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THE U.S.–PHILIPPINES ALLIANCE: DEEPENING THE

SECURITY AND TRADE PARTNERSHIP

HEARING

BEFORE THE

SUBCOMMITTEE ON TERRORISM, 

NONPROLIFERATION, AND TRADE

OF THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

SECOND SESSION

FEBRUARY 7, 2012

Serial No. 112–120

Printed for the use of the Committee on Foreign Affairs

(

Available via the World Wide Web: http://www.foreignaffairs.house.gov/ or

http://www.gpo.gov/fdsys/

(II)

COMMITTEE ON FOREIGN AFFAIRS 

ILEANA ROS-LEHTINEN, Florida, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

DAN BURTON, Indiana 

ELTON GALLEGLY, California 

DANA ROHRABACHER, California 

DONALD A. MANZULLO, Illinois 

EDWARD R. ROYCE, California 

STEVE CHABOT, Ohio 

RON PAUL, Texas 

MIKE PENCE, Indiana 

JOE WILSON, South Carolina 

CONNIE MACK, Florida 

JEFF FORTENBERRY, Nebraska 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

GUS M. BILIRAKIS, Florida 

JEAN SCHMIDT, Ohio 

BILL JOHNSON, Ohio 

DAVID RIVERA, Florida 

MIKE KELLY, Pennsylvania 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

ANN MARIE BUERKLE, New York 

RENEE ELLMERS, North Carolina 

ROBERT TURNER, New York 

HOWARD L. BERMAN, California 

GARY L. ACKERMAN, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

DONALD M. PAYNE, New Jersey 

BRAD SHERMAN, California 

ELIOT L. ENGEL, New York 

GREGORY W. MEEKS, New York 

RUSS CARNAHAN, Missouri 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

DENNIS CARDOZA, California 

BEN CHANDLER, Kentucky 

BRIAN HIGGINS, New York 

ALLYSON SCHWARTZ, Pennsylvania 

CHRISTOPHER S. MURPHY, Connecticut 

FREDERICA WILSON, Florida 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

YLEEM D.S. POBLETE, Staff Director 

RICHARD J. KESSLER, Democratic Staff Director 

SUBCOMMITTEE ON TERRORISM, NONPROLIFERATION, AND TRADE

EDWARD R. ROYCE, California, Chairman 

TED POE, Texas 

JEFF DUNCAN, South Carolina 

BILL JOHNSON, Ohio 

TIM GRIFFIN, Arkansas 

ANN MARIE BUERKLE, New York 

RENEE ELLMERS, North Carolina 

BRAD SHERMAN, California 

DAVID CICILLINE, Rhode Island 

GERALD E. CONNOLLY, Virginia 

BRIAN HIGGINS, New York 

ALLYSON SCHWARTZ, Pennsylvania 

(III)

C O N T E N T S 

Page

WITNESSES 

The Honorable Kurt Campbell, Assistant Secretary, Bureau of East Asian 

and Pacific Affairs, U.S. Department of State ................................................... 8

The Honorable Peter Lavoy, Ph.D., Acting Assistant Secretary of Defense, 

Asian and Pacific Security Affairs, U.S. Department of Defense ..................... 18

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

The Honorable Edward R. Royce, a Representative in Congress from the 

State of California, and chairman, Subcommittee on Terrorism, Nonproliferation, and Trade: Prepared statement ................................................... 4

The Honorable Kurt Campbell: Prepared statement ............................................ 11

The Honorable Peter Lavoy, Ph.D.: Prepared statement ..................................... 20

APPENDIX 

Hearing notice .......................................................................................................... 32

Hearing minutes ...................................................................................................... 33

(1)

THE U.S.–PHILIPPINES ALLIANCE: DEEPENING THE SECURITY AND TRADE PARTNERSHIP 

TUESDAY, FEBRUARY 7, 2012

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON TERRORISM,

NONPROLIFERATION, AND TRADE,

COMMITTEE ON FOREIGN AFFAIRS, 

Washington, DC. 

The committee met, pursuant to notice, at 2 o’clock p.m., in room 

2172 Rayburn House Office Building, Hon. Edward R. Royce (chairman of the subcommittee) presiding. 

Mr. ROYCE. This meeting of the Subcommittee on Terrorism, 

Nonproliferation, and Trade will come to order. 

Today we are focusing on deepening the security and trade partnership between the Philippines and the United States. It is really 

a rejuvenated relationship, a relationship that goes back, of course, 

many, many years to the point in time when, with our traditional 

ally, the Philippines, we stood shoulder-to-shoulder in fighting Japanese aggression. The Philippines is one of five treaty allies that 

the United States has in Asia. Last year marked our alliance’s 60th 

anniversary. 

Now, for those of us here in the House, I think there is no 

blunting the fact that there is a feeling that the Philippines has 

been largely ignored in U.S. foreign policy for the last few years. 

We need to change that. This is the first congressional hearing focused solely on the U.S.-Philippine relationship in many years. Fortunately, we are going to hear today that there are a lot of things 

changing in terms of the relationship between the Philippines and 

the United States right now. 

Since 9/11, the U.S. and the Philippines have been very closely 

cooperating on counterterrorism. The Abu Sayyaf group, the Moro 

National Liberation Front, the Moro Islamic Liberation Front, 

those groups are responsible for the deaths of over 100,000 Filipinos. And that struggle goes back decades. 

U.S. Armed Forces have worked under the armed forces of the 

Philippines to provide training and logistics and other support to 

root out these terrorist organizations. And Philippine forces have 

had a good deal of success. As all of you know, last week Philippine 

forces killed some of Southeast Asia’s most wanted terrorists, including Marwan, a key link to the Abu Sayyaf terrorist group. 

So, security cooperation has intensified lately. The U.S. and the 

Philippines regularly conduct joint military exercises. U.S. ships 

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make regular port calls, and last year the United States transferred the Coast Guard cutter Hamilton to the Philippine navy. 

The navy there rechristened that the Gregorio del Pilar. I have 

written the Defense Department requesting that the Philippines be 

given priority when other vessels are transferred. Another capital 

ship will soon arrive in Manila, and there is talk of even greater 

military cooperation between the two countries. 

Both countries have serious concerns about Chinese aggression 

in the South China Sea. At least nine times last year Chinese ships 

fired live rounds at Filipino fishermen. They severed Philippine oil 

supply cables. They harassed Philippine ships, sometimes merely 

miles from the Philippine coast. The U.S. and the Philippines want 

peace and stability in the region. That is going to be key to the 

global economy. It is going to be key to the growth of the economy 

in the Philippines. But this is going to require a balance of power. 

Cooperation I think is made easier by the good feelings the people of each country have for one another. Filipino-Americans have 

helped create a very positive impression of the Philippines, and 

public opinion polling shows that the Philippines population is one 

of the most pro-American populations anywhere in the world. 

Economic cooperation is important as well. For too many years, 

the Philippines has suffered from economic malaise, as some of its 

neighbors have had their economies soar. The problems have been 

many. Corruption has been a problem, poor infrastructure, lack of 

competition, and generally harmful economic policies. But there are 

signs the conditions are improving. There are efforts underfoot to 

change that equilibrium. What is certain is that the many skilled 

Filipinos deserve better than the economy they have had to survive 

in. 

The U.S. can help in this regard. I am supporting legislation, the 

SAVE Act, to restore to the Philippines preferential access to the 

U.S. market for many clothing items it lost when the global apparel quota system was lifted 7 years ago. Of course, since then, 

the Philippines apparel exports to the United States have shrunk 

from $3 billion to $1 billion a year. Hundreds of thousands of Filipinos have lost their jobs, which have shifted to China. We should 

give an ally like the Philippines a leg up in competing for international apparel orders. 

The SAVE Act has bipartisan support, and I am hopeful it can 

advance this year. It is in the Ways and Means Committee right 

now. It is gaining more and more support, more and more traction. 

The Philippine Government has trade aspirations. It has expressed an interest in joining the Trans-Pacific Partnership, a proposed trade agreement involving nine countries, including the 

United States, Australia, Malaysia, New Zealand, Singapore, and 

Vietnam. The Deputy U.S. Trade Representative has a Manila trip 

planned for this month to discuss the TPP and other trade issues. 

The Philippines needs to come up to speed. Due to its regulatory 

shortcomings and its treatment of intellectual property and red 

tape and other trade and investment inhibiting factors, there are 

changes that need to occur. Well, the United States can help in 

that regard. 

The Partnership for Growth Initiative aims to assist the Philippines to improve many of the conditions that impede its economy 

3

and participation in TPP-like trade agreements. This also would 

help put the Philippines on the map for more trade and investment 

vis-a`-vis competitors like China. 

This week I will be holding a hearing on some of these issues, 

but we are starting with this hearing today that looks at the deepening of the security and trade partnership. 

With that said, I would like to turn to Mr. Sherman for any 

opening statement he might have. 

[The prepared statement of Mr. Royce follows:]

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Mr. SHERMAN. Thank you. 

Can you tell us about this upcoming hearing? I yield to the chairman. 

Mr. ROYCE. We will start with this hearing here today, and I will 

yield to you. 

Mr. SHERMAN. Okay. I will look forward to the additional hearing 

that you referenced. 

Thank you for holding these hearings. 

Back when I was in private practice is when Marcos fled to Hawaii with, I think it was, 27 Bekins boxes of his financial records, 

the roadmap to his stolen assets. Back then, I served as part of the 

legal team that got those Bekins boxes and, ultimately, the assets 

to the government of Corazon Aquino. We followed the U.S.-Philippine Tax Treaty then, and I think the fact that we adhered to 

the treaty, even when the administration at that time was reluctant to do so, further cements our relationship with the Philippines, that we take our treaty obligations seriously. The Philippines is an important ally in a strategically-critical region, especially given the aggressive economic and military rise of China. 

I would like to recognize the 3.5 million Filipino-Americans who 

have made such outstanding contributions to our country. Southern 

California, and especially the San Fernando Valley, is honored and 

blessed to have a vibrant Filipino-American community. 

The U.S.-Philippine relationship has a long history going back to 

the 19th century. But, since 9/11, this relationship has grown, particularly in the area of counterterrorism. Filipino security forces 

have successfully disrupted and weakened al-Qaeda-affiliated organizations, and the Philippine Government has acted in cooperation 

with the United States. 

Abu Sayyaf and Jemaah Islamiyah—JI I can pronounce—carried 

out multiple terrorist bombings throughout the Philippines in the 

past decade. About 600 U.S. soldiers are assigned to the U.S.-Philippine Joint Special Operations Task Force and were sent there 

after 9/11 to assist the Philippines in its effort to combat terrorism. 

With U.S. support, these groups’ connections to al-Qaeda and their 

capacities have both been weakened. 

Most recently, on February 2nd of this year, the Malaysian terrorist known as Marwan was reportedly killed in a U.S.-backed 

strike, though we don’t have confirmation of his death yet. American counterterrorism troops have helped Filipino troops track 

Marwan for years using satellite and other surveillance. Marwan’s 

death, if true, would be a major success in disrupting a terrorist 

network responsible for numerous deadly bombings in the Philippines and for training a large number of militants. 

Tensions are high in the South China Sea where China, the Philippines, Vietnam, Brunei, Malaysia, and Taiwan all have overlapping territorial claims and are fighting over areas that may contain 

oil and gas resources. Too often, we hear of worrisome incidents of 

Chinese aggression against the Philippines and other nations of the 

South China Sea, especially near the Spratly Islands. 

In February of last year, a frigate from China’s navy fired shots 

at three fishing boats from the Philippines. In March of last year, 

the Philippine Government reported that two patrol boats from 

China attempted to ram one of its surveillance ships. 

7

Secretary of State Hillary Rodham Clinton visited the Philippines in June of last year and committed to supporting the defense of that island nation. Philippine Foreign Secretary Rosario 

aptly stated that the Philippines is a small country but, in his 

words, ‘‘prepared to do what is necessary to stand up to any aggressive action in its backyard.’’ We should provide the Philippines 

with the necessary resources to meet this need, but we must be 

certain that we are not brought into a conflict in the South China 

Sea. 

All these developments are, of course, seen in the context of the 

President’s recent pivot toward Asia. For the past several months, 

the administration has emphasized a shift in U.S. military resources and diplomatic focus away from the Middle East and toward Asia and the Pacific. I see the dangers of Asia and the Pacific. I am not sure there has been a lessening of dangers in the 

Middle East. 

Recent agreements have been reached to allow thousands of U.S. 

Marines to rotate through northern Australian, and U.S. Navy 

warships in Singapore. The President has announced in November 

that the U.S. would deploy 2500 Marines in Australia and would 

shore up alliances in Asia. Not surprisingly, the Chinese do not 

find this helpful. 

The agreement with Australia amounts to the first long-term expansion of U.S. military presence in the Pacific since the end of the 

Vietnam War. This shift comes despite necessary cuts in the Pentagon budget. We need to balance our need to provide for security 

in Asia with the budgetary situation in the United States. The U.S. 

deployment to Australian, the largest since World War II, will start 

this year with a company of 250 Marines in Darwin and, as I mentioned, eventually 2500. 

One question I will want our panel to answer is, what should the 

U.S. be doing to help our allies in Southeast Asia, including the 

Philippines, deal with these security challenges without necessitating a large buildup of U.S. forces in the region. 

Finally, as to trade, the chairman pointed out that the Philippines has expressed interest in joining the Trans-Pacific Partnership. I will simply point out that many of these trade deals have 

turned out extremely badly for American working families. As we 

look at the TPP, we have to see not only what expansion of exports 

would be involved, but also what expansion of imports and the effect on our trade deficit. 

I look forward to hearing from our witnesses on this and other 

matters. 

Mr. ROYCE. Thank you, Mr. Sherman. 

Before I introduce our two witnesses, I would like to recognize 

the presence of the Ambassador, Jose Cuisia, the Philippine Ambassador to the United States. I would just like you to stand for 

a minute. 

This hearing today comes a day after a very powerful earthquake 

hit the Philippines, and our hearts go out to the Filipino people, 

those who lost their lives in this quake. The thoughts of the committee are with the Filipino people, Mr. Ambassador. Thank you. 

Kurt Campbell is the Assistant Secretary of State for East Asian 

and Pacific Affairs. He has held numerous positions in government, 

8

including Deputy Assistant Secretary of Defense for Asia and the 

Pacific. He has also held various positions in academia and think 

tanks in the past, and he has served as an officer in the U.S. Navy. 

Dr. Peter Lavoy is the Acting Assistant Secretary of Defense for 

Asian and Pacific Security Affairs. Previously, he held several senior positions in the Office of the Director of National Intelligence. 

Dr. Lavoy is the author and editor of several books and journals 

on security policy in Asia. 

We thank both of our witnesses. We will begin with Assistant 

Secretary Campbell. 

STATEMENT OF THE HONORABLE KURT CAMPBELL, ASSISTANT SECRETARY, BUREAU OF EAST ASIAN AND PACIFIC AFFAIRS, U.S. DEPARTMENT OF STATE 

Mr. CAMPBELL. First of all, Chairman Royce, may I thank you for 

your interest and focus on Asia, but particularly on the Philippines. 

It is much appreciated. We have noted in recent years there has 

been lots of testimony on other parts of the world, but in recent 

years not as much focus on Asia as we would like to see in the Legislative Branch. And so, we appreciate that you are doing this, and 

we hope to see more of these hearings going forward. 

Let me just say at the outset I very much appreciate your recognition of Ambassador Cuisia. I would just simply say that we in 

the U.S. Government are extraordinarily impressed by the team; 

first of all, by the leadership that President Aquino has demonstrated since he has come to office. He has a rare integrity, a 

passion for his country, a commitment to our relationship. He has 

nominated and put in place a very strong team from the Foreign 

Minister, Foreign Minister del Rosario, the Defense Minister, Defense Minister Gazmin, and also a wonderful Ambassador that is 

a patriot, but also determined to build stronger relations between 

the United States and the Philippines. 

I know we got started a little bit late. So, in the interest of time, 

I would like to just submit my full testimony for the record, with 

your permission, sir, and just highlight a few key points, if I may. 

I would just like to say a couple of things just at the outset to, 

hopefully, frame our overall discussions. 

My own view, gentleman, is that I believe that we are on the 

verge of a renaissance in the relationship between the United 

States and the Philippines. And frankly, this hearing helps us 

along this path. 

I am not going to read from my statement, but I would simply 

point out one sentence at the end of the first paragraph which I 

think is particularly pertinent in this regard. I think we are in the 

process of turning the page from really a previous legacy of paternalism to a much more equal partnership between our two countries. I think that is particularly significant for the Filipino people. 

As you underscored, I think the United States is in the midst of 

an extraordinarily important shift in the focus of American foreign 

policy. To Congressman Sherman, we completely agree that there 

are enormous threats and challenges that will persist in the Middle 

East and South Asia, but it is also the case that enormous possibilities are also apparent in the Asian-Pacific region. I think by almost any measure, most would argue that the lion’s share of the 

9

history of the 21st century is going to be written in the Asian-Pacific theater. So, I think the United States—and this is a proud, I 

believe, bipartisan commitment—is in the process of stepping up 

our game in the Asian-Pacific region while at the same time maintaining our critical security and political commitments in the Middle East and South Asia. 

What we are seeing in Asia is a multifaceted strategy. First, 

starting with the strengthening of our alliances, Congressman 

Royce, you talked about our five alliances, enormous historical significance, the Philippines key among them. 

We are also attempting to diversify our relationships in the region as a whole. Today Secretary Clinton is hosting the Indian Foreign Minister, India playing an increasingly important role not only 

in the subcontinent, but as a player in the Asian-Pacific region. 

We are diversifying our strategic and military strategy. Dr. 

Lavoy will speak about this. Part of what we are doing is ensuring 

that we are balanced in our approach. We will keep a strong commitment in Northeast Asia, but we will focus more of our attention 

in Southeast Asia. 

We recognize how important it is to have a strong, predictable, 

credible relationship between the United States and China. That 

will be a challenge, but it is important. Every country in the region 

wants a better relationship with China. It is important for us to 

respect and understand that. Also, the United States wants a better relationship with China. We need to work on that relationship. 

It will be one of the most consequential relationships for the United 

States in the 21st century. 

In addition to stepping up our diplomatic game generally, we will 

focus on a number of key partnerships like Indonesia, working 

more closely with Vietnam and others. We also believe that a key 

component of our overall approach will be our economic role in the 

Asian-Pacific region. 

I am pleased and proud that we passed the Korea Free Trade 

Agreement. I know there were some concerns, but I think it is 

going to be important for American prosperity going forward. 

I think the Trans-Pacific Partnership has the prospect for providing a very high-quality trade agreement. We very much appreciate the interest that countries like the Philippines have expressed. 

I would simply say, Congressman Royce, that as we go forward 

we will have, I think, important people-to-people ties. I believe our 

security and strategic relationship will diversify. But at the core relationship has to be a deeper economic component, and I commend 

you on your support for innovative ideas that will bring our two 

peoples together. 

Let me simply say that we have tried to amplify our engagement 

through a series of high-level visits. I think you will see more of 

that coming in the next few months. 

As you indicated, Secretary Clinton visited the Philippines a few 

times, but was there last in November. We commemorated the 60th 

anniversary of our alliance on the deck of the USS Fitzgerald, a 

U.S. warship in harbor, where we signed the Manila Declaration, 

which commits our two countries to a broad and diverse strategic 

partnership going forward. 

10

President Aquino met President Obama subsequently in Bali, 

and we were able to talk about the areas of our common endeavor, 

including, as you suggested, the Partnership for Growth. This is a 

major initiative designed to combat and support the Philippine effort, which is very serious, at getting at the root of some of the 

challenges that the country has faced with respect to corruption 

and inefficiency. We are very proud to support this initiative, and 

we think it is already making a difference on the ground in the 

Philippines generally. 

We believe that over the course of the next several years there 

will be enormous opportunity for the United States and the Philippine Government to work closely together. We are looking at a 

host of areas of cooperation on the defense side. Peter, Dr. Lavoy, 

will talk more about that. 

But we are also working much more closely together in multilateral fora at the East Asia Summit, which the United States joined 

for the first time; the U.S. ASEAN summits, and the ASEAN Regional Forum. 

I would simply say, just in quick conclusion, gentlemen, that 

there is no country in Asia that is more welcoming to the United 

States, more supportive of a stronger relationship, and more on our 

side, rooting for us at every step of the way. 

What is important about our overall effort in Asia is that it is 

bipartisan. Obviously, we are operating in a season of occasional 

political back-and-forth, but the truth is that the great foundations 

of American engagement in Asia have been bipartisan: Trade, economic, security, political, human rights of the kind that Congressman Sherman spoke eloquently about. 

I just want to commit to you that, as we go forward, we will work 

closely with this committee and others, as we have done in the 

past, getting your advice and your counsel and your support as we 

strengthen one of the great alliances that the United States has 

the pleasure of being involved in, and that is the U.S.-Philippine 

relationship. 

Thank you very much. 

[The prepared statement of Mr. Campbell follows:]

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Mr. ROYCE. Thank you, Dr. Campbell. 

Dr. Lavoy. 

STATEMENT OF THE HONORABLE PETER LAVOY, PH.D., ACTING ASSISTANT SECRETARY OF DEFENSE, ASIAN AND PACIFIC SECURITY AFFAIRS, U.S. DEPARTMENT OF DEFENSE 

Mr. LAVOY. Thank you very much. Chairman Royce, Ranking 

Member Sherman, thank you for the opportunity to join my colleague, Assistant Secretary Kurt Campbell, to testify on the deepening of the security partnership and the longstanding alliance between the United States and the Republic of the Philippines. 

As Secretary of Defense Panetta recently said, ‘‘We are balancing 

our global posture and presence and emphasizing the Pacific.’’ This 

region is growing in importance to the future of the United States 

economy and our national security. Our relationship with the Philippines is an important part of achieving these national security 

objectives in this important region. 

As one of five defense allies in the Asia-Pacific, the Philippines 

plays a critical role in our efforts to achieve important security objectives in the region, including in the areas of maritime security 

and counterterrorism. Specifically, we believe that U.S. forces in 

the region, working alongside our partners, help promote stability. 

The evolution of our 60-year-old alliance with the Philippines has 

weathered a series of ups and downs, but has always moved along 

in a positive trajectory. We currently have new opportunities to 

refocus our bilateral defense cooperation and advance our mutual 

security interests in tangible ways. There are three reasons for 

this. 

First, the current Government of the Philippines is deeply committed to defense reform and modernizing its defense capabilities, 

initiatives for which it is turning to the United States for support. 

Second, our efforts to help the Philippines build its 

counterterrorist capabilities have been highly effective in reducing 

the operating space of known terrorist groups. 

And finally, the Defense Department has a new strategy that 

prioritizes Asia and is consistent with the President’s recent remarks at the Pentagon. 

Our bilateral military engagement is currently focused on assisting the armed forces of the Philippines to transition from an inward-focus on domestic threats to an outwardly-focused military 

that needs to be reorganized to address external concerns. We are 

working to help the Philippines meet its strategic objective of establishing a credible security presence and awareness in the maritime domain. We are accomplishing this through security assistance focused on maritime security capabilities to help the Philippines play a greater role in promoting regional safety and security in that domain. 

The cornerstone of our security relationship with the Philippines 

rests on ensuring stability in the region and providing increased 

capacity to jointly respond to missions such as conducting disaster 

relief and humanitarian operations. We continue to work with all 

elements of the Philippine defense establishment to further develop 

the armed forces into a modern, professional military capable of defending its sovereign territory, upholding and promoting our shared 

19

values of human rights and democracy, and serving as a net contributor to regional security. 

Another evolving security challenge is the increase in tension 

over land and maritime claims in the region. We do not take a position on the competing sovereignty claims over land, but believe 

that our partnerships in the region work toward ensuring security. 

In this endeavor, we continue to encourage the Philippines and all 

nations to settle their disputes through a collaborative diplomatic 

process. 

This renewed focus on security issues is made possible by the 

great strides the Philippines has made in achieving its counterterrorism objectives. The successes in countering terrorism in the 

southern Philippines provides the Philippines armed forces the 

space and opportunity to refocus strategic security objectives from 

domestic threats to external concerns. 

We have made significant investments in countering 

transnational terrorist groups through Operation Enduring Freedom-Philippines. The personnel of JSOTF-P, or the Joint Special 

Operations Task Force-the Philippines, continue to work in support 

of the AFP to reduce potential threats to U.S. security from 

transnational terrorist organizations seeking an operational safe 

haven in the southern Mindanao region, while demonstrating to 

local and national leaders the importance of promoting our shared 

values of human rights and democracy. As a recent example, on 

Thursday morning the AFP conducted a successful operation targeting key leaders of terrorist groups that have plagued the southern Philippines for years. 

In conclusion, I would like to emphasize the strategic importance 

of the relationship between the Republic of the Philippines and the 

United States, which we must continue to develop. I look forward 

to working with you, Mr. Chairman, and with members of the subcommittee and Congress, to seek opportunities to influence positively the future direction of this relationship. 

I stand by, along with my colleague, Kurt Campbell, to respond 

to any questions you may have on these very important issues. 

[The prepared statement of Mr. Lavoy follows:]

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Mr. ROYCE. I thank you very much, Dr. Lavoy. 

Would you like to comment just for a minute on the role the U.S. 

played with the Philippine armed forces taking down this terrorist 

organization not too many days ago? If you are free to do so, I 

would love to hear some commentary on that. 

Mr. LAVOY. Well, sir, I can say generally that we have provided 

a great deal of support to the Philippines in countering a variety 

of terrorist threats. The Philippines have enhanced their 

counterterrorist capabilities immensely and are performing very effectively. But I can’t talk about this specific operation or any other 

specific operations in this setting. 

Mr. ROYCE. Well, I mentioned in my opening statement the ships 

that are being transferred through the Excess Defense Articles Program, the new flagship being an example. I know the Dallas, the 

Coast Guard cutter, is due to sail for Manila soon. But having written the Secretary of the Navy on this, I am pleased to see this 

move along. 

I understand there is some interest in the Philippines also on F–

16s, refurbished F–16s. Dr. Campbell, would you like to comment 

on that potential? Or should I turn that to Dr. Lavoy? Okay. Go 

ahead. 

Mr. LAVOY. Thanks very much. Thanks, Kurt. 

We have been working with the Philippines Government on identifying ways that we can enhance our mutual security capabilities. 

That, of course, entails working with the Philippines to help it 

modernize its armed forces and reorient to external security requirements. 

Sir, you mentioned the transfer of the high-endurance cutter, the 

Hamilton, to the Philippines, which took place August last year. I 

think that was a very significant accomplishment. This is now renamed by the Philippines as Gregorio del Pilar. It is now the flagship of the Philippine navy. And I am happy to note that it just 

completed its first patrol in the vicinity of the Spratly Islands just 

2 days ago, on the 6th of February. 

You also indicated that there is a likelihood of transferring additional military equipment to the Philippines, including an additional cutter, the cutter Dallas. This is pending Congress’ approval 

and consent. I believe that takes place in 2 days, if I am not mistaken. So, we look forward to a positive supporting consent by Congress. 

On the issue of F–16s, right now we are considering a range of 

military capabilities that the Philippines have requested, but I 

want to emphasize that affordability and sustainment are critical 

criteria in our evaluation of these additional supplies. 

Thank you. 

Mr. ROYCE. Thank you, Dr. Lavoy. 

Dr. Campbell. 

Mr. CAMPBELL. Yes, just I would simply say, first of all, I support 

everything that Dr. Lavoy has stated. 

We have previous experience of working with the Philippine military. At times in the past, I think we have built capabilities that 

were hard to sustain, that were inefficient. One of our goals is to 

make sure that we take the appropriate steps with them, building 

the kind of capabilities that will support not only independent PhilVerDate 0ct 09 2002 14:09 Mar 13, 2012 Jkt 000000 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 F:\WORK\TNT\020712\72789 HFA PsN: SHIRL
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ippine capabilities, but will allow for greater interoperability and 

engagement with the United States. 

In that respect, Dr. Lavoy, and his excellent team, has led a very 

intensive effort with the Philippines to identify what are the best 

ways that we can spend, frankly, scarce resources. 

I should also say that to support that as well is a discussion that 

we are having about how the United States can work more effectively with the Philippine armed forces to support our mutual goals 

and missions, not just in Mindanao, as you have discussed, but, as 

Peter indicated, more in the maritime realm as well. 

I will say that the Philippine Government has asked us to look 

carefully at a variety of things. For instance, they have suggested 

that, look, the ships that you provided us, you have stripped a lot 

of the gear out of it; is it possible to see what can be done to transfer that to the Philippine Government? I think it is a very reasonable request. And so, under Peter’s leadership, we are looking to 

see what we can do to support in an effective, cost-efficient way, 

supporting Philippine capacities in this regard. 

Mr. ROYCE. Dr. Campbell, another question I was going to ask 

you: When I talk to those involved in the Filipino-American community here about doing business in the Philippines, they say that 

one of the impediments is the necessity for reform there. And likewise, when we look at trade liberalization and trade and investment issues in the Philippines, there is this question of how to encourage reform because corruption could be a major obstacle to economic growth. That is the concern, I think, of many in the business 

community in the Philippines. 

There is a Global Competitiveness Report that also said that that 

was the hurdle to doing business in the Philippines. 

Now President Aquino has this new anti-corruption campaign 

underway. I was going to ask you, what major hurdles exist with 

respect to that campaign and how much headway is it making for 

economic reform in the Philippines and rule of law in business 

transactions? 

Mr. CAMPBELL. Thank you, Congressman Royce. 

I, too, try to talk with the key players that do business in the 

Philippines. You characteristically hear three concerns. 

One, as you suggested, the corruption issues, which have in the 

past been very challenging. 

Second, some infrastructure issues, some inefficiencies in that regard. 

And third, some legal challenges. 

My own sense is that you have seen some substantial improvements in a few of the legal inhibitions that have caused difficulties, 

and you see some major companies that have been able to overcome them. 

And I also believe that, with respect to the prospects of greater 

trade engagement, that some of the issues associated with foreign 

ownership, there are some creative ways around that, as has been 

demonstrated in other parts of Southeast Asia. 

Inefficiencies have also improved generally. The infrastructure is 

improving in a number of places in the Philippines. I think that 

really leaves some of the corruption issues. I have to say I think 

we are just very impressed with the intensity, the unflagging focus 

26

of the Aquino government on this. This is not simply one of those 

circumstances where it is, hey, don’t watch what I’m doing; listen 

to what I’m saying. The senior officials in the government are practicing what they preach. I think they have taken the bull by the 

horns with respect to corruption in the Philippines. 

I listened very clearly as—and I think it is all right to repeat 

this—President Aquino made clear that his legacy, what he wants 

to leave when he leaves office is a track record and an experience 

that is impossible to turn back on; that a new way of doing business, a clean government ethos remains as the critical gift that he 

and his administration bestow to his nation. Anything we can do 

to support that, we will. 

The Philippines, Congressman, I will say they are growing. They 

are not growing as fast as some Southeast Asian countries. But we 

really, frankly, with the right steps, we could see enormous possibilities there in the years to come. 

Mr. ROYCE. Well, we know that conditionality exists in these 

TPP-like trade agreements. We know that those reforms will have 

to be made. I think the Partnership for Growth Initiative intends 

to play a role here in terms of our engagement with the Philippines 

in order to try to ensure that those reforms that you have articulated go through. 

Let me turn to Mr. Sherman for his questions. 

Mr. SHERMAN. I will start by disagreeing with Dr. Campbell 

when he says that support for these trade deals is bipartisan here 

in Congress. That is true only if you look at the Democratic and 

Republican Party. If you look, instead, at Congress having a Wall 

Street Party and a Main Street Party, it is only the former that 

supports these trade deals. 

Looking at the issues we are here to deal with, we have got an 

unusual circumstance. We provide MFN to China and then accept 

the most outrageous corruption of the trading relationship with 

China that enriches China. That allows them to build up their defense. Then, we ask the American taxpayers to provide the weapons, and in some cases the men and women, to offset this Chinese 

aggressive defense or military posture. 

And so, it would seem illogical that we are both financing the 

Chinese expansion and then we are financing the response, but it 

is not illogical at all from the standpoint of corporate profits. You 

see, there are huge corporate profits by giving China total access 

to our markets, whether they give us access to theirs or not on 

paper or in reality. And then, there are significant corporate profits 

in responding to the Chinese military buildup. So, we do have a 

logical policy. It is just a policy whose logic is driven by Wall Street 

and not by the interests of either our national security or of working families. 

That being said, I have talked about the dispute in the South 

China Sea. What can the United States do to have that dispute resolved by an international tribunal rather than this constant jockeying for oil and gas and other resources? 

Mr. CAMPBELL. Thank you. 

I would simply say, on the first point, my own view would be 

that one of the keys to American prosperity in the 21st century will 

be to increase American exports substantially. 

27

Mr. SHERMAN. Reclaiming my time and asking you to respond to 

my question, I will simply say that we have tried these trade deals. 

They have destroyed hundreds and thousands of American families. To assume that continuing to do what we have done will yield 

to a different result is the definition of insanity. 

Now what can you tell me about international law in the South 

China Sea? 

Mr. CAMPBELL. The United States has a national interest in the 

maintenance of peace and stability, freedom of navigation, respect 

for international law, and unimpeded lawful commerce in the 

South China Sea. We oppose the threat or use of force by any party 

to advance its claims or interfere with legitimate economic activity. 

We do not take sides on the competing territorial disputes over 

land features in the South China Sea. We support a collaborative, 

diplomatic process by all claimants for resolving the various disputes without coercion. We believe all——

Mr. SHERMAN. Dr. Campbell, if I can interrupt——

Mr. CAMPBELL. Can I answer the question that you asked? 

Mr. SHERMAN. I know you have got your standard talking-point 

response. Is there an international tribunal to which we could persuade the parties to submit these claims? 

Mr. CAMPBELL. Do you want me to just finish my answer or prefer not? 

Mr. SHERMAN. I would prefer you answer the question, but——

Mr. CAMPBELL. We believe all parties should pursue and clarify 

their territorial claims and accompanying rights to maritime space 

in accordance with international law, including as reflected in the 

1982 Law of the Sea Convention. In this regard, we have commended the Philippines for progress in harmonizing their maritime 

laws with international law, and pledge to continue to support 

their efforts. 

We welcome the recent progress between ASEAN and China on 

steps related to the declaration on the code of conduct of parties in 

the South China Sea and dialog toward a code of conduct, but we 

also think much more needs to be done in this regard. 

Mr. SHERMAN. Dr. Campbell, if I can interrupt again, because my 

time is expiring, what are you doing to try to turn our current 

trade deficit with the Philippines into a trade surplus? 

Mr. CAMPBELL. As I was trying to suggest, I think one of the 

most important things that the United States can do going forward 

will be to encourage American firms and those companies that historically have not needed to export, to export to the Asian-Pacific 

region, the largest growing middle classes in the world. 

If you look at the top 1,000 American companies, the vast majority of American exports to the Asian-Pacific region come in the top 

tier of those companies. I think one of the most important things 

that we can do is encouraging those firms, whether they are based 

in your District or other Districts, that have normally sold their 

products mostly to the American people, to have the opportunity to 

export those same products to Asia and elsewhere. 

Mr. SHERMAN. I would say that government needs to do more 

than send out an email to companies saying, ‘‘Hey, have you 

thought of Asia?’’ It is up to us to open the markets, to make sure 

that access to U.S. markets is contingent upon our access to theirs, 

28

and our failure to export is not because of the laziness of American 

entrepreneurs or their lack of knowledge of Asia; that America is 

failing over the last 30 years because our Government has been a 

failure, particularly in the area of trade. 

And I yield back. 

Mr. ROYCE. Mr. Rohrabacher. 

Mr. ROHRABACHER. Thank you very much. 

I would certainly associate myself with the observations of my 

colleague, Mr. Sherman, that we need to make sure that, if the 

Philippines is going to succeed and be a prosperous country, they 

need to make sure they understand it is not going to be a favor 

from someone else. It is going to be the fact that we are treating 

each other as adults and treating each other fairly. With access to 

our markets, we should have access to theirs as well. 

Let me note I have a long history of working with the Philippines, and I think that President Aquino is just a shining light 

of hope for us who were waiting for someone of that caliber to 

emerge. We couldn’t be happier. Those of us in this foreign policy 

arena, we are rooting for him and had some good meetings with 

him when we were in the Philippines. I think the United States, 

as you are demonstrating today by your testimony as well as what 

this administration has been doing, that we actually are making 

this a higher priority to try to get something done now that they 

have got a good leader who might be able to make some differences. 

One thing we have to do is make sure that we differentiate between a democratic government and a dictatorship. I am afraid 

that we have trade laws—this goes back to what Mr. Sherman was 

talking about—we have trading laws now that seem to actually 

have Most Favored Nation status and such with Vietnam, where 

they haven’t had any democratic reform whatsoever, and China, 

and some of these other countries, where the Philippines have been 

struggling to have democracy and they have a free press. And yet, 

we treat them, actually, we treat them worse when it comes to 

trade than we do with these dictatorships. 

We have American companies investing, and to a large degree, 

in Vietnam and in China. Yet, they are dictatorships. And there’s 

the Philippines right there who could use that investment. So, I 

would hope that, now that they have a President who is committed 

to bringing down the level of corruption, that we will reverse that 

emphasis; that, instead, we will be looking at people to invest in 

a country that is a democratic country that is now committed to 

ending that barrier of corruption that has been working against 

them. 

But let me just say, about the security issues, I congratulate this 

administration and both of you. I congratulate our Special Forces 

teams. I visited them not too long ago down in the southern Philippines. What a wonderful victory it was for the people of the Philippines and for all of the people of the world who are standing together against terrorism and this threat of radical Islam. Radical 

Islam was in the Philippines being supported by international 

causes. It is good that we stood in solidarity with the people of the 

Philippines against this radical Islamic threat. Now we have gotten 

at least some of their leaders, and, actually, I understand there 

29

were leaders from other countries there as well. So, that is wonderful. 

The last point, and I will be happy to comment. Sorry, I wasn’t 

here earlier and I apologize; I have been running back and forth 

between meetings here. 

China is, as we know, where I believe the threat of radical Islam 

is in that part of the world now, and especially the Philippines will 

recede, due to the strong stand that we have taken and the success 

that we have had in cooperation and standing beside the Filipino 

Government and Filipino military. 

We need to stand as aggressively and as solidly with the Filipino 

Government in their confronting an aggressive, arrogant China, expansionist China, as we have stood with them against radical 

Islam. We have had success against radical Islam now, but China 

has to be put right up there as just as great a threat. 

The Chinese are trying to steal the mineral rights and the 

wealth that belongs to the people of the Philippines. The Spratly 

Islands are, as we know, possibly in a very mineral-rich area. If we 

let the Chinese with their superior military take by force from the 

Philippines, it is international theft at its worst. 

I am very pleased; again, the administration deserves kudos for 

providing this Coast Guard cutter, but I think that we need to 

work with the Philippines to provide them much more than just an 

old Coast Guard cutter. Because, again, they fought radical Islam. 

We have had a great success there. That is a success for both of 

us. Stopping Chinese aggression in the South China Sea will be a 

victory for all the people who believe in peace and freedom in that 

region and in the world. 

So, I have had my say. If you have any comment, please feel free. 

If you disagree, don’t say it. [Laughter.] 

All right. Well, thank you very much. Again, I want to congratulate the administration. This is a good example of the positive 

things they have been able to accomplish. I have my disagreements 

in other areas, but I think we ought to recognize a success when 

we see it. 

Thank you very much. 

Mr. ROYCE. Thank you. And I will say I share my colleague’s interest in seeing investment move from China to the Philippines. 

That is one of the things we want to see happen. That is one of 

the policy goals. From my standpoint, that is why I am backing the 

SAVE trade bill, the engagement with the Philippines on this trade 

initiative. 

I did want to make mention of a resolution which I and Congressman Rohrabacher support. That is House Resolution 352. 

That resolution calls for a peaceful and collaborative resolution of 

the maritime dispute between what China calls the South China 

Sea and what the Philippines calls the West Philippine Sea. The 

resolution calls for all parties of these territorial disputes to refrain 

from threatening force or using force to assert territorial claims. 

The reason we think there is such an important opportunity to 

push this resolution and have it heard is because the entire diplomatic community, every country in the world, perceives this in the 

same way that the Philippines perceives it. Only China, China 

30

alone, perceives these waters as an extension of its territory. They 

are out of step. 

That is why multilaterally I think the United States and the 

Philippines and Indonesia and Malaysia and other countries in the 

region, Vietnam, can all work in tandem toward an international 

resolution that moves us away from the bellicose use of force and 

rhetoric that we see, and sort of unites the international community in a resolution to try to resolve this without the aggressive behavior that we have seen on the part of China here. 

I wondered, Dr. Campbell, if you would like to make any additional comment on that. 

Mr. CAMPBELL. Thank you very much again. 

I would associate myself with the comments that you have made. 

I have looked at both bills that you have submitted, one on the 

SAVE Act and, also, the second one that you have just suggested. 

I would just say, on the first one, I think it is really something 

that we have to look at seriously. I think there is a lot here that 

I think both your body has to think about and we have to focus on 

as well. 

Let me just say, some have suggested that the South China Sea 

is none of our business. I would simply point out that, by most 

measures, 50 percent, literally 50 percent of the global tonnage of 

shipping passes through the South China Sea every year and, by 

value, probably somewhere between a quarter and a third. So, it 

is an artery in the global economy. 

And so, the maintenance of peace and stability, and how issues 

there are resolved, are extraordinarily important to us. I happen to 

believe, just as you have indicated, Congressman Royce, that in 

many respects how these issues will be discussed, how they will be 

resolved in many respects is a 21st century case study on how the 

rules of the road will be established and maintained. 

I think the United States, we are not a claimant. We are extraordinarily careful how we talk about these things. I appreciated Congressman Sherman’s questions, but you will note we have a very 

clear set of statements that we make. 

We believe that there is a process underway. The United States 

believes that we can play a constructive role in this process. Ultimately, the peaceful resolution of disputes, and finding a legal 

internationally-recognized framework for how to deal with these 

issues, we believe it is in the best interests and preserves the interests of all those involved. 

Mr. ROYCE. Dr. Campbell, I thank you. I thank you for your testimony today, Dr. Lavoy. 

I am sorry we started a little late. That was because of the votes 

on the Floor. 

Mr. CAMPBELL. Thank you. 

Mr. ROYCE. But we appreciate you. We know you are headed up 

to the State Department now for a meeting. 

Again, we thank the witnesses. 

Mr. CAMPBELL. Thank you very much. 

Mr. LAVOY. Thank you. 

Mr. ROYCE. Ambassador, thank you for attending as well. 

[Whereupon, at 3:49 p.m., the meeting was adjourned.] 

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