TRADE AGENDA 

HEARING 

BEFORE THE

COMMITTEE ON FINANCE 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

MARCH 7, 2012 

( 

Printed for the use of the Committee on Finance 

COMMITTEE ON FINANCE 

MAX BAUCUS, Montana, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

KENT CONRAD, North Dakota 

JEFF BINGAMAN, New Mexico 

JOHN F. KERRY, Massachusetts 

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 

ORRIN G. HATCH, Utah 

CHUCK GRASSLEY, Iowa 

OLYMPIA J. SNOWE, Maine 

JON KYL, Arizona 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

MICHAEL B. ENZI, Wyoming 

JOHN CORNYN, Texas 

TOM COBURN, Oklahoma 

JOHN THUNE, South Dakota 

RICHARD BURR, North Carolina 

RUSSELL SULLIVAN, 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 

Kirk, Hon. Ronald, U.S. Trade Representative, Executive Office of the President, Washington, DC .......................................................................................... 5 

ALPHABETICAL LISTING AND APPENDIX MATERIAL 

Baucus, Hon. Max: 

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

Prepared statement .......................................................................................... 33 

Grassley, Hon. Chuck: 

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

Hatch, Hon. Orrin G.: 

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

Prepared statement .......................................................................................... 36 

Letter from Senator Hatch to Secretary Geithner and Ambassador Kirk, 

dated September 28, 2011 ............................................................................ 39 

Letter from Senator Hatch to Secretary Geithner and Ambassador Kirk, 

dated January 18, 2012 ................................................................................ 40 

Letter from Secretary Geithner and Ambassador Kirk to Senator Hatch, 

undated .......................................................................................................... 42 

Kirk, Hon. Ronald: 

Testimony .......................................................................................................... 5 

Prepared statement .......................................................................................... 44 

COMMUNICATIONS

American Apparel and Footwear Association (AAFA) .......................................... 49 

Business Roundtable ............................................................................................... 54 

Center for Fiscal Equity .......................................................................................... 61 

Pharmaceutical Research and Manufacturers of America (PhRMA) .................. 66 

U.S. Chamber of Commerce .................................................................................... 74 

U.S.-China Business Council (USCBC) ................................................................. 86 

(III) 

(1) 

PRESIDENT’S 2012 TRADE AGENDA 

WEDNESDAY, MARCH 7, 2012 

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

The hearing was convened, pursuant to notice, at 10:05 a.m., in 

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

(chairman of the committee) presiding. 

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

Grassley, Roberts, and Thune. 

Also present: Democratic Staff: Russ Sullivan, Staff Director; 

Amber Cottle, Chief International Trade Counsel; Hun Quach, 

International Trade Analyst; Gabriel Adler, Senior International 

Trade and Economic Advisor; and Chelsea Thomas, Professional 

Staff. Republican Staff: Chris Campbell, Staff Director; Everett 

Eissenstat, Chief International Trade Counsel; Paul DeLaney, 

International Trade Counsel; and Maureen McLaughlin, Detailee. 

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

FROM MONTANA, CHAIRMAN, COMMITTEE ON FINANCE 

The CHAIRMAN. The committee will come to order. 

Winston Churchill once said, ‘‘Success is not final.’’ Last year was 

a banner year for trade. We passed 3 free trade agreements to open 

new markets for U.S. exporters. We renewed Trade Adjustment Assistance to help U.S. workers retrain for a global economy. We renewed two important preference programs to lower costs for U.S. 

manufacturers and retailers. 

We achieved great success, but we cannot let this success be 

final. We must press for continued success in 2012. An aggressive 

trade agenda is key to creating good jobs, including agricultural 

jobs in my home State of Montana. Export-related jobs pay 13 to 

18 percent more than the national average. 

Concrete goals will ensure continued success. We should set 3 

major trade goals for 2012: (1) approving permanent normal trade 

relations with Russia; (2) concluding the Trans-Pacific Partnership 

negotiations; and (3) addressing the challenges posed by China. 

First, we must seize the opportunity provided by Russia’s entry 

into the World Trade Organization. Russia is now the 6th-largest 

economy in the world and growing fast. Russia’s GDP is expected 

to surpass Germany’s by 2029, and Japan’s by 2037. 

For U.S. companies to take advantage of this growing market, 

Congress must repeal the Jackson-Vanik Amendment and establish 

permanent normal trade relations with Russia, known as PNTR. 

2 

PNTR is a 1-way street. Passing PNTR would double U.S. exports to Russia in 5 years, and we give up nothing in return. Not 

a single U.S. tariff will be reduced as part of this deal. If we do 

not pass PNTR by this summer, United States companies will lose 

out to competitors in China, Europe, and the 150 other members 

of the WTO. 

As our economy continues to recover, we simply cannot let that 

happen. I traveled to Russia last month, and I saw a country with 

vast potential for U.S. business. I also saw a country with a troubled democracy and human rights record. I heard about the importance of PNTR from some unexpected sources, namely democracy, 

human rights, and transparency activists. 

The activists all have serious concerns about Russia, but they all 

support PNTR. They explain that PNTR is no gift to the Russian 

government; to the contrary, they explained, repealing JacksonVanik weakens the ability of the hard-liners in Russia to rally antiAmerican forces. Repealing Jackson-Vanik will open Russia to U.S. 

companies and promote competition, openness, and transparency. I 

look forward to working with you, Mr. Ambassador, and my colleagues to repeal Jackson-Vanik this summer. 

The second ambitious goal that we should meet this year is the 

conclusion of the Trans-Pacific Partnership, or TPP, negotiations. 

The TPP provides a tremendous opportunity to tie together and expand trade among some of the most dynamic economies in the 

world. 

Japan, Canada, and Mexico now want to join the negotiations. 

Adding these countries would increase the number of TPP consumers by 50 percent. With their inclusion, the TPP would account 

for a full 40 percent of the world’s GDP. 

I know you are examining whether these countries are ready to 

quickly accept the high-standard commitments of the TPP. I look 

forward to consulting with you on that question. I hope that our 

new FTA partners—Colombia, Panama, and South Korea—are 

added to the list of potential TPP entrants as well. 

Our third goal for 2012 must be meeting the challenge of China. 

China is the 2nd-largest economy in the world, and the 3rd-largest 

destination for U.S. exports. It is a country exploding with potential for U.S. companies and their workers, but the challenges that 

China poses are also real. 

Senator Grassley and I requested a study that uncovered $50 billion of U.S. intellectual property stolen in China each year. China’s 

under-valued currency also continues to cost U.S. jobs. Too many 

Chinese imports to the United States are dumped or subsidized. It 

is past time to address these problems. 

A recent World Bank study outlined a series of dramatic steps 

that China should take to reform its own economy. They include 

shifting away from market-distorting policies that favor stateowned enterprises in China and harm U.S. exporters. I know you 

know all about this study, Mr. Ambassador, and I was briefed by 

Mr. Zoellick, the World Bank president, about it. 

What is important to me about this is that China requested the 

study. China knows that it has to be thinking ahead. China is a 

virtual partner in this study. There are five very significant recommendations, as you know, that the bank made to the governVerDate Nov 24 2008 20:50 May 22, 2013 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 R:\DOCS\80866.000 TIMD
3 

ment of China as to how to modernize its economy. I think it is a 

good framework for us to utilize as we are talking with China. 

China’s new leaders, I think, should heed this advice. But we 

cannot simply wait for China to act, we must obviously take steps 

here at home. The Interagency Trade Enforcement Center that the 

administration recently announced is an important step in that direction, and I hope the Senate will further enhance USTR’s effectiveness in dismantling trade barriers in China and around the 

world. This has been USTR’s core mission from day one. No agency 

is better positioned to perform this role than the USTR. 

I look forward to working with you, Mr. Ambassador, and also 

with other government agencies to address these important challenges that China poses. So let us heed Mr. Churchill’s advice and 

remember that ‘‘success is never final.’’ Let us build on the bipartisan trade successes of last year, and work together on even greater trade successes this year. By so doing, let us work together to 

create the jobs our economy needs right now. 

[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. Welcome, Mr. 

Ambassador. I appreciate the work you do. Mr. Chairman, I want 

to thank you for holding this hearing. Our economy demands a robust international trade policy, and my hope is that this hearing 

will contribute to the continued development of that agenda. 

To grow our economy and access new customers abroad, we need 

a trade policy that truly opens markets to U.S. goods and services. 

Trade already accounts for approximately 14 percent of our Nation’s GDP, and we have yet to reach our full potential. 

In 2011, our Nation’s exports totaled nearly $1.5 trillion. In 2010, 

companies from my home State of Utah exported over $13.8 billion 

in goods alone to countries around the world. Last year, President 

Obama finally sent to Congress our long-stalled free trade agreements with Colombia, Panama, and South Korea. Congress readily 

approved them. As a result, the American worker can soon harvest 

the market access opportunities that they bring. 

These are positive developments, but the fact remains that President Obama delayed sending the agreements for years, while he 

pursued what we consider to be a misguided health care law, and 

other domestic spending programs. 

Now that the trade agreements are law, President Obama is 

eager to take the credit. Yet it is important to remember that it 

was President Bush’s vision of an aggressive market-opening U.S. 

trade policy that made all 3 trade agreements possible to begin 

with. 

President Bush believed strongly in the power of trade, and 

matched his belief with action. He relentlessly pursued Trade Promotion Authority and, once achieved, quickly negotiated 12 free 

trade agreements with 17 countries. Even U.S. participation in the 

Trans-Pacific Partnership, which some view as President Obama’s 

4 

signature trade initiative, was actually initiated by President Bush 

and his team in 2008. 

The United States needs that same level of commitment and 

leadership from our President today if we are going to create the 

framework for prosperity tomorrow. Our workers and job creators 

face significant and growing challenges in the world. There are 

over 300 trade agreements in force around the globe, but the U.S. 

is a party to only 14. 

China has been growing at an average rate of between 8 and 10 

percent for many years, and several studies project China will surpass the United States as the world’s largest economy over the 

next decade. Meanwhile, the U.S. economy is projected to grow at 

around 2.3 percent this year, too low to have much impact on the 

persistently high unemployment rate we have suffered under this 

administration. 

Unfortunately, instead of the strong leadership and bold trade vision that America needs to grow the economy, our President is satisfied with just nibbling at the edges of a comprehensive and coherent trade agenda. I think it is time to move past the achievements 

made possible under Trade Promotion Authority of 2002 and move 

forward with a new trade agenda of substance to address the opportunities and challenges the world presents now. 

Mr. Ambassador, I believe you are willing to do that, and I have 

great respect for you in that regard. The President’s new legislative 

trade priority, securing permanent normal trade relations with 

Russia, is, in my opinion, a poor substitute. 

The President would have the Congress pass PNTR and ignore 

Russia’s rampant corruption, theft of U.S. intellectual property, 

poor human rights record, and adversarial foreign policies for a 

market that amounts to 0.05 percent of U.S. exports. Moreover, it 

is a market we will have access to anyway, on an MFN basis under 

the terms of our 1992 trade agreement, once Russia joins the WTO. 

I just wish the President and his administration were straight 

with us and the American people. We hear a lot of rhetoric about 

how the President will only pursue trade policies consistent with 

his values, especially when it comes to the labor policies of our 

democratically elected friends in Latin America. But somehow 

those values vanish in the context of trade with Russia, a corrupt 

and autocratic regime. 

A quick review of the Obama administration’s other trade priorities reveals a similar lack of substance and vision. The President’s 

most recent executive order, creating an Interagency Trade Enforcement Center, an event Ambassador Kirk called the most significant commitment of resources and expertise devoted to trade 

enforcement in 50 years, appears to do nothing more than detail 

personnel from one agency to another, while replicating the core 

statutory mission of the Office of the U.S. Trade Representative. At 

the same time, the President seeks to end USTR’s special role in 

trade policy through a trade agency reorganization, ending 50 

years of achievement by a talented, nimble, and effective agency. 

Now, we need less hyperbole and more concrete action. We can 

start with Trade Promotion Authority. I was quite disturbed to 

hear comments that the President will seek TPA when he decides 

5 

that he needs it. TPA is not something the President asks for after 

an agreement is negotiated. 

TPA establishes the foundation upon which trade agreement negotiations and meaningful consultation take place. Article 1, section 8 of the Constitution vests Congress with the authority over 

tariffs. Absent congressional delegation of that authority, and consensus directives through TPA, the President has no authority or 

guidance from Congress upon which to negotiate. 

Federal Register notices and staff-level meetings are not a substitute for TPA. Moreover, many of the elements of the current 

Trans-Pacific Partnership negotiation do not reflect congressional 

directives. 

Finally, few countries will conclude a meaningful trade negotiation with the United States unless the President has the authority 

to negotiate through TPA. But TPA will not become law without 

sustained engagement by the President in a substantive and meaningful way. 

Now, I do appreciate the President’s interest in concluding the 

Trans-Pacific Partnership agreement, but unless this administration engages with Congress on TPA, and soon, I fear that this important initiative will fail under the weight of empty rhetoric without action, and that the American people will be left with an 

Obama trade policy that is really nothing more than false hope. 

One final point. I did write you and Secretary Geithner about 

trade and currency policies on September 28, 2011 and January 18, 

2012. I might mention, the administration has not responded to either letter. The American people have a right to know what the 

Obama administration position is on currency. Therefore, I would 

ask that both my letters be placed into the hearing record at this 

point, and that the administration response be included in the 

record when it is received, Mr. Chairman. I thank you for this 

time. 

The CHAIRMAN. Without objection. 

[The letters appear in the appendix on p. 39.] 

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

The CHAIRMAN. Ambassador Kirk, you know the drill. It is all 

yours. Welcome. We welcome you before the committee. I personally think you have done a great job. I know you work very hard 

on behalf of the United States with respect to other countries. You 

have a small, nimble agency which I think increases its effectiveness, and I appreciate all that you have done. 

STATEMENT OF HON. RONALD KIRK, U.S. TRADE REPRESENTATIVE, EXECUTIVE OFFICE OF THE PRESIDENT, WASHINGTON, DC 

Ambassador KIRK. Mr. Chairman, thank you for your kind 

words. It has been a privilege to work with you and the other members of this committee. I very much appreciate the opportunity to 

visit with you today about our 2012 trade agenda. 

As you referenced in your remarks, Mr. Chairman, it was a little 

over a year ago that we shared with you our commitment to advance the trade agreements with Korea, Colombia, and Panama, to 

6 

work with you to renew Trade Adjustment Assistance, as well as 

extending our trade preference programs. 

At that time some, frankly, questioned whether our efforts were 

taking too long, or if we were seeking too much. But working with 

you and other members of Congress, all of this and more was accomplished last year. Together, we did the hard work necessary to 

pass these measures on one historic evening, and we built what I 

believe is a new bipartisan template for trade policy that opens 

markets and levels the playing field for American businesses, workers, farmers, ranchers, manufacturers, and service providers. 

This year, with your help, we will advance another ambitious 

trade agenda, and I would like to highlight just a few of our key 

initiatives from the President’s trade policy agenda for 2012. 

First, as you noted, the recent U.S.-Korea trade agreement will 

enter into force on March 15th. At the same time, we continue to 

work diligently with the governments of Colombia and Panama to 

fulfill their commitments, so that those agreements can come into 

force as soon as possible, as well. 

We are also moving full speed ahead in our negotiations in the 

Trans-Pacific Partnership. Building on the broad outlines of the announcement last November at APEC by our leaders, we seek to 

conclude a landmark TPP agreement this year. It will address 

cross-cutting issues, such as promoting regulatory coherence among 

our partners, and participation of more small businesses in AsiaPacific trade, as well as regional supply chains that promote U.S. 

jobs. 

As we consider the entry of additional countries, we will continue 

to coordinate closely with you to ensure that any new participants 

meet the TPP’s high standards and address concerns raised by you 

and other stakeholders. 

As we move toward negotiating outcomes, the administration will 

explore issues regarding additional Trade Promotion Authority necessary to approve the TPP and future trade agreements. This year 

we will continue our efforts to have even tougher trade enforcement, which has been a priority for the Obama administration from 

day one. 

Our new Interagency Trade Enforcement Center will challenge 

even more aggressively the kinds of unfair trade practices that 

USTR fights fiercely every day, from China’s improper restrictions 

on industrial raw materials to improper subsidies by the EU and 

other partners. 

As we consider enforcement, I want to especially thank this committee for working together to defend the rights of U.S. workers 

and businesses who face unfairly subsidized imports from countries 

like China, and you stood up for them by working to pass, in a bipartisan manner, legislation to address the GPX lawsuit. 

This year we are also ready to seize the benefits and enforcement 

tools available to the United States as Russia seeks and prepares 

to join the World Trade Organization. To do so, we must work together to terminate Russia’s Jackson-Vanik status as soon as possible. Only then will American firms enjoy the same benefits of 

Russia’s WTO membership as our international competitors. 

President Obama’s pursuit of enhanced trade to support American jobs extends across all geographic regions and all major ecoVerDate Nov 24 2008 20:50 May 22, 2013 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 R:\DOCS\80866.000 TIMD
7 

nomic sectors. At the President’s direction, we are engaged with 

the European Union to deepen our trans-Atlantic trade relationship, and we are also eager to work with Congress to make immediate progress with sub-Saharan Africa as well as CAFTA countries 

on issues like third-country fabric and textiles and apparel rules of 

origin. 

At the World Trade Organization, we will continue to look for 

fresh, credible approaches to market-opening trade negotiations in 

the Doha Development Round, and along with it plurilateral options such as services. Working together, we can stay on track to 

meet the President’s goal to double U.S. exports and support more 

jobs for more Americans. I appreciate your thoughtful consideration 

of these critical issues and your continued support of a forwardleaning, job-creating trade agenda. 

Thank you. 

[The prepared statement of Ambassador Kirk appears in the appendix.] 

The CHAIRMAN. Thank you, Mr. Ambassador. 

I would like to talk a little bit about Russia PNTR. What benefits 

will U.S. companies receive when Russia joins WTO? 

Ambassador KIRK. First of all, I appreciate your comments in 

your opening remarks, Mr. Chairman. I would associate myself 

with all of them. 

Were we to not address the Jackson-Vanik application of Russia, 

we would be limited to those benefits per our bilateral agreement, 

but we would lose all of the ability to enforce them and hold Russia 

accountable to the commitments it is making as a member of the 

World Trade Organization. 

If we act as you have suggested, and we agree to lift the JacksonVanik restrictions and extend to Russia permanent normal trade 

relations, then our exporters, our farmers, and ranchers not only 

have the benefits of the tariff cuts, but more important, we have 

the ability to hold Russia accountable when they do not live up to 

those commitments. 

The CHAIRMAN. Now some people say, if the United States grants 

PNTR to Russia, the United States is giving something to Russia, 

when in fact the opposite is true. That is, if we repeal JacksonVanik and Russia joins the WTO, the Duma passes it, then frankly 

we will be getting something. That is, the United States’ people 

will be getting the benefits of the WTO. Whereas, if Jackson-Vanik 

is not repealed, the United States is not getting the benefits of Russia’s entrance into the WTO. Is that correct? 

Ambassador KIRK. That is absolutely correct. Mr. Chairman, 

your expression of it as a 1-way street is exactly correct. Russia is 

reducing their tariffs, bringing them down to the norms. The 

United States has to make not one single change in our laws, our 

tariffs, or duties. If Russia moves into the World Trade Organization and we do not act, then our exporters are going to be at a competitive disadvantage. This is decidedly in our interests to address 

this. 

The CHAIRMAN. Can you tell me, are Jewish groups in Russia in 

favor or not in favor of the repeal of Jackson-Vanik? 

Ambassador KIRK. Well, Mr. Chairman, you have the advantage 

of having been to Russia more recently than I have. I am a bit 

8 

hesitant to try to speak on behalf of a group as broadly as all Jewish groups in Russia. I will say many of those who advocated for 

Jackson-Vanik at the time, both in Russia and here, feel that it 

served its purpose. 

Jackson-Vanik was about allowing Russian Jews to be able to 

emigrate more freely from that country. I am told some 2, almost 

2.5 million Jews have now had that ability to do that, and they are 

living in Europe, the United States, many in Israel. So in some 

cases, Jackson-Vanik has served the purpose. 

The CHAIRMAN. It is my very strong impression that Jewish 

groups are in favor of repeal. I talked with a fellow, Rabbi Goldstein, who is one of the chief rabbis in Russia, and he told me he 

very strongly favors repeal of Jackson-Vanik. He even said to me, 

‘‘Senator, we will be your foot soldiers in the United States. I will 

organize in the United States, because it is just very important 

that Jackson-Vanik be repealed.’’ 

What about human rights groups? Human rights groups, for 

some time, have been using Jackson-Vanik as leverage. Is it your 

understanding that human rights groups in Russia favor or do not 

favor repeal of Jackson-Vanik? 

Ambassador KIRK. My sentiment is similar to what you expressed. While there are still very serious concerns about human 

rights and a more full seeding of democracy, they see the lifting of 

Jackson-Vanik—and frankly, Russia being a part of a rules-based 

system—as aiding that, as not being contrary to our broader concerns about human rights. 

The CHAIRMAN. All right. Now, I see Senator Cardin here. He 

and other Senators have raised various very important concerns 

about the Magnitsky case in Russia. That is, where a lawyer, 

Magnitsky, died while in prison. He could well have been murdered 

while he was in prison. My question is, when we address this issue 

of repealing Jackson-Vanik, there are some very serious issues the 

United States has with Russia. This is one. How do you suggest 

this be dealt with? 

Ambassador KIRK. Well, I believe we can do both. Senator Cardin 

has spoken out very strongly on this. I think, as you know, Senator, his concerns are shared by the administration. First of all, the 

administration has acted. The State Department’s policy right now 

is to deny visas to those who were involved in the torture or abuse 

of other human beings. 

This administration—President Obama issued an executive order 

that accomplishes, for the most part, what Senator Cardin is seeking to do by his legislation. But, as you have noted, I think we have 

to move on parallel tracks. We will continue to engage and press 

Russia on issues of human rights, but when it comes to Russia’s 

entry into the World Trade Organization, which they will do later 

this summer, it is equally important that we lift the Jackson-Vanik 

restrictions so that our farmers, ranchers, and businesses are not 

put at a competitive disadvantage. 

The CHAIRMAN. It is a very vexing question here, and that is 

Russia’s providing arms to Syria. That is pretty serious. Should 

that get in the way of repeal of Jackson-Vanik? 

Ambassador KIRK. Senator, I do not want to sound insensitive. 

We are very concerned, and I know the administration has spoken 

9 

very critically of Russia’s actions with respect to Syria, but I believe this Congress can address all of those, and do them on parallel tracks. It is still the responsible thing to do, to move as you 

suggested and lift Jackson-Vanik and grant Russia permanent normal trade relations status. 

The CHAIRMAN. Senator Hatch? 

Senator HATCH. Well, thank you, Mr. Chairman. 

Welcome, Mr. Ambassador. We appreciate you being here today. 

USTR’s fiscal year 2013 budget justification states, ‘‘In fiscal year 

2013, USTR will be finalizing the legal text of, and seeking congressional approval for, the first tranche of the TPP agreement, the 

President’s signature trade initiative, and is expected to begin integrating additional TPP members, including Japan, Canada, and 

Mexico, in what would be cumulatively the single-largest trade 

agreement initiative by trade volume in U.S. history.’’ 

Now, according to this statement, the administration intends to 

complete the TPP negotiation and get it approved by Congress before Japan, Canada, Mexico, or any other country, joins. Is that 

correct? 

Ambassador KIRK. Well, our first objective, Senator Hatch, is to 

complete work on the text—which was the directive our leaders 

gave us in APEC—and see if we cannot get that done this year. We 

welcome the expression of interest by Japan, Canada, and Mexico 

in particular. If you will recall, part of our rationale for moving forward with the TPP negotiations is, we see it as an open architecture. 

We believe this can be the vehicle by which we rationalize trade 

throughout the Asia-Pacific, but I want to be careful. I do not know 

that we have made a final decision that we have to conclude before 

we welcome others, but we want to make sure that any new partners understand the standards and objectives that we are attempting to achieve in the Trans-Pacific Partnership, and that they are 

willing to meet those standards before we bring them into the process. 

Senator HATCH. It also appears from this statement that President Obama has already decided to integrate Japan, Canada, and 

Mexico into the TPP. Now, that is correct, is it not? 

Ambassador KIRK. We have not predetermined anything. We 

very much welcomed their expression of interest, but as we have 

noted, and in working with this committee, we have a very defined 

process by which we work with you, and House Ways and Means 

and others, to make a determination for entering FTA negotiations 

with any partner. We have begun that process, but we want to 

work through that process before we make a final judgment. 

Senator HATCH. All right. Does the administration plan on concluding the TPP, the President’s signature trade initiative, without 

TPA? 

Ambassador KIRK. Well, we are working diligently, as you have 

noted, to try to conclude work on the text of the agreement. We will 

also engage with Congress on the steps that we would need to implement a new Trade Promotion Authority, not only for TPP but 

for others. 

But we believe not having TPA right now does not hinder those 

negotiations. We are proceeding as if we have had it. As you have 

10 

referenced, we have had, Senator, almost 350 consultations with 

Congress, so there are no surprises here, but we believe we can 

move forward on a parallel track. 

Senator HATCH. My staff is ready to sit down with your team to 

start negotiating the terms of the TPA today. Can we get those negotiations started on that basis? 

Ambassador KIRK. Senator, we are pleased, and we welcome you 

and your staff’s strong interest on this. At the appropriate time, we 

will be more than happy to sit down with you and other members 

to begin to develop the outlines of Trade Promotion Authority. 

Senator HATCH. All right. As you know, Mr. Ambassador, trade 

enforcement is a high priority for Senators on both sides of the 

aisle here in the Senate. This committee worked for years with 

USTR to ensure that American interests are defended and our 

agreements enforced. 

I am very troubled, however, that the pattern of the President’s 

trade policy by press release continues unabated. The creation of 

the Interagency Trade Enforcement Center is, in my opinion, a perfect example. 

Now, the ITEC was touted in the State of the Union address and 

promoted in multiple press releases and press calls with senior officials. Such a high public profile makes one think that the creation 

of ITEC is an event of great significance. In fact, during one of 

these press briefings, you yourself called the ITEC ‘‘the most significant commitment of resources and expertise devoted to trade 

enforcement in more than 50 years.’’ 

Now, despite deploying senior political officials to do press calls, 

no one from your office or the administration has offered to brief 

any Senator on this committee or our staff about this new initiative, not before, during, or after its creation. Now, is this what the 

President means by ‘‘unprecedented congressional consultations’’? 

Ambassador KIRK. Senator, I very much respect and appreciate 

your support for our trade initiatives. But I would have to note 

that, from the very beginning of the first trade agenda that we presented to this committee in 2009, the Obama administration made 

it plain that we believed, in order to get the American public back 

on board with our trade strategy, we could not just focus on negotiating FTAs, we had to be more faithful to enforcement. 

I would submit, respectfully, that we have a stronger record on 

trade enforcement than any administration over the last 20 or 30 

years. The President gave notice to the Congress that he wanted 

to address enforcement in his State of the Union address, that we 

were going to make this a priority. 

We have visited with a number of members of Congress and your 

staff on this, and we are moving forward with what I believe is an 

appropriate and a thoughtful approach to bringing all of our resources together so that our enforcement activities are not hindered, or at all slowed down, by a lack of resources. 

Senator HATCH. Well, my concern is, why no consultations on the 

ITEC? There have not been any consultations. 

Ambassador KIRK. Well, we have just created the ITEC, and we 

will be happy to continue to work with this Congress. But the 

President has made it known: we will not yield in our responsibility to stand up for the rights of American workers and manufacVerDate Nov 24 2008 20:50 May 22, 2013 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 R:\DOCS\80866.000 TIMD
11 

turers and farmers, and we will continue an aggressive trade enforcement policy to effectuate that. 

Senator HATCH. My time is up, Mr. Chairman. 

The CHAIRMAN. Senator Wyden? 

Senator WYDEN. Thank you, Mr. Chairman. 

Ambassador Kirk, it is good to see you. Thank you for always 

being so accessible. As chairman of our subcommittee here, our 

Trade Subcommittee, it has always been easy to get in touch with 

you, and I appreciate that. 

I want to start my questioning with the Anti-Counterfeiting 

Trade Agreement matter that you and I have been discussing. 

This, of course, is an international accord that seeks to establish 

online intellectual property rights and disciplines in the intellectual 

property rights area. 

As we have talked about, many in our country believe that it 

raises many of the same issues that have been on the table in what 

is called the Protect IP Act, and also the SOPA legislation, the Stop 

Online Piracy Act. 

Now, right before the hearing, the Obama administration sent 

me a letter indicating that they believe the agreement is legally 

binding, and that, of course, is in line with the conversation that 

you and I had late yesterday. So, I appreciate that. 

Let me turn now to some of the implications, since the administration has now—and it has been a long time in coming; we have 

been talking about that—finally articulated a position that the administration considers the agreement legally binding. 

So my first question is, if I and my colleagues here in the Senate 

pass legislation to enhance competition and innovation on the 

Internet that runs contrary to the provisions of ACTA, could ACTA 

party nations retaliate against the United States or sue us in international court if we pass legislation like that? 

Ambassador KIRK. Well, Senator, first of all, thank you for your 

strong interest in making sure the United States has the strongest 

intellectual property rights protection for our industries, since I 

think we all understand a critical part of our competitiveness lies 

in our innovation, and we have to combat piracy and theft of that 

innovation around the world. That is singularly what ACTA was 

designed to address. 

It would be difficult for me to answer a complete hypothetical on 

what other countries would do, but I would say ACTA, as in any 

other FTA that we have entered, does nothing to constrain this 

Congress from continuing to pass legislation to regulate in the interest of the safety, the health, and protection of America’s families 

and our economy. 

So, nothing in ACTA would constrain this Congress from acting 

in the future. If Congress were to address additional IPR protections, then at that time we would work with Congress to make sure 

that our international commitments are left in place, and advise 

what steps would be necessary to protect us then. 

Senator WYDEN. Mr. Ambassador, respectfully, I differ on this 

point. It seems to me that this really boxes the Congress in on 

some very important questions with respect to promoting Internet 

freedom, and competition and innovation on the net, because the 

Congress is now going to have to sort of be looking over our shoulVerDate Nov 24 2008 20:50 May 22, 2013 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 R:\DOCS\80866.000 TIMD
12 

der with respect to whether or not we have done something that 

could cause an active party nation to sue us. 

So my question on this point is, all over the world you have parliaments and legislators having debates, the people’s representatives, having debates on whether or not to pass ACTA. Why should 

the U.S. Senate not consider something like this? As you know, the 

traditional practice is, when something is considered a treaty, a 

binding agreement, it comes to the U.S. Senate. It comes to Chairman Baucus’s committee. Why should the Senate not be debating 

and considering something like this? 

Ambassador KIRK. Well, Senator, we have had, I think, lengthy 

conversations with you and your staff, and I know you have written 

us, State, and others, and we have given you a written response 

to that. We believe it is a legally binding agreement, entered by the 

executive administration with the authority given by this Congress. 

It has been used by previous administrations to enter agreements 

where Congress has frankly asked us to act. 

You mentioned the 2008 pro-IP Act. In that legislation, Congress 

expressly directs the executive branch ‘‘to work with other countries to establish international standards and policies for the effective protection and enforcement of intellectual property rights.’’ So 

this agreement was entered into with the express direction of Congress to take these steps to make sure American innovation is protected around the world. I will draw—— 

Senator WYDEN. Just on that point, Mr. Ambassador. Millions of 

Americans e-mailed and called the Congress with respect to Protect 

IP, and it was withdrawn at this time. 

Mr. Chairman, I know I will have some additional questions, and 

I thank you for your courtesy. 

The CHAIRMAN. Thank you, Senator. 

Senator Carper? 

Senator CARPER. Thanks. Thanks, Mr. Chairman. 

Mr. Ambassador, it is great to see you. The President has, I 

think, made a number of excellent appointments to his Cabinet, 

and I put you right at the top of the list. That is the good news. 

Unfortunately, I am the only one who feels that way. [Laughter.] 

Ambassador KIRK. I hope not, but thank you. 

Senator CARPER. No. I think we all feel that way. Thank you for 

the good work that you and your team continue to do. 

Believe it or not, we make a whole lot of things in Delaware that 

are sold all over the world. You must think I am Johnny One-Note, 

because one of the issues I talk with you most about is poultry. I 

like to think our economy sort of stands on 3 or 4 legs, including 

tourism, including agricultural, manufacturing, legal services. We 

have a lot of folks incorporated in our State. So, there is a lot of 

diversity to our economy. 

But our agricultural economy, which is pretty significant—very 

significant, actually—is 80 percent poultry. So that is one of the 

reasons that I am always mindful in raising this issue with you, 

and your folks, and with Secretary Vilsack. 

You all have been great, very, very supportive, and we are grateful for the attention that the President and the Vice President paid 

to this. We are not the only State that raises chickens, but we have 

13 

300 of them for every person in Delaware, so it is a matter of special concern to us. 

I think until just a couple of years ago, Russia and China were 

the top two countries for U.S. poultry exports. For every five chickens that are raised in the U.S., we export one. If you go back 20 

years ago, out of every 100, we exported three. So, there is a dramatic increase, I think almost a doubling of poultry exports just in 

the last 5 or 6 years. So this is a matter of interest to a bunch of 

States. 

But recently this has shifted as a result of factors including, as 

you know, Russia’s ban on U.S. poultry a couple of years ago and 

China’s imposition of unfair antidumping and countervailing duties. I really do appreciate the administration’s work on both of 

these issues, most recently with regard to the dispute settlement 

process, and the matter with China. 

As you know, the poultry industry, as I said, is really important 

to us. We export not only out of the Delmarva Peninsula, but all 

over the country. One out of every five chickens that we raise, we 

send someplace else, we sell someplace else. So, it is really important to try to open new markets where we can. 

Many believe that one of the new markets that could be very 

promising is India, and I would welcome any thoughts that you 

have there. We are not allowed to sell much poultry into India, but 

it could be a huge market for us. 

But many believe that the Trans-Pacific Partnership agreement 

will set the standard for agreements going forward, making it of 

the utmost importance that we ensure poultry producers get a fair 

shot there. 

Last year, I believe Mexico was the 2nd-largest market for U.S. 

poultry exports. Number two. However, it has come to my attention 

that the Mexican government has brought an antidumping case 

against the U.S. poultry industry, which the industry asserts is 

frivolous. I would be concerned in supporting Mexico joining the 

TPP discussions, if they were to impose the established duties on 

U.S. poultry. 

I am just going to ask if you might provide us with an update 

as to any action we are taking to resolve this particular situation 

with Mexico, and also any thoughts you have on the export of poultry to India. Thank you. 

Ambassador KIRK. Senator, thank you for your comments about 

our work. I would say broadly, I think all of the members of this 

committee understand how extraordinarily important export markets are to all agriculture. It is the most export-dependent of any 

industry. The good news is, over the past 2 years, as we have 

sought to meet the President’s goal of doubling exports, our agricultural exports are up dramatically. 

In fact, 2011 was a record year, just slightly under, I believe, 

$148 billion, and across the board. One of the reasons is that, as 

new consumers around the world have more money to spend, and 

they are moving from diets that may have consisted solely of rice 

and grains, they now have a need and a taste for protein. Typically 

they start with pork and poultry. So, this is significant to us. 

As you noted, we have challenged China’s antidumping duties 

they placed on U.S. poultry in the WTO, and frankly just yesterday 

14 

we requested consultations with India over actions they have taken 

to bar poultry in their market, for all the reasons that you articulated, and we continue to dialogue with Mexico over their actions. 

But I would note that still, as much as we are pursuing new 

markets, Canada and Mexico continue, in most cases, to be two of 

our best three trading markets around the world. But we will continue to aggressively work with our Secretary of Agriculture and 

others to make sure that we have access to these critical markets. 

Senator CARPER. All right. Well, it is important to a lot of States, 

and especially to ours and to Delmarva as well. So, I would just 

say ‘‘thank you’’ for raising these issues with India, Mexico, China, 

and others. I would just urge you to, as we say in Delmarva, keep 

squawking. 

Ambassador KIRK. We will keep squawking. I would note though, 

again, this is another reason we believe getting Russia into the 

WTO would give us an advantage we do not have, because we 

would have the ability to challenge some of their agriculture policies we believe are not based on sound sanitary and phytosanitary 

practices. 

Senator CARPER. Good. Good for you. Thanks so much. Keep up 

the good work. 

The CHAIRMAN. Thank you, Senator. 

Senator Roberts? 

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

holding the hearing. Thank you, Mr. Ambassador, for taking the 

time out of your very valuable time. Thank you for emphasizing the 

increase in our exports. That is certainly good news, in keeping 

with world demand. 

I have a repeat question that Senator Hatch brought up. As 

usual, he was right on target. The administration having TPA before trying to initiate other trade negotiations, I think that would 

signal the administration’s seriousness, not only to our TPP partners, but to the world, that the United States is ready to open markets for U.S. exporters regardless of where they are. 

Now, you said the administration will explore issues regarding 

additional Trade Promotion Authority necessary to approve the 

TPP and future trade agreements. What are we talking about? 

What issues do you expect to explore? 

Ambassador KIRK. Well, Senator, again, thank you for your 

strong support, particularly of our passing the trade agreements 

last year. 

One of the things we want to do is make sure that when we work 

with you, which we will to draft new Trade Promotion Authority, 

we are also addressing issues that are relevant in today’s economy. 

For example, when we last had TPA, it did not envision, perhaps, 

some of the challenges that we are trying to address in the TransPacific Partnership, of dealing with countries in which there is a 

predominance of state-owned enterprises or some of the issues that 

are imbedded in having a more digital economy and making sure 

that we have an open architecture for that. 

So we want to make sure that we engage with you on these nextgeneration issues so that it is broad enough that they can be addressed, not only in the Trans-Pacific Partnership, but in any future trade agreements we might see. 

15 

Senator ROBERTS. Well, we look forward to working with you on 

that. I am sorry the Senator from Delaware has left, indicating he 

has 300 chickens for every American. I was going to ask him if 

they were free-range chickens, but that is another issue that probably we do not want to get into. 

At any rate, we have more cows than people in Kansas. They are 

in a better mood right now. You have the same thing in regards 

to Texas. Give me an update on China, Taiwan, and Japan in regards to beef exports. We have talked about poultry, and we have 

talked about pork. Let us move to beef. My cowboys want to know 

why we are not exporting to those three countries. 

Ambassador KIRK. Well, Senator, as you know, those are critical 

markets to us, and we have been struggling for almost 10 years 

now to get back into that Asia-Pacific market. The good news is, 

our beef exports are up dramatically across the board, and particularly in Korea. 

We continue to work with this committee and others to get full 

normalization of our beef exports in all of those markets. So our objective for China, Taiwan, and Japan is no different than it is for 

other markets, and that is to have those countries allow our U.S. 

protein, which is some of the safest for consumers around the 

world, into those markets absent some sound scientific basis to 

keep it out of those markets. 

We have been pressing Taiwan and Japan in particular. I think 

you know we have pressed China. Secretary Vilsak and I have 

raised this at the highest levels. We are somewhat encouraged 

Japan is moving to a scientific study now to address some of the 

concerns we have raised, and hopefully we may be able to see some 

movement back into that market. We had what we thought was a 

common-sense agreement with Taiwan last year about this time, 

but as you know we retreated for them. But rest assured, this remains very high on our agenda. 

Senator ROBERTS. Well, I hope they can approach it with a sound 

science approach, as opposed to the political approach, which is 

very easy to do. I thank you for your cooperation with the Secretary. 

You have established—not you, but the administration has established—an Interagency Trade Enforcement Center. I thought that 

was brought up by Senator Hatch—and perhaps the chairman— 

and it was by executive order. If there is one thing I am a little 

fatigued about, it is basically that I am about executive orderedout. This is a new enforcement unit. I do not know how many folks 

you have envisioned. 

I do not know if they have parking places, and if they are permanent, and everything else, but I always thought that basically you 

folks did that at USTR, and I do not know why establishing another layer by executive order, not even coming to this committee, 

will increase your ability to better coordinate with existing traderelated organizations. So what metrics support this conclusion, this 

demand for enforcement? Where is the reason for this, and how 

many folks are you talking about now? 

Ambassador KIRK. Well, currently USTR—thank you. I appreciate all of the members’ comments about our work at USTR—the 

strength of it is, we are one of the smaller, more nimble agencies 

16 

of government. But what I have heard from members on both sides 

of the aisle, and you have heard from the administration, is we all 

realize that just entering new trade agreements is only half the 

story. We have to make sure we get the full benefits of them. 

One of the things that this committee asked me to do, when I 

came before you for a confirmation, was to enforce our agreements. 

Now, we have done, I think, a more than commendable job in doing 

that at USTR. For example, we have doubled the number of cases 

we have brought against China. We have probably a 99-percent 

success rate on cases we bring at the WTO. 

But the President believes we should not be constrained from 

moving as aggressively as we can, not just against China, but any 

of our trading partners, to deal with subsidies, to deal with unfair 

competition. And so, as part of the outgrowth of this National Export Initiative, the President has directed all of us in the administration to work more closely together. That is what we are seeking 

to do through this Trade Enforcement Center, and it will make 

sure that we are not resource-constrained as we seek to deal with 

unfair trade barriers around the world. 

Senator ROBERTS. I appreciate your answer. 

Mr. Chairman, my time is up, but I would only say that, if Senator Coburn was here, he would point out that the GAO has identified 32 areas of duplication in your annual report, and it would 

seem to me that you could do the job at USTR. You have a great 

record going. 

I do not know why you have to add an additional marine grade, 

and then call them something else, and have them enforce it. You 

are doing it. If you need more people you ought to just do it under 

the USTR. Why, by executive order, are we doing this? You do not 

have to answer that. I think you have already tried. 

Thank you very much, Mr. Chairman. 

The CHAIRMAN. Thank you. Thank you, Senator. 

Senator Grassley? 

Senator GRASSLEY. Mr. Chairman, I have a very short statement 

that I want to put in the record, then I will ask questions. Most 

of my statement is talking about the need for Trade Promotion Authority and that we need to be talking about that more. 

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

Senator GRASSLEY. Ambassador Kirk, welcome. I have the same 

interest that Senator Roberts had about the coordinating committee, or whatever it is. But I would like to ask you in addition 

to what Senator Roberts did, do you have a recent example of 

where USTR, or another agency, has failed to properly coordinate 

the trade enforcement matter, that you have not had cooperation? 

Ambassador KIRK. It is not that we have not had cooperation, 

but I think it is a thoughtful, appropriate step by the President to 

make sure we are being as efficient as we can. I would say, in some 

of our cases in particular that involve countries in which we have 

to translate huge volumes of documents, and in particular where 

we have to gather a lot of information, given the size, the modest 

size of our legal staff at USTR, we have to be very discriminating 

in which cases we take. 

17 

We have not in the past had translation services imbedded within our agency, so in many cases we are going to State and other 

agencies to get those. I think the President wisely brought all the 

agencies, whether it is the ITA at Commerce, elements of State, 

Agriculture, together to make sure we can work as cooperatively 

and efficiently as possible, and hopefully do it in a more costefficient manner to the taxpayers. 

Senator GRASSLEY. In regard to WTO and Russia, I will ask a 

question first, and then I want to say something about it. What assurances could you give me that the administration will succeed in 

getting an enforceable SPS agreement with the Russians on pork? 

You may recall that last year you and I exchanged issues on this. 

Quite frankly, I am surprised that this is still an issue. 

Unless I was misled, when Senator Leahy, I, and others were in 

Moscow last June, we discussed this with the Russian Foreign Minister. At that time there were meetings going on in Geneva over 

this issue, and of course Russia is very interested, at least it was 

under the previous administration, under Medvedev, to get into the 

WTO. So this is still an issue, evidently. So where are we on it? 

Ambassador KIRK. Well, as you know, because of the support of 

you and Chairman Baucus and many others and the leadership of 

our President, we are now in a position that Russia was formally 

invited to join the World Trade Organization at our 8th ministerial 

meeting in Geneva in December. Russia will finalize their process 

of what they need to do, probably sometime this summer, they 

have told us. 

So specifically to address your concerns about SPS, unless the 

United States lifts the Jackson-Vanik restrictions and grants Russia permanent normal trade relations status, we will be in the 

unique position that we will have some access to the tariff reductions because of our previous bilateral treaty, but we will not have 

the benefits of any of the enforcement ranges. 

So, in order for us to address Russia’s practices, for example, 

that you implied do not meet SPS standards, it is critical that we 

lift Jackson-Vanik and grant them PNTR so that we have full access to the range of enforcement tools that would be available 

through the World Trade Organization. 

Senator GRASSLEY. So in other words, we are not going to get out 

of Russia agreements that they are going to abide by the normal 

SPS agreements? We are going to have to let them into the WTO 

and then take them to the WTO to get what we consider ought to 

be a level playing field, even for their entrance into the WTO? 

Ambassador KIRK. No. No, Senator. I want to make it plain: Russia is making those commitments as part of their accession to the 

WTO. 

Senator GRASSLEY. All right. All right. 

Ambassador KIRK. Because we have Jackson-Vanik, we have had 

to invoke something called non-application, which means, if we do 

not lift Jackson-Vanik, then we do not have the benefits of those 

commitments that Russia has made. So, quite the contrary, they 

are making them, but for us to have the benefits of them, we need 

to grant them permanent normal trade relations status. 

Senator GRASSLEY. My last question would be, is the USTR going 

to use the opportunity of high-level discussions with the EU to adVerDate Nov 24 2008 20:50 May 22, 2013 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 R:\DOCS\80866.000 TIMD
18 

dress some of the challenges that U.S. agriculture faces with the 

EU? And you are engaging in these high-level discussions right 

now with the EU. 

Ambassador KIRK. We absolutely will, Senator. Again, we appreciate your strong support of our efforts. We had a very good success 

as a result of these negotiations. I think 2 weeks ago we announced 

a reciprocal certification unit for organic products. We still have 

challenges because of Russia’s renewable energy directive, and others. 

But, as part of this high-level working group, we are broadly 

having a discussion about all issues that would allow us to deepen 

our trade relationship, which by way of background is by far the 

strongest commercial relationship in the world. 

My directive to our team is that everything is on the table, but 

we should invoke the trade equivalent of the Hippocratic Oath and 

make sure we do no harm. But we are putting everything on the 

table. 

Senator GRASSLEY. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. 

Senator Menendez? Oh, sorry. Senator Thune has returned. 

Thank you, Senator. You are next. 

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

and the ranking member for having the hearing today. Ambassador 

Kirk, thank you for your willingness to testify. 

We all know how important trade is to our economy. Ninety-five 

percent of the world’s population lives outside the United States, 

yet we generate more than a fifth of the world’s income. 

So the way to maintain that level of income is to continue to 

open up markets and expand the sale of American-made goods and 

services. I may not agree with every approach to trade advocated 

by the President, but I certainly believe that, working together, we 

can continue what I think is an incredible success story that is 

America’s export economy. 

Just this week we saw—Chairman Baucus and I were able to 

work with our colleagues to get through the Senate something 

that—in a matter of days—is an important trade enforcement law, 

which around here, I might add, is warp speed. That does not happen very often. But I hope that the President will sign that into 

law, and I look forward to working cooperatively on a trade agenda 

moving forward. 

I wanted to highlight a couple of things quickly, if I might. The 

first is Japan’s inclusion, and the potential importance of that inclusion, in the TPP from the perspective of American agricultural 

exports. Japan is the world’s 3rd-largest economy, and has historically been a very important market for our exports. Their interest 

in joining TPP leads me to believe that they are committed to 

adopting the high standards of the TPP. 

However, there remain a significant number of outstanding 

issues that need to be addressed concerning the persistent barriers 

that they put up to certain segments of American agriculture, as 

well as autos and services, for that matter, and including issues regarding Japan Post. 

Can you assure me that you will remain vigilant in addressing 

these concerns so that, if Japan does eventually join the TPP negoVerDate Nov 24 2008 20:50 May 22, 2013 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 R:\DOCS\80866.000 TIMD
19 

tiations, we will be likely to see real benefits to our farmers, ranchers, manufacturers, and service providers? 

Ambassador KIRK. Senator, absolutely, I will give you that assurance. First of all, thank you, Chairman Baucus and other members 

of the committee, for the very important action that you took to 

protect American manufacturers and exporters against dumping, 

and the speed with which you addressed it. 

I do think that speaks well of how quickly we can work together, 

as a Congress, to do things that are in the interests of American 

businesses and workers. So, thank you for that. I think you know 

we have pressed, and are going to continue to press, Japan to fully 

open their market and meet their obligations with respect to opening their agriculture, and on insurance, whether they join TPP or 

not. 

I want to make it plain: we do not see any linkage of those. 

These are issues we have been pressing Japan for action on. Second, we welcome Japan’s interest in joining the Trans-Pacific Partnership as we do Canada’s and Mexico’s, but, as we have said to 

all of the members, this is something countries aspire to, and that 

means you have to be willing to meet the high standards we are 

seeking to achieve throughout the partnership and that everything 

has to be on the table. 

Now, we are encouraged with Prime Minister Noda’s leadership 

on this, but one of the things about our Federal Register system 

is, Japan knows fully the concerns that you have expressed, and 

other stakeholders, and we are going to engage them very honestly 

on how we would address those concerns, particularly with respect 

to autos, and the insurance markets, and agriculture. 

Senator THUNE. All right. Good. Thank you. 

As you probably know, my home State of South Dakota is a 

major ethanol producer. I would like to bring your attention to concerns I am hearing from ethanol producers regarding actions by 

Brazil, which consumes about a third of our ethanol exports and 

is America’s largest ethanol export market. 

Our Nation has gone from a net importer of ethanol as recently 

as 2008 to exporting 1.2 billion gallons last year, which far exceeds 

the export volumes of any other nation. Recently, however, the U.S. 

ethanol industry has complained that, while the U.S. has removed 

our barriers to ethanol imports, Brazil has been erecting barriers 

to our ethanol exports. 

Specifically the State of Sa ̃o Paulo, which serves as the entry 

point for almost three-fourths of all exports from the U.S., recently 

announced a discriminatory tax scheme, whereby imported ethanol 

must pay the ICMS sales tax at the point of Customs entry, while 

at the same time deferring payment of the ICMS tax for domestic 

product. 

As a result of this policy, American ethanol exports through Sa ̃o 

Paulo are being disadvantaged by requiring them to pay a tax upon 

entry, but at the same time a domestic product is allowed to pay 

the tax at a later date, if at all. In light of that, I would be interested in knowing what efforts you might be engaging in, or are 

planning to engage in, to address claims that these recent efforts 

are erecting technical barriers to trade, or otherwise preventing 

free and fair trade with Brazil. 

20 

Ambassador KIRK. Senator, we believe, as you do, this should be 

an open and unfettered market. I do think—and not to be repetitive—it is a very good-news story, how quickly we went from producing a limited amount of ethanol to being a net exporter. That 

is a tremendous export opportunity for us. We have heard from the 

same industries you have. We will use every bit of leverage we 

have, to be frank, including the forthcoming visit from President 

Rousseff, to raise these issues. 

When President Obama visited Brazil last year at this time, I 

think you know we created, through USTR, a trade agreement enhancement committee. We will be meeting next week, and we will 

raise all of these issues. We might, with your permission, like to 

reach out with you to get a little more background. 

Senator THUNE. Yes. We would be happy to provide that, and I 

hope that you would be able to engage them on this issue when you 

meet with them. That would be very helpful. 

Ambassador KIRK. We would be happy to. 

Senator THUNE. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Snowe? 

Senator SNOWE. Mr. Ambassador, welcome. 

Back in June, I sent a letter, along with some other colleagues, 

concerning the TPP with respect to the impact it would have on the 

rubber footwear industry. As you know, in our State, and actually 

in the country, we have the last rubber athletic footwear manufacturer, New Balance, that provides more than 2,000 jobs in this 

country and almost 900 jobs in the State of Maine. 

The concern is that the agreement will not exclude the reductions in duties on imported products from Vietnam, which is really 

the largest producer of rubber footwear, and would have a severe 

impact on an industry and jobs with respect to New Balance. 

So can you tell—I know we have had some conversations with 

your staff, and this is a very serious issue, because it would be to 

the detriment of this industry that is invaluable and manufactures 

shoes and footwear for our military as well. But it would provide 

a severe disadvantage to this industry, without question, since 

Vietnam pays on average 46 cents an hour, whereas New Balance 

pays $10 an hour. 

So can you tell us the status of those negotiations and discussions? Because I understand there will be a market access discussion with Vietnam with respect to the TPP. 

Ambassador KIRK. I am happy to try to provide further clarity 

on that. But again, thank you, Senator, for your extraordinary 

service to our country throughout your time in the Senate. 

Senator SNOWE. Thank you. 

Ambassador KIRK. I appreciate your education of me on a number of issues, from softwood lumber to footwear. 

Senator SNOWE. You have been very responsive, and I appreciate 

that. 

Ambassador KIRK. It has been a pleasure to work with you. 

Senator SNOWE. Thank you. 

Ambassador KIRK. I hope you believe that this administration, if 

anything, is wedded to a principle that we have to convince the 

American public, if we want them to believe in the power of trade 

21 

to improve our lives, that trade is a vehicle that not only gives us 

consumptive benefits, which is a great thing for all families, but 

trade is also a tool by which we create jobs. 

We have done everything we can, and are attempting in this 

TPP, whether it is in footwear or others areas, to make sure we 

have a proper balance, that we continue to give American families 

the consumptive benefits, but that we help Americans who are still 

making products, and doing what the President has simply said: 

we want to innovate, we want to make more products, and we want 

to sell them around the world. 

That is what we are attempting to achieve in our textile negotiations in the Trans-Pacific Partnership. I have visited a number of 

times with the textile industry. Good or bad, it would not surprise 

any of you, I think they feel, as an industry, they have perhaps 

been harmed more by our trade policy over the last 30, 40 years. 

But what is remaining of our textile industry is vibrant. It is 

fully integrated in many cases. We want to make sure that what 

we achieve is a proper balance in this Trans-Pacific Partnership, 

and does not operate to their disadvantage. 

We want the benefits of whatever we do in textiles to accrue to 

the members of the Trans-Pacific Partnership and not other countries. That is the balance that we are seeking to achieve, and that 

is what we sought to achieve with what we have put forth on the 

table in terms of the proposals on rules of origin and yarn forward 

provisions. 

Senator SNOWE. Well, I just cannot underscore enough the severe 

impact it would have on a manufacturer like New Balance, which 

is the last rubber athletic footwear manufacturer in the United 

States, if those reduced duties are included, because it would be 

devastating. 

We have lost, basically disproportionately, that part of the industry with respect to shoe production in America. I know when I 

began in Congress, I think that perhaps foreign import penetration 

was about 45 percent. Obviously now it is up to 99 percent. There 

is very little left in the United States, and New Balance happens 

to be an ideal example of how they can succeed. They have been 

innovative. They have a remarkable workforce. They are technology-driven. They do extraordinary work, and they should not be 

penalized. 

So, if this is allowed—I mean, the disparity between wages alone, 

I think, illustrates the problem, and the inequities that exist. So, 

if we enshrine that in this trade agreement, it absolutely would 

devastate thousands of jobs that this great company provides here 

in America. So, I hope that we can continue to work on that. 

Even a phase-out period would not work in this instance because 

of the significant difference between wages between these two 

countries alone. So I cannot underscore—in fact, I have sent you 

a letter to invite you to come and visit Maine and New Balance. 

We have several facilities in Maine, and I think it would be worth 

your while to see a rarity that now exists in America, with respect 

to manufacturing shoes, and in this case athletic footwear. 

Ambassador KIRK. Well, I appreciate that invitation. As you 

know, I have visited Maine before with Congressman Michaud and 

visited paper mills. I had some extraordinary blueberries. But I 

22 

would welcome the opportunity to come back and learn more about 

footwear. But I would note—because L.L. Bean will call, and others—I know New Balance is the last tennis shoe maker, but we do 

have a handful of industries that make footwear. 

Senator SNOWE. Right, they do. Like, literally a handful. I mean, 

we have lost 28,000 jobs in this industry since 1997. There is no 

reason to lose this invaluable industry. I cannot underscore that 

enough, and I hope that we can continue to have those conversations. 

Ambassador KIRK. We absolutely can. 

Senator SNOWE. All right. Thank you. 

Ambassador KIRK. Thank you. 

The CHAIRMAN. Thank you, Senator. 

Senator Menendez? Well, I see Senator Cardin just arrived. 

Technically, he is ahead. 

Senator Cardin, are you ready, or do you want to wait? 

Senator CARDIN. I am ready. I rarely have a chance to go before 

Senator Menendez. 

The CHAIRMAN. Here is your shot. Here is your chance. 

Senator CARDIN. I love the way seniority works. I am going to 

take my time now. Thank you, Mr. Chairman. 

The CHAIRMAN. Go ahead. 

Senator CARDIN. I am ready to go. 

The CHAIRMAN. This is the special seniority rule. 

Senator CARDIN. I appreciate that. 

First, Mr. Ambassador, thank you very much. I listened to your 

exchange with the chairman as it related to the human rights dimension of Jackson-Vanik. I guess I want to make a couple of 

points, if I might, just to start off. The first is that we all understand that the primary reason why Jackson-Vanik was enacted was 

to deal with the emigration issue from the former Soviet Union. 

That issue is nowhere near the dominant issue it was when it was 

first enacted. 

I might tell you, I am proud of what that provision did. There 

were naysayers back in those days who said, do not mix trade with 

human rights. The fact that we were able to put such a spotlight 

on the human rights issue has allowed thousands of people to be 

freed from the former Soviet Union. So, it served a very, very important purpose, as you pointed out. 

I might say, there were those who said, when we took up sanctions against the apartheid government of South Africa, why are 

we penalizing the people? Let us put that on a totally separate 

track. We did not. We first did it on our own, that is, the United 

States, and then other countries followed us. As a result of that action, and the international community coming together, we were 

able to bring down the apartheid government of South Africa with 

a minimal amount of violence. 

So, when we look at this as an opportunity, I see this as an opportunity to advance human rights, and I must tell you that, I 

could argue with you about whether it is still needed. We know 

that the government imposed new emigration restrictions on April 

7, 2010, a new law that says the state may restrict people from 

leaving the country, or defendants in criminal cases. 

23 

It is now routinely used by corrupt law enforcement officers in 

cases like the Sergei Magnitsky case. So, the government is still 

using this as an oppressive means to carry out their policies. We 

know, in the Magnitsky case, that you had a person who tried to 

bring corruption to the attention of the Russian government. He 

was arrested, tortured, and killed in prison, and has garnered a 

great deal of international support. 

I say that because, what we do here in this Congress will have 

a direct impact on what happens internationally. We know that in 

Europe they are considering laws similar to what we have done to 

deny visa privileges to those who are involved in gross human 

rights violations. 

I take issue with just a couple of your statements, just so we are 

on the record on it. The administration has taken good steps in this 

area to deny visas to those who are involved. But there is more 

that needs to be done, and with the Magnitsky legislation that I 

filed with many co-sponsors, we have a much more transparent 

process. We also deal with assets that are under American control. 

So I accept your offer to work together on this, and I would like 

to just put in the record of this committee the statement that was 

made by Secretary Clinton where she said, ‘‘I am not standing back 

waiting. I would like to very affirmatively offer to you the opportunity to work together because I think we can do both,’’ talking 

about human rights and trade. I interpret your comments to be the 

same. 

But let me just point out, it is difficult to get action on this type 

of legislation. Russia PNTR is a bill that will get to the Senate 

floor, and we are going to do everything we can to make sure that 

the Magnitsky-type bill also gets to the Senate floor. 

I look forward to working with you on this issue—as I take your 

comments to the chairman, your willingness to work together—and 

hopefully finding a way that these bills can become law. I welcome 

any further comments that you may want to make for the record 

in the 50 seconds I have left. 

Ambassador KIRK. Senator, in case you have other questions, we 

appreciate your strong leadership on this, as you have shown in 

other areas of human rights, and we will work with you on it. I 

think Secretary Clinton’s statement is one I fully associate with. I 

would just only echo, I think we can do both. We do look forward 

to working with you. 

Senator CARDIN. Thank you. 

Mr. Chairman, thank you. I want to thank Senator Menendez for 

his courtesy. 

The CHAIRMAN. Thank you, Senator. Also, while we are passing 

thanks around here, thank you. I think you are very seriously and 

wisely addressing an extremely important issue with wisdom and 

effectiveness. I just thank you, how you are trying to solve this, as 

we all are together. Thank you very much. 

Senator Menendez? 

Senator MENENDEZ. Thank you, Mr. Chairman. 

Ambassador, thank you very much for your service. I am always 

happy to yield to my colleague from Maryland, especially on such 

an important topic, which I share his view on. 

24 

Ambassador, few industries have more significant, high-paying, 

productive jobs than the bio-pharmaceutical sector. In my home 

State, that is nearly 195,000 jobs alone. So on the Trans-Pacific 

Partnership, I am trying to understand why the administration has 

not yet tabled in negotiations a time frame for the regulatory protection of data for biologics, and specifically a proposal for 12 years 

of regulatory data protection for biologics, consistent with U.S. law. 

This has strong bipartisan support in the Congress. So, does the 

administration recognize the importance of this innovative area for 

job creation and innovation? If so, will you table, in May’s negotiating round in Dallas, a proposal for 12 years of data protection for 

biologics? 

Ambassador KIRK. Well, let me first of all state, Senator, that 

the administration absolutely understands the importance of this 

issue. Again, the President has spoken time and time again to the 

link between our investment in innovation and R&D, not only in 

pharmaceuticals and manufacturing, to the health of our economy, 

and that is why we seek, across the board, the strongest protection 

for intellectual property rights, the strongest inducements to bring 

these new products to market. 

But as you know, and I will be very candid, there is a strong divergence of thought between the administration and Congress in 

terms of whether that should be 12 years or 7 years. Because of 

that, we have been working diligently with both members of Congress and the administration to find the proper balance. That is 

why we have not yet tabled a specific proposal on that. 

But we have made very plain to our TPP partners that we need 

to have a chapter that addresses this, not only for the protection 

of intellectual property rights but also, frankly, to induce the companies to bring these important lifesaving drugs, in many cases, to 

market sooner rather than later. 

Senator MENENDEZ. Well, if the administration’s goal is to foster 

greater job growth at home by the greater export of U.S. products 

abroad, why is it that we would not seek to pursue in the TPP that 

which is U.S. law today, which is the 12-year time frame? 

Ambassador KIRK. Senator, I can only speak honestly, that the 

administration, in the President’s budget request, tabled a 7-year 

proposal. You know there is a difference of thought on this. But out 

of respect for the strong views of many of you in Congress, that is 

precisely the reason we have not yet tabled a specific time line 

within the TPP. 

Senator MENENDEZ. All right. Do you have any sense of when we 

are going to get to that time frame? 

Ambassador KIRK. We are going to have to get to it before we 

conclude work on the text. 

Senator MENENDEZ. Well, that is for sure. 

Let me ask you about something else that may not be in your 

particular trade agenda, but is in mine. That is something that I 

care about very deeply: the cotton trust fund. In New Jersey, we 

have—and there are other States. Some of my colleagues on this 

committee actually enjoy the reality that there are companies in 

our States. I have three shirt manufacturers that employ over 300 

people. I know there are several others who have the same realities 

in their States. 

25 

And yet, they find themselves in the situation which allows their 

foreign competitors to import a foreign-produced shirt to the United 

States duty-free, while a very steep tariff is charged on the materials an American company needs to produce the very same product 

in America, so that a shirt made abroad of cotton comes into the 

United States duty-free, but a United States manufacturer imports 

that cotton and then ultimately has to pay a very steep tariff to 

produce the very same shirt that came in duty-free from foreign 

competitors. That is not about creating American jobs at the end 

of the day. 

So we have been looking to reauthorize the program of duty refunds to domestic cotton shirt manufacturers—it existed at one 

time under the cotton trust fund, but it lapsed—who are faced with 

an unfair playing field, resulting from trade agreements with the 

Andean, Caribbean, and African countries. Those agreements allow 

finished shirts to enter duty-free, whereas imported fabrics face duties as high as 15.5 percent. So the cotton trust fund used to offset 

that. 

Does the administration support the reauthorization of the cotton 

trust fund to keep these jobs in the United States? 

Ambassador KIRK. Senator, you are correct in that I will have to 

make sure that I am up to speed on the trust fund. I would say 

generally the provisions that you reference with respect to Africa 

and CAFTA are part of our preference programs, which this Congress wisely renewed when you passed the trade agreements. 

We do think those are important to literally help the poorest 

farmers in the world have some ability to move out of poverty and 

move into a more reasonable lifestyle, and they are critically important to many of our manufacturers who source materials from 

many of those countries, whether they are finished or unfinished. 

For our textile industry in particular, many of them are fully integrated, producing the yarns, the fabrics, the cotton here, but then 

manufacturing them at plants they own in South America. But I 

would need to learn more about it. 

Senator MENENDEZ. Well, we look forward to working with you, 

because all those countries that you mentioned would still be able 

to import to the United States. But the difference is—the only difference here is between sending the shirt with the very same fabric 

that is imported to the United States for a domestic producer to 

create, and having that shirt already assembled and sold here in 

the U.S., and then saying to a U.S. company, oh, by the way, 

against that competition you are going to have to pay for the fabric 

that they did not have to pay for at all. That is fundamentally unfair. If we are talking about creating jobs in America, we can still 

have the competition from abroad, but have the jobs in America. 

Thank you, Mr. Chairman. 

Ambassador KIRK. Thank you. 

The CHAIRMAN. Thank you, Senator. 

Ambassador Kirk, two questions. First, where do you see getting, 

this year and the next couple of years, the biggest bang for your 

buck? What is the top priority to get the best results, most effective 

in terms of American jobs, American companies, American businesses just doing a lot better? There is a long list of programs, a 

26 

long list of initiatives. But what is kind of at the top of your list 

if you were going to prioritize this? What is number one? 

Ambassador KIRK. Short-term, literally our 3-, 6-month strategy: 

get the FTAs that we passed with Panama, Colombia, and Korea 

into force, because that gives us immediate benefit. 

The CHAIRMAN. All right. What else? 

Ambassador KIRK. Near-term, do everything we can to see if we 

cannot get this Trans-Pacific Partnership, the text of that agreement, in a position that then we can quickly move with you to approve that. 

The CHAIRMAN. Have you quantified what increase in jobs that 

will mean for Americans—— 

Ambassador KIRK. Senator, I know. I will get you—— 

The CHAIRMAN [continuing]. Or increase in GDP? Some metric 

that makes some sense? 

Ambassador KIRK. Yes, we do. It would be our 3rd-largest market if you put those nine countries together now. They are already 

our 3rd-largest market. I think I want to say it would be 3 times 

the impact of Korea, which we put at about—for some reason I am 

thinking $40 billion. So you are talking hundreds of thousands of 

jobs, and that is just if we stay with those nine. Obviously we have 

ambitions beyond that. 

The CHAIRMAN. If we add the others, what is the increase in 

American jobs? 

Ambassador KIRK. If you applied the calculus that I think most 

of us agree with, every billion dollars in exports is 5,000 jobs and 

upwards of $40 billion in goods, and not calculating services you 

easily get into 280,000-something jobs, which we think is on the 

conservative side. 

The CHAIRMAN. How much will it help you achieve your goals, 

this legislation that Senator Thune and I passed through the Senate—it passed the House and will soon be on the President’s desk— 

addressing the market or non-market status of China, namely that 

you can proceed as if it is a market economy? 

Ambassador KIRK. We think it is critically important. As you 

know, there are hundreds of industries that believe they have been 

besieged with cheap products dumped on this market. We have to 

have the ability to protect them, and we have to have the ability 

to apply countervailing duties and antidumping penalties. This legislation is critical to maintaining that protection for our manufacturing base. I think that was—— 

The CHAIRMAN. Is there any way you can quantify what difference it will make? 

Ambassador KIRK. Senator, let me try to get back to you with a 

number on that. We know there are 21 cases pending that involve 

literally hundreds of thousands of U.S. workers. This is decidedly 

more defensive. If I can get you better data than that, I will. 

The CHAIRMAN. I appreciate that. I hope you try. 

Ambassador KIRK. We will. And Senator, if I might, the other 

two, again, are enforcement and then, as you noted, our strategy 

with China. If China were to fully meet the commitments they 

made going into the WTO, you mentioned just the calculation of 

what we think we lose in the software industry. That could be a 

huge opportunity for us. So we have been making the case to China 

27 

that the World Bank study now makes, for some time, that it is 

not just in the U.S.’s interests. We can help China—— 

The CHAIRMAN. Have you any numbers that show what the increase in jobs would be in the United States if China ‘‘played fair’’? 

Ambassador KIRK. If you believe just that one slice of the pie 

that you referenced, the $50-billion figure in the software industry, 

and we are looking at everything from investment to them opening 

up government procurement—— 

The CHAIRMAN. Right. 

Ambassador KIRK [continuing]. When you are talking $50 to 

$100 billion, that is hundreds of thousands of jobs for American 

workers. 

The CHAIRMAN. I think obviously we must take advantage of 

every opportunity, and one is that Mexico, Japan, and Canada 

would like to join this. That is leverage for us on those countries. 

Ambassador KIRK. Yes. 

The CHAIRMAN. Japan and beef, for example. I think it is just 

outrageous that Japan does not allow beef in, claiming that our 

beef is not safe. It is setting up false health standards. At one time 

Japan did take a lot more American beef, and then there was the 

Mad Cow scare, but now that the OIE said it is fine, Japan should 

fully open up. 

The second is lumber with Canada. Since I have been in the U.S. 

Senate, Canadian lumber has always been a problem. We have 

softwood lumber agreements, et cetera. Then we have to go back 

and sue again because they are not living up to it. One time they 

bored holes in their lumber. There were all kinds of ways to get 

around it. 

I think there is an opportunity here to make sure that finally 

Canada, by standards of fair trade, does not subsidize and dump 

in the United States. Disputes are not in these binational courts, 

but rather disputes we might have with Canada would be in Federal courts and not these trade courts, which I think tend to diminish our efforts in this country. So I just urge you very strongly to 

take advantage of this opportunity to exercise a lot of leverage on 

Canada on lumber, and Japan on beef, among others. 

Ambassador KIRK. Yes. 

The CHAIRMAN. Senator Wyden? 

Senator WYDEN. Thank you very much, Mr. Chairman. 

There are a couple of other areas I want to get into with you, 

Mr. Ambassador, and then return back to the intellectual property 

issue, particularly as it relates to TPP, where we have had some 

discussions as well. 

On the TPP negotiations on footwear and apparel, you recently 

said the choice is cheaper tennis shoes versus jobs. I know you had 

some discussion here with Senator Snowe, and I have heard you 

say that. I just think that is a false choice. I think we can have 

both. 

There are thousands and thousands of good-paying jobs in the 

design, R&D, and marketing of footwear. Just to make clear, I 

want to work closely with you on this issue, because I want those 

jobs and manufacturing jobs considered during the TPP negotiations. 

28 

Now second, on a housekeeping matter, I just want to make sure 

that the record is clear on that. You were at Ways and Means last 

week, and you mentioned that, by one measure, the United States 

enjoyed a trade surplus in solar technology. I think you know, and 

we have shown it to your office, I have done a report on this question of green goods. 

My sense is what you were talking about were the 2010 trade 

figures, because the recent figures are out. No matter how you 

measure it, in 2011 the U.S. suffered a massive trade deficit in 

solar technology, particularly in cells and modules that make up 

the solar panels. This reversal, in my view, is due to China. This 

deficit concerns me. I know it concerns you. I just wanted to make 

that clear for the record as well. 

Let me turn and wrap up with some questions again about intellectual property, because the same issues that were on the table in 

the Protect IP Act, the Stop Online Piracy Act, the discussion we 

had with respect to ACTA, are now on the table in the negotiations 

about the Trans-Pacific Partnership agreement, the TPP discussions. 

I am getting a lot of questions and complaints and concerns from 

people who care passionately about Internet freedom, what is going 

to happen with respect to technology policy, about the fact that 

right now one is required to obtain a security clearance and permission by the administration to see documents relating to the TPP 

negotiations. 

The public, particularly those who feel so strongly about this 

issue, which has generated enormous interest across our country, 

the public just feels shut out with respect to this debate about 

Internet freedom and competition and innovation. 

I just want to get a sense of why the administration agreed to 

this process for these discussions. It does not seem to me to be in 

line with the President’s commitment to transparency and open 

government. Give me your sense about how we got into this, and 

then what can we do to turn it around? Because I think millions 

of Americans, as we saw in the discussion with Protect IP and 

SOPA, they want to be part of these discussions, and they are feeling locked out in one proceeding after another. 

Ambassador KIRK. Well, Senator, if I might, if I can go back to 

one of my guiding principles when I was Mayor, and privileged to 

serve as Mayor of Dallas, and we were in a situation like this, I 

would always tell my staff, the truth is an option. So let us go back 

to one thing. One, you can be helpful. First, we do not help ourselves by trying to conflate the recent debate over PIPA and SOPA 

with what we are doing in TPP, because nothing could be further 

from the truth, first of all. 

So, one, you can help us in making sure people understand this 

is completely the opposite. None of the issues of which you had the 

most concern over, those provisions in SOPA or PIPA, is included 

in the TPP, first of all, so that concern is unfounded. 

I think we have some credibility on this because, when we were 

negotiating ACTA, many of the same voices that raised legitimate 

concerns on PIPA put out a tremendous amount of misinformation 

about ACTA, which was subsequently shown to be not true. What 

we are doing in our work in ACTA and TPP, frankly, is the oppoVerDate Nov 24 2008 20:50 May 22, 2013 Jkt 000000 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 R:\DOCS\80866.000 TIMD
29 

site. We are trying to make sure that we promote the free flow of 

data and information. 

We have no provisions at all trying to restrict the flow of information, and we are following the same balanced approach in the 

TPP that Congress established when you passed the Digital Millennium Copyright Act. They are complemented by what we are trying 

to do on market access-opening provisions. 

So I think the first thing is to make sure we get the truth out: 

these are two different animals. Second, as I mentioned to Chairman Baucus and Ranking Member Hatch and others, we have engaged in more public consultations over this Trans-Pacific Partnership, probably by 10-fold, with Congress compared to all of our provisions that we have been negotiating. 

We have had just over 350 consultations with Congress alone, 

many more with our stakeholders. We have had stakeholders participate as observers in a number of our sessions, negotiating, including those who are concerned about these issues. 

We are proceeding with the same negotiating parameters in this 

Trans-Pacific Partnership that the United States has negotiated in 

every trade agreement over the last 20 to 30 years. So, nothing 

that we are doing is different. We have moved to disclose more information sooner than any previous administration, as we did in 

the case of ACTA. 

But the reality is, because these are very complex negotiations, 

we are representing the United States and the President as your 

counsel, as are our other partners. You can understand there is a 

certain degree of discretion that has to occur in order to get these 

countries to sit down at the table and negotiate with us. 

But I would defend our record for transparency, for inclusion of 

all groups, against any other administration. I think we have gone 

further, and we are absolutely acting consistently with the President’s commitments that he made in terms of having a more transparent administration. 

Senator WYDEN. Mr. Ambassador, let us take your statement— 

and that is why I wanted you to kind of expand on your thinking— 

and juxtapose it along the lines of what people who care about 

these issues are coming to me and telling me. They are saying 

right now there is currently a requirement for a security clearance 

to see TPP text and documents that can impact Internet freedom. 

That is what people tell me, that they have to have a security 

clearance to see the documents. So we put that alongside your 

statement. 

Let me ask you about something that might clear this up, and 

actually get this resolved. What is wrong with letting the public see 

the text in real time, of at least what your office is proposing, as 

it relates to Internet freedom? In other words, I have heard your 

views. I have tried to tell you what people are coming and telling 

me. 

I am saying to a public official who always looks to try to work 

with me, why do we not resolve this, and resolve it by putting out 

the text in real time of what the proposals are with respect to 

issues that can touch on Internet freedom, certainly what people 

feel will touch on Internet freedom? 

30 

What would be wrong with putting that online, so we could dispose of this issue, show that once again the President, whom I 

know feels strongly about transparency and openness, is demonstrating that, and we put this issue to bed? 

Ambassador KIRK. Well, again, Senator, we have moved—if you 

look at our modus operandi on ACTA, as soon as we had enough 

of a convergence among our negotiating partners and we thought 

we had the text, we moved to do that. When we did, I would remind you, at least our office received a fairly stern message from 

the two committees who oversee my work that this not become the 

norm for USTR for the practical reason—and I understand the 

need; more of this is when we disclose. 

But the practical answer to, what is wrong with putting it all out 

now, nothing, unless you do not ever want to negotiate a trade 

agreement, because no one will sit at the table and negotiate with 

us if we put all the terms of every text out. It is an evolving process. 

Second, with respect to the security clearance required, as you 

know as chairman of the Trade Subcommittee, this Congress mandates that I have a number of trade advisory committees because 

of the complexity of trade deals. You want to make sure that we 

have, first of all, thoughtful intelligence from those affected by 

that. All of them operate as what we call, Senator, cleared advisors. 

That is because of congressional law. You give us the latitude, for 

those who serve on these advisory committees and have passed the 

security clearance, we do share the text with those, whether it relates to Internet or agriculture or pharmaceuticals or any of the 

multitude of trade advisory committees that we have. 

That is one way that we make sure that we have the interests 

of different communities voiced and taken into account in our trade 

policy. It is a very thoughtful policy. It serves us well. I believe it 

is the most appropriate way for us to go forward. 

Senator WYDEN. Mr. Ambassador, just let us see if we can wrap 

up on this point. I also serve on the Intelligence Committee, so day 

after day I see just how you draw the bright lines with respect to 

security clearances and matters that can be classified and deserve 

special treatment because of the implications they can have for national security in particular. 

I just think—and you mentioned the norm. The norm changed, 

Mr. Ambassador, on January 18, 2012, where millions and millions 

of Americans said, we will not accept being locked out of debates 

about Internet freedom. They just said, we have to have a chance 

on something that is so important to innovation and competition, 

we have to have a chance to be heard. And I am not asking for everything to be published, and certainly I respect your judgment 

with respect to issues that affect national security and classified 

matters. 

But issues that pertain to freedom and innovation on the net are 

policy questions, and the American people want a chance to participate. I am going to give you the last word on it, but it relates a 

bit to what we wrapped up with on the ACTA discussion. 

That is one topic, and now we are having some of the same 

issues being raised on TPP. These questions are not hypothetical, 

Mr. Ambassador. They are not. The prospect of the Congress of the 

31 

United States passing a piece of legislation, for example, that 

changes the Digital Millennium Copyright Act, and does it in a way 

that is inconsistent with ACTA, that is very real. These are not hypothetical, speculative questions. 

We are not going to resolve all of them today, and I understand 

that, but what I hope we will do, and what I want to take a few 

extra minutes for—and I appreciate your courtesy on this—is to 

make clear how important it is that you throw open the doors of 

your agency, so that the public can be heard with respect to their 

views on Internet freedom. 

Because I thought you made an excellent presentation in terms 

of describing how you are handling the process. When I walk out 

of this room, I am going to get more calls, and they are going to 

say, I still have to get a security clearance in order to have a 

chance to see something about Internet regulation. That does not 

make sense. 

So let’s you and I see if we can work this out, take away from 

this my position that I feel very strongly with respect to TPP, 

about getting the proposals that you are looking at from a policy 

standpoint—not the classified matters—getting them online so that 

the public can have a chance to be heard on it. 

I do not think these are going to be speculative questions. We 

learned, on January 18th of this year, that these issues are not 

speculative anymore, something that just kind of, people are going 

to talk about in the abstract. They are very real. People want to 

be heard. 

Last word to you. 

Ambassador KIRK. Senator, I could not agree with you more. 

There is no form of government that is closer to the people than 

local government. There is no form of—and no disrespect to the 

Senate or the Congress. I am proud to serve here. But I understand 

the need for transparency in government as much as any other official. This President does. But, just as we have a representative 

form of government, that is why we have elections. 

It is why you sit here, because the people of your State collectively understand everybody in your State cannot come to Washington, so we have elected representatives whom we count on who 

will express the voice, and not just those you agree with but those 

you disagree with. 

Then this Congress further refines and understands that, while 

you retain the constitutional authority to enter commercial treaties, as a practical matter this Congress is not going to sit down 

and negotiate with other countries, so you have ceded that authority to the administration. 

In part of that, you have directed us to have a very balanced 

committee of advisors that represents a broad range of thought of 

those affected by trade policy, so all these voices, these concerns 

you have heard, have been expressed. 

Now, I would submit to you again—and I agree with you, you 

and I are going to the same place—and I will tell you, Senator, we 

have done so much to reach out to stakeholders across the board 

to hear their concerns, not just on issues of digital freedom but on 

every element of what we are tabling within the TPP. 

32 

But as you understand, as an elected official, hearing from all of 

these voices, and everyone getting exactly what they want, are two 

different things. I think we have had the most open, transparent 

process ever. We have taken more steps to put more information 

before the public on our websites, on our TPP websites, than ever 

before. 

But we have to maintain that balance between making sure that 

we have the space we need to negotiate with nine very different 

countries that may have different thoughts on the issues of Internet freedom, of Internet protection, than we, and have that in a 

constructive way while at the same time making sure that our public is informed until we get to the point of making sure we keep 

our businesses and industries competitive. That is what we have 

tried to do, is strike that proper balance. I think we have done 

that. 

I know you care about it, and that is why we will always listen 

to your thoughts and guidance on this. But I would just take issue 

that I do believe we have absolutely met the President’s commitment of having one of the most transparent administrations ever. 

Senator WYDEN. I had promised you the last word, Mr. Ambassador, and I will just amend that pledge for 10 seconds or thereabouts. [Laughter.] 

There is no question that is the way it used to work. I think 

what the public is saying is, we have to do better, and particularly 

because the Internet is the engine of innovation and competition in 

so many of the new jobs. So take away that you got a specific request this afternoon for at least putting the portions of the text— 

not the classified matters—that relate to Internet freedom policy 

online. I think the American people want it. 

With that, Mr. Ambassador—it has been a long morning—the 

Senate Committee on Finance is adjourned. 

Ambassador KIRK. Senator, if I might make just one final—— 

Senator WYDEN. Of course. 

Ambassador KIRK. Not on this, but this committee has had a remarkable ability of scheduling these hearings on my wife’s birthday, which the first three were. [Laughter.] 

This year we missed it by 2 days. But, notwithstanding, my wife 

will celebrate another milestone on Friday. I think she is watching, 

so I did want to take this opportunity to wish her a Happy Birthday. [Laughter.] 

Senator WYDEN. I like that a lot. I am sure she knows, since your 

Dallas days, the sacrifices for public service. We appreciate what 

you do. 

The Committee on Finance is adjourned. 

[Whereupon, at 11:50 a.m., the hearing was concluded.] 

(33) 

A P P E N D I X 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD


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COMMUNICATIONS


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Æ 


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