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PRESIDENT OBAMA’S 2015 

TRADE POLICY AGENDA 

HEARING 

BEFORE THE

COMMITTEE ON FINANCE 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

JANUARY 27, 2015 

( 

Printed for the use of the Committee on Finance 

COMMITTEE ON FINANCE 

ORRIN G. HATCH, Utah, Chairman 

CHUCK GRASSLEY, Iowa 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

MICHAEL B. ENZI, Wyoming 

JOHN CORNYN, Texas 

JOHN THUNE, South Dakota 

RICHARD BURR, North Carolina 

JOHNNY ISAKSON, Georgia 

ROB PORTMAN, Ohio 

PATRICK J. TOOMEY, Pennsylvania 

DANIEL COATS, Indiana 

DEAN HELLER, Nevada 

TIM SCOTT, South Carolina 

RON WYDEN, Oregon 

CHARLES E. SCHUMER, New York 

DEBBIE STABENOW, Michigan 

MARIA CANTWELL, Washington 

BILL NELSON, Florida 

ROBERT MENENDEZ, New Jersey 

THOMAS R. CARPER, Delaware 

BENJAMIN L. CARDIN, Maryland 

SHERROD BROWN, Ohio 

MICHAEL F. BENNET, Colorado 

ROBERT P. CASEY, Jr., Pennsylvania 

MARK R. WARNER, Virginia 

CHRIS CAMPBELL, Staff Director 

JOSHUA SHEINKMAN, Democratic Staff Director 

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hatch, Hon. Orrin G., a U.S. Senator from Utah, chairman, Committee on 

Finance .................................................................................................................. 1 

Wyden, Hon. Ron, a U.S. Senator from Oregon .................................................... 3 

ADMINISTRATION WITNESS 

Froman, Hon. Michael, U.S. Trade Representative, Executive Office of the 

President, Washington, DC ................................................................................. 5 

ALPHABETICAL LISTING AND APPENDIX MATERIAL 

Brown, Hon. Sherrod: 

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

Froman, Hon. Michael: 

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

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

Responses to questions from committee members ......................................... 49 

Hatch, Hon. Orrin G.: 

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

Prepared statement .......................................................................................... 82 

Wyden, Hon. Ron: 

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

Prepared statement .......................................................................................... 84 

COMMUNICATIONS

Advanced Medical Technology Association (AdvaMed) ........................................ 87 

American Apparel and Footwear Association (AAFA) .......................................... 89 

American Council of Life Insurers (ACLI) ............................................................. 90 

American Enterprise Institute ................................................................................ 91 

Coalition for GSP ..................................................................................................... 94 

International Wood Products Association (IWPA) ................................................ 98 

National Association of Manufacturers .................................................................. 99 

National Cotton Council of America ...................................................................... 106 

Outdoor Industry Association ................................................................................. 109 

Rocky Mountain District Export Council ............................................................... 112 

Telecommunications Industry Association (TIA) .................................................. 113 

U.S. Chamber of Commerce .................................................................................... 114 

United States Council for International Business (USCIB) ................................. 122 

(III) 

(1) 

PRESIDENT OBAMA’S 2015 

TRADE POLICY AGENDA 

TUESDAY, JANUARY 27, 2015 

U.S. SENATE, 

COMMITTEE ON FINANCE, 

Washington, DC. 

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

room SD–215, Dirksen Senate Office Building, Hon. Orrin G. Hatch 

(chairman of the committee) presiding. 

Present: Senators Grassley, Crapo, Roberts, Cornyn, Thune, 

Isakson, Portman, Toomey, Coats, Heller, Scott, Wyden, Schumer, 

Stabenow, Nelson, Menendez, Carper, Cardin, Bennet, and Casey. 

Also present: Republican Staff: Chris Campbell, Staff Director; 

Everett Eissenstat, Chief International Trade Counsel; Rebecca 

Eubank, International Trade Analyst; Kevin Rosenbaum, Detailee; 

and Shane Warren, International Trade Counsel. Democratic Staff: 

Elissa Alben, International Trade Counsel; Michael Evans, General 

Counsel; Jocelyn Moore, Deputy Staff Director; Joshua Sheinkman, 

Staff Director; and Jayme White, Chief Advisor for International 

Competiveness and Innovation. 

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

SENATOR FROM UTAH, CHAIRMAN, COMMITTEE ON FINANCE 

The CHAIRMAN. The committee will come to order. Good morning. 

It is a pleasure to welcome everyone to today’s hearing on our Nation’s trade agenda. I want to thank Ambassador Froman for taking time to be with us here today, with all the obligations he has. 

I have to say that the trade agenda is looking up since the last 

time you testified. Things seem to be improving with our ongoing 

trade negotiations. For example, while significant gaps remain, the 

administration seems to be inching ever closer toward a conclusion 

of the Trans-Pacific Partnership agreement. Morale at the Office of 

the United States Trade Representative, after a long period of decline, is beginning to rise. Of course, there is still a lot to be done, 

and renewal of Trade Promotion Authority, or TPA, is at the top 

of my list. 

But even in that regard, things seem to be looking up. Compared 

with this time last year, this administration is much more engaged 

at all levels in making the case for renewal of TPA. President 

Obama’s strong call for TPA in the State of the Union address was 

welcome, though, in my opinion, it was long overdue. I hope that 

he will follow his latest call to action with a real concerted effort 

to help us get TPA through Congress. 

2 

Here in the Finance Committee, we are doing all we can to help 

in this effort. Although the bill I introduced last year with Chairmen Camp and Baucus received broad support, I am currently 

working with Senator Wyden to see if there is a way to address 

some additional issues that he has raised. We are working with 

Chairman Ryan as well. And while there may be some improvements we can make to the bill, I want to make one thing clear: the 

time for TPA is now. 

TPA is how Congress tells the administration and our negotiating partners what a trade agreement must contain to be successfully enacted into law. And TPA empowers our negotiators to get 

the best deal possible for American workers. 

Now, to succeed in getting TPA renewed, we will need an all-out 

effort by the administration to make the case for why TPA is so 

vital to our Nation’s ability to fairly engage in international trade 

and to enhance the health of our own economy. 

Simply put, trade means jobs. Today, 95 percent of the world’s 

consumers live outside of the United States. These potential customers account for 92 percent of global economic growth and 80 

percent of the world’s purchasing power. 

To maintain a healthy economy, we need the opportunity to sell 

American products in these markets. Right now the United States 

is engaged in some of the most ambitious trade negotiations in our 

Nation’s history. The first, which I already mentioned, is the 

Trans-Pacific Partnership, or TPP. Renewal of TPA is key to the 

success of this agreement. And without TPA, the administration 

will not be able to bring back the high-standard agreement Congress needs to ensure its enactment. 

Let me be clear here. It would be a grave mistake for the administration to close TPP before Congress enacts TPA. Doing so may 

lead to doubt as to whether the U.S. could have gotten a better 

agreement, ultimately eroding support for TPP and jeopardizing its 

prospects for passage in Congress. 

There are also some key outstanding issues that need to be resolved in TPP. As I have stated in the past, my support for TPA 

by no means ensures that I will support just any version of TPP 

that happens to be submitted to Congress for approval. For me, the 

agreement must achieve a very high standard for the protection of 

intellectual property, including 12 years of data protection for biologics and strong copyright and trademark protections. The intellectual property provisions of TPP must also effectively address the 

theft of trade secrets and ensure effective implementation and enforcement of IP obligations. Provisions to enhance digital trade and 

address state-owned enterprises are also critical, as is real market 

access for U.S. exports. 

There are other major negotiations that are ongoing, and I am 

confident that renewal of TPA would help and will help in bringing 

those to successful conclusions as well. Most notably, there is the 

Transatlantic Trade and Investment Partnership, or TTIP. TTIP 

must be a comprehensive agreement and include provisions on financial services regulation and strong investor-state dispute settlement mechanisms. The agreement must also achieve a high level 

of IP protection and effectively address the systemic misuse of geographical indications to create market barriers. 

3 

I am also hopeful the administration will soon be able to conclude negotiations to update the Information Technology Agreement, and I expect we will see progress in advancing the negotiation of a Trade and Investment Services Agreement and an Environmental Goods Agreement. 

Ambassador Froman, all of this represents a very ambitious 

agenda for your office and for the administration as a whole. But 

if I have not been clear up to now, let me restate. TPA must be 

considered an essential element for all of these endeavors. I believe 

congressional renewal of TPA will unleash new energy in our international trade agenda, helping to propel our economy to greater 

growth and prosperity. 

History shows that trade agreements concluded with TPA in 

place create new economic opportunities and, importantly, higherpaying American jobs. This year we truly are at the precipice of opportunity. The only question is whether both parties in Congress 

and the administration can work together to put in place the necessary tools to seize this opportunity. 

I certainly think we can, and I will do everything in my power 

as chairman of this committee to ensure our mutual success. 

Ambassador Froman, I look forward to your testimony today and 

to working with you to advance a strong pro-growth trade agenda. 

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

The CHAIRMAN. I would now like to turn it over to Senator 

Wyden for his opening remarks. 

OPENING STATEMENT OF HON. RON WYDEN, 

A U.S. SENATOR FROM OREGON 

Senator WYDEN. Thank you very much, Chairman Hatch. And it 

is good to be working with you and to have the Ambassador here. 

Today’s global economy seems to move at a million miles an 

hour, so clinging to yesterday’s outdated trade policies is a loser for 

the millions of middle-class American workers counting on political 

leadership to create more high-skill, high-wage jobs. 

Trade agreements need to bulldoze the trade barriers and open 

new markets to exports made by America’s middle class—the 

things we grow or raise, build or forge. Done right, trade agreements can help grow the paychecks of middle-class families. That 

can help take our economic recovery from a walk to a sprint. 

According to a report by the Commerce Department’s International Trade Administration, many export-driven jobs, from precision welding to engineering design, offer higher pay and more 

generous benefits than jobs that are not tied to exports. American 

workers who design and build products like machinery, electrical 

gear, or transportation equipment can get into the winner’s circle 

when the goods they make are exported. The goal of trade agreements should be to take the fruits of American labor and to ship 

them to markets around the world. 

That said, it is easy to understand why many American workers 

are frustrated when they have not seen a meaningful pay raise in 

decades—or worse, they have lost their job and fallen out of the 

middle class. When discouraged Americans argue they have been 

hurt by trade, those voices must not be ignored. Those voices have 

4 

to be heard, and those who favor a trade agenda that takes on the 

challenges of a hyper-competitive global economy have a responsibility to make the case that it is going to work for the middle class. 

I am raising that issue especially because the President said during the State of the Union address, and I quote, ‘‘Past trade deals 

haven’t always lived up to the hype,’’ unquote. So I am looking forward to the Ambassador outlining today how the administration 

plans to change that with fresh policies that are going to lift wages, 

help create middle-class jobs, and expand the winner’s circle. It is 

also important to hear what safeguards are going to be in place to 

ensure that any workers impacted by trade have access to retraining, health coverage, and other sources of support that connect 

them to new opportunities. 

Briefly, I am going to wrap up by mentioning three key issues. 

The first is, there must be tough trade law enforcement. There has 

never been a greater need for the U.S. to back its workers and 

businesses by strongly enforcing our trade laws and agreements. 

And, in the face of unfair schemes by foreign governments and 

companies that undercut our jobs and our exports, trade enforcement is essential. 

Just ask any one of the hundreds of workers who work in my 

State at Solar World, a solar panel manufacturer. When the Chinese made an end-run around our trade laws, it threatened Solar 

World and its employees. The company fought back and won. That 

victory preserved 900 good-paying Oregon jobs. And American 

trade enforcers have to keep at it, because China and other governments will not stop trying to get around the trade laws anytime 

soon. 

With 21st-century trade agreements, tough enforcement also 

needs to hold foreign governments accountable for commitments to 

uphold strong labor rights and environmental protections. Those 

are bedrock elements of a trade agreement, and they cannot be ignored or pushed to the sidelines. 

The second issue to address is technology. Just as containers 

changed trade in the 20th century, the Internet is changing trade 

in the 21st, enabling more efficient ways to exchange goods and 

services internationally. Three decades ago, an entrepreneur with 

big dreams in a town like Mount Vernon, OR, with a population 

of 500, did not have the Internet as a tool to access global markets. 

Today that entrepreneur does, and that access could be direct or 

through Internet platforms. 

The Nation’s trade policies must take advantage of economic 

areas where there is clearly ‘‘Advantage USA.’’ That means promoting and protecting a free and open Internet, keeping open what 

is, in my view, the shipping lane of the 21st century. 

The last point I want to mention is transparency. The American 

people have made it clear that they are not going to accept secretly 

written agreements that do not see the light of day until the very 

last minute. That was too often the way things worked in the past. 

It is not good enough anymore. Nor is it enough to respond to important questions with the same inadequate refrain that somehow, 

some way people are going to benefit from trade deals. The American people have a right to know what is at stake in negotiations 

before they wrap up. Our trade policies are stronger when the 

5 

American people are part of the debate and when their elected officials in Congress conduct effective and vigorous oversight. 

Furthermore, transparency is also critical for a Trade Promotion 

Authority bill. Once it is ready, that bill must be available to the 

public, and there has to be a fair and open process for its review 

and consideration, and Chairman Hatch and I have been discussing 

these and other issues. 

Finally, whatever a member of this committee feels with respect 

to trade, let us have a serious debate and work together on a bipartisan basis to find as much agreement as possible. My focus is 

going to be on finding new opportunities to sell red, white, and blue 

American goods overseas; helping our businesses create high-skill, 

high-wage jobs; and growing paychecks for middle-class families. 

Chairman Hatch, thank you for the opportunity this morning to 

discuss these important issues. We are glad the Ambassador is 

here, and I look forward to his views. 

The CHAIRMAN. Thank you, Senator Wyden. We appreciate your 

work in this area, and we are highly hopeful we can continue to 

work in a bipartisan way to do this very important work. 

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

The CHAIRMAN. We are so happy to have you here, Mr. Ambassador. I do not think you need an introduction beyond saying that 

we are very pleased to see you working in this area. We believe you 

are one of the best people we have had in this area, and we intend 

to work with you to try to make sure that we get this work done. 

But you come here with all the credentials and with an awful lot 

of experience in this administration. So we are looking forward to 

working with you, and we will turn the time over to you. 

STATEMENT OF HON. MICHAEL FROMAN, U.S. TRADE REPRESENTATIVE, EXECUTIVE OFFICE OF THE PRESIDENT, 

WASHINGTON, DC 

Ambassador FROMAN. Thank you, Chairman Hatch, Ranking 

Member Wyden, members of the Finance Committee. Thanks for 

this opportunity to talk about the President’s trade agenda. 

As a central part of the President’s overall economic strategy, our 

trade agenda is committed to supporting more good jobs, promoting 

growth, and strengthening the American middle class. At USTR, 

we are advancing those goals by knocking down barriers to U.S. exports and leveling the playing field for American workers and businesses of all sizes. As we work to open markets around the 

world—— 

[Outbursts from the audience.] 

The CHAIRMAN. Let us have order. All right. Remove this person 

from the room. And if anybody else—if anybody else does this, you 

are going to be removed. 

[Outbursts from the audience.] 

The CHAIRMAN. Remove these people. 

[Outbursts from the audience.] 

The CHAIRMAN. All right. Let us take them out. Now look, the 

committee will be in order. Comments from the audience are inappropriate; they are out of order. If there is any further disruption, 

the committee will recess until the police can restore order. 

6 

Let me just say this. I understand that some people have strong 

feelings about the subjects we are talking about today. That is fine. 

The First Amendment guarantees your right to express your views, 

but we have to allow civil discussion to occur in the context of this 

hearing—— 

[Outbursts from the audience.] 

The CHAIRMAN [continuing]. So for people who are protesting, I 

ask that you respect the rights of others, respect this committee, 

and remain quiet so the hearing can continue, and we would appreciate having the signs removed as well. Show some courtesy here. 

But we are not going to put up with it, and, if we have to recess 

this committee, we will, which would be a shame, but we will recess until order is restored. So let us have no more of that. I ask 

our Capitol Hill Police to make sure that we do not have any more 

of this type of activity. 

Ambassador Froman, we turn the time back to you. 

[Outbursts from the audience.] 

The CHAIRMAN. Look, you are not representing your people properly. Take him out. 

[Outbursts from the audience.] 

The CHAIRMAN. You are not helping your case, I will tell you that 

right now. 

Mr. Ambassador? 

Ambassador FROMAN. As we work to open markets around the 

world—— 

The CHAIRMAN. If any signs go up again, we are going to throw 

you out of the meeting too. So let us just stop the cheap politics. 

Ambassador Froman? 

Ambassador FROMAN. Mr. Chairman, as we work to open markets around the world, we are enforcing our trade rights so that 

American workers, farmers, ranchers, and businesses get the full 

benefit of all the economic opportunities the United States has negotiated over the years. 

Taken together, these efforts have contributed greatly to America’s economic comeback. Since 2009, America’s total exports have 

grown by nearly 50 percent and contributed nearly one-third of our 

economic growth. And, during the most recent year on record, 2013, 

U.S. exports reached a record high of $2.3 trillion and supported 

a record-breaking 11.3 million jobs. At a time when too many workers have not seen their paychecks grow in much too long, these jobs 

typically pay up to 18 percent more, on average, than non-exportrelated jobs. 

Over the past year, I have traveled around the country and 

heard many of the stories behind these statistics. I listened to 

small business owners in Colorado, Maryland, and Ohio; farmers 

and ranchers in Iowa and Wisconsin; manufacturers and service 

providers in Texas and the State of Washington; and many others. 

And across our country, I have heard the same resounding message: confidence that as long as the playing field is level, our workers and businesses can win. 

Today, more small businesses are exporting than ever before, 

and, by tapping into global markets, these companies are able to 

increase their sales and their payrolls. And this success is all the 

more impressive when you consider that the United States is an 

7 

open economy and other countries are not necessarily playing by 

the same rules. That is why we are working harder than ever to 

bring home trade agreements that will unlock opportunities by 

eliminating barriers to U.S. exports, trade, and investment, while 

raising labor, environmental, and other important standards across 

the board. 

If we sit on the sidelines, we will be faced with a race to the bottom in global trade, not a race to the top. And, as the President 

said last week, we should be the one to engage and lead. That leadership is apparent in our work during the last year to advance the 

Trans-Pacific Partnership, or TPP. The contours of a final agreement are coming into focus, and we have made important progress 

in the market access negotiations, and in addressing a number of 

21st-century issues such as intellectual property, digital trade, 

competition with state-owned enterprises, and labor and environmental protections. At the November TPP leaders meeting, all 12 

countries reaffirmed their commitment to concluding a comprehensive, high-standard agreement as soon as possible. 

Another promising area is the Transatlantic Trade and Investment Partnership, or TTIP. With the new European Commission in 

place, the United States and the European Union are moving forward with a fresh start in the TTIP negotiations, which will build 

upon the $1 trillion in two-way annual trade. In November, President Obama and E.U. leaders reaffirmed their commitment to an 

ambitious, comprehensive, and high-standard TTIP agreement. 

At the World Trade Organization, the United States is working 

to conclude a WTO Information Technology Agreement expansion 

deal, which would cover roughly $1 trillion in trade, while moving 

forward in negotiations on the Trade in Services Agreement, and 

the Environmental Goods Agreement. 

This will be a critical year for trade. We look forward to continuing our efforts to engage the public, stakeholders, and members 

of Congress in a robust discussion about how we are opening markets and creating opportunities for American exports; how we are 

raising labor and environmental standards to level the playing field 

for American workers; how we are promoting innovation and creativity, as well as access to its products; and how we are ensuring 

that governments will be able to regulate in the public interest, 

while giving Americans abroad the same kind of protections we 

guarantee domestic and foreign investors here at home. 

As we move ahead, we are committed to providing maximum 

transparency consistent with our ability to negotiate the best 

agreements possible. We look forward to working with this committee and others in Congress to determine the best way to achieve 

that goal. 

Mr. Chairman, there is no other area of policy that reflects closer 

coordination between the executive branch and Congress than 

trade policy. To further strengthen that cooperation, as the President made clear last week, we look to Congress to pass bipartisan 

Trade Promotion Authority. TPA puts Congress in the driver’s seat 

to define our negotiating objectives and strengthens congressional 

oversight by requiring consultations and transparency throughout 

the negotiating process. 

8 

The previous TPA legislation was passed over a decade ago. An 

updated TPA bill is needed to address the rise of the digital economy, the increasing role of SOEs, and to reflect the latest congressional views on labor, environment, innovation, and access to medicines. TPA also establishes the timeline and process for the trade 

agreements we bring home to be reviewed not only by Congress, 

but also by the American people. TPA is Congress’s best tool to ensure that there is ample time for public scrutiny and debate on 

U.S. trade agreements. And the administration looks forward to 

working with this committee and the new Congress as a whole to 

secure a TPA that has bipartisan support. 

We also look forward to working with Congress to renew a number of other programs, including Trade Adjustment Assistance; the 

Generalized System of Preferences, which expired in 2013; and the 

African Growth and Opportunity Act program well before its expiration in September of this year. 

We can only accomplish these shared goals and priorities 

through strong bipartisan cooperation between Congress and the 

administration. Together we can assure that our trade policy continues unlocking opportunity for all Americans. 

Once again, thank you for the invitation to testify, and I am 

happy to take your questions. 

The CHAIRMAN. Thank you, Mr. Ambassador. 

[The prepared statement of Ambassador Froman appears in the 

appendix.] 

The CHAIRMAN. Last year I expressed my profound disappointment that you refused to bring a WTO case against India for its 

continuing efforts to undermine U.S. intellectual property rights. 

High-level working groups and meetings are simply not good 

enough. I have long feared that if you did not act, more problems 

would emerge. Now, less than 2 weeks ago, India’s patent office refused to grant a patent on an important drug that treats hepatitis 

C. Their rationale is based on a patentability standard that is out 

of step with the rest of the world, and which many believe is inconsistent with India’s obligations under the World Trade Organization. 

Now, would you express to us today your plan to take meaningful 

action against India’s breaches of our various companies’ intellectual property rights? 

Ambassador FROMAN. We have been concerned about the deterioration of the innovation environment in India, and we have engaged with the new government since they came into office in May 

of last year about our concerns. We held the first trade policy 

forum in 4 years in November, and I just returned from India yesterday, as a matter of fact. And in all of these areas, we have laid 

out a work program with the government of India to address these 

and other outstanding issues. 

Recently the government of India published a draft intellectual 

property rights proposal, a policy proposal, that is now open for 

public comment, and we are in the process of providing comments 

on that draft proposal. And we are committed to continuing to engage with them to underscore areas of work that needs to be done 

in copyright, in trade secrets, as well as in the area of patents. 

9 

I believe we have a good dialogue going now with the new government on this issue, and we are committed to working to achieve 

concrete progress in this area. 

The CHAIRMAN. Well, I hope you will follow up on that. 

China’s leadership continues to pledge that the market will play 

a greater role in China’s economy. Yet the government continues 

to use law as an instrument of industrial policy. This is increasingly pronounced in the use of China’s anti-monopoly law. Now, 

how will you ensure that China administers its anti-monopoly law 

in a nondiscriminatory and transparent manner? 

Ambassador FROMAN. Well, this has been an area of strong interest of ours. At the recent Joint Commission on Commerce and 

Trade that we held—that Secretary Pritzker and I held with China 

in December—this was one of the issues very much on the agenda. 

And we have made some progress in moving ahead on the application of anti-monopoly law, which we think should be applied to deal 

with issues of competition, not issues of industrial policy. 

So we are engaged with them, as are our competition authorities 

at the Department of Justice and the FTC, to work to encourage 

them to apply the law as it is intended to be applied. 

The CHAIRMAN. I know these are tough areas. Canada’s creation 

of a heightened standard for patentable utility for pharmaceutical 

patents is a serious problem for our U.S. innovators. This standard 

is inconsistent with other countries and undermines the ability of 

U.S. innovators to obtain and enforce patent rights in Canada. It 

is also inconsistent with Canada’s obligations under the World 

Trade Organization and under NAFTA. 

What are you doing to ensure Canada’s patentability standards 

are consistent with its international obligations? 

Ambassador FROMAN. We have raised this concern directly and 

repeatedly with the Canadian authorities. That issue is now being 

litigated, and I believe the Canadian authorities are looking to see 

how it proceeds in litigation as we continue that dialogue with 

them. 

The CHAIRMAN. Thank you. Ambassador Froman, in remarks last 

June, you highlighted data localization requirements as a significant problem for U.S. services companies. Now, some foreign governments require U.S. financial services providers to set up local 

data centers as a condition of doing business in their markets. New 

trade agreements need to fix this problem. Do you agree that it is 

important that all U.S. industries, including financial services providers, receive protection against data localization requirements in 

ongoing trade negotiations? 

Ambassador FROMAN. I do agree, and this is a key area right 

now in our TPP negotiations, where, as Ranking Member Wyden 

mentioned, the digital economy is playing an increasingly important role in trade. And we want to, through TPP, secure agreements and commitments to maintain the open flow of data across 

borders so that our small businesses, for example, can be based 

here and sell into markets abroad, but also to ensure that there are 

not localization requirements which require the construction of redundant infrastructure, making companies build infrastructure in 

each country which they want to service. 

10 

So this is a key part of our TPP negotiations. We are making 

progress in that area, and we hope that will set a new standard 

for bringing trade rules into the digital economy. 

The CHAIRMAN. Thank you so much. I am going to be strong on 

enforcing the 5-minute rule so everybody can have an opportunity 

here. 

Senator Wyden? 

Senator WYDEN. Thank you, Mr. Chairman. 

Mr. Ambassador, the President said in his State of the Union 

speech, and I quote here, ‘‘Past trade agreements haven’t always 

lived up to the hype.’’ And my sense is, based on my town hall 

meetings—this has come up repeatedly—what middle-class families 

are going to ask is, ‘‘So what is going to be different this time?’’ 

I think it would be helpful if you would spell that out. 

Ambassador FROMAN. Thank you. Thank you, Senator. Look, I 

think the President has made clear that as we pursue a new trade 

policy, we need to learn from the experiences of the past, and that 

is certainly what we are doing through TPP and the rest of our 

agenda. 

For example, when he was running for President, he said we 

ought to renegotiate NAFTA. And what that meant was to make 

labor and environment not side issues that are not enforceable, but 

bring labor and environment into the core of the agreement and 

make them enforceable just like any other provision of the trade 

agreement, consistent with what Congress and the previous administration worked out in the so-called May 10th agreement. 

That is exactly what we are doing through TPP. There will be 

strong labor and environmental protections in the core of the agreement, and they will be fully enforceable, consistent with the rest 

of the agreement. And that is important, because it is part of our 

effort to level the playing field, raise labor and environmental 

standards, as well as strengthen intellectual property rights standards and access to their products, creating new disciplines on the 

issues that are affecting real workers and real production right 

now, like state-owned enterprises. 

Right now, state-owned enterprises in other countries compete 

against our private firms on an unlevel playing field. TPP will put 

disciplines on state-owned enterprises for the first time and require 

those state-owned enterprises, if they are engaged in commercial 

activity, to act on a commercial basis, and also—you mentioned the 

digital economy—update our trade agenda to reflect changes in the 

global economy. 

So in all of these areas, we are working to make sure, and we 

are trying to use every tool at our disposal in the trade negotiations, to drive more production, more manufacturing, to the United 

States to make the U.S. the production platform of choice. 

Senator WYDEN. Let us talk about transparency next, because I 

think this is another area where the public looks at the Internet 

and says, hey, we can find out a lot of information that you could 

not have, for example, back when the trade deals were being discussed in the 1990s. So there has, of course, been a concern about 

transparency in the Trans-Pacific Partnership discussion. And the 

concern here is that the President would sign a TPP deal that 

11 

would be protected by fast-track, and then you would have middleclass families saying, ‘‘We do not know what is in it.’’ 

Now, you and I have discussed this before, and I think it would 

be helpful if you could address the question of whether you expect 

the President to sign a Trans-Pacific deal before the agreement is 

made public for the American people to see. 

Ambassador FROMAN. Well, certainly in the past, the practice 

has been for it to be public before it is signed. That is our expectation here. We need to consult with our trading partners to understand what their processes and domestic constraints are, but we 

are beginning that consultation process with that expectation in 

mind. 

Senator WYDEN. Good. On the issue of, again, looking at some of 

the sector-specific questions that you and I have discussed, there 

is a lot of concern with respect to dairy, and this is a very important issue in the Pacific Northwest. We, of course, have both defensive and offensive interests with respect to dairy. For example, we 

may be willing to open our market to more dairy goods from Australia and New Zealand, but only if Japan’s and Canada’s market 

is more open to our dairy products. 

How are you going to ensure that a Trans-Pacific agreement, on 

balance, is a better deal than what the industry has now? 

Ambassador FROMAN. Well, whether it is dairy or other agricultural commodities, we want to make sure TPP creates additional 

opportunity for them, and that includes both market access—getting access to markets abroad like Japan, Vietnam, Malaysia, Canada, and others—but also, dealing with issues like sanitary and 

phytosanitary standards and making sure that other countries are 

applying SPS standards consistent with science. 

It also goes back to an issue that the chairman mentioned of geographical indications, making sure that we can sell our highquality products from the United States and have their trademarks 

and the common names respected in other countries. 

So we are working on a package as a whole to make sure that 

it benefits our dairy farmers, and the same thing could be said of 

our other commodity groups. 

Senator WYDEN. One last question, if I might, and it addresses 

what the President touched on with respect to China. I think the 

President basically said that, if America is not leading in writing 

the trade rules in the Asia-Pacific region, China will. 

With which countries in the Asia-Pacific area does China either 

seek or already have a trade agreement, and how specifically would 

those agreements disadvantage America’s middle-class workers? 

Ambassador FROMAN. It is my understanding that China has negotiated 14 FTAs since 2002, one with ASEAN—which is 10 countries in total—plus Australia, Chile, Costa Rica, Hong Kong, Iceland, Korea, Macau, New Zealand, Pakistan, Peru, Singapore, 

Switzerland, and Taiwan. And right now they are engaged in what 

is called the Regional Comprehensive Economic Partnership negotiations, which include 16 countries spanning from India all the 

way to Japan. 

I think what is important about this is, these are the fastestgrowing markets of the world. Right now there are about 570 million middle-class consumers in Asia, but that number is expected 

12 

to grow to 2.7 billion over the next 15 years. And the question is, 

who is going to serve that market? Is it going to be Made in America and Grown in America products, or is it going to be products 

made by China or others? And what are the rules of the road for 

that region going to be? 

The big differences between what we are doing in TPP and other 

trade agreements are things like raising labor and environmental 

standards, having strong intellectual property rights protection and 

commitments to access, putting disciplines on state-owned enterprises, and bringing into the digital economy rules like the free 

flow of data and information that come from the real economy. 

Those types of discipline do not exist in these other trade agreements, and that is why it is so important for American interests 

and American values that we be the ones who engage and lead to 

create a fair and level playing field to protect our workers and protect our jobs. 

Senator WYDEN. Thank you, Mr. Chairman. 

The CHAIRMAN. It looks like China has a robust trade policy. 

Senator Grassley? 

Senator GRASSLEY. First of all, I want to thank you for the number of times you have taken my telephone calls and given me updates on negotiations that we are talking about here. Having the 

opportunity to get updates is very important. 

Also, I want to, since you talk to the President probably more 

frequently than I do on trade, give a little bit of advice. I know that 

the President is very much a believer in trade and wants Trade 

Promotion Authority. I know he has mentioned it at least in the 

last two State of the Union messages, to the Business Roundtable, 

to the Export Council. But I hope you will tell him that if we are 

going to get Trade Promotion Authority passed, he is going to have 

to work the telephones one-on-one with some Senators to get us to 

the 60-vote threshold. 

Now, I am going to ask my first question a little bit along the 

lines of what you discussed with Senator Wyden. 

When you were at the Iowa State Fair with me last August 

meeting with Iowa farmers, you stated—and I hope I am quoting 

you accurately—that you would ‘‘know a good deal for agriculture 

when you saw it,’’ end of quote. And that was in regard to TPP. 

My question for you is very simple. How close do you think we 

are to seeing a good deal for agriculture with TPP, and, more specifically, related to pork, how are the market access negotiations 

with Japan going? 

Ambassador FROMAN. Thank you, Senator. We are making good 

progress in these market access areas, including on agriculture and 

including on pork. We are not done yet. We still have work to do 

with Japan and other countries, and we have been working very 

closely with our stakeholders in this area, the pork producers and 

others, to ensure that the package that we come up with addresses 

their concerns and creates real value for American farmers and 

American ranchers. 

So we are not done yet, but I feel confident that we are making 

good progress, and we hope to close out a very positive package 

soon. 

13 

Senator GRASSLEY. Just to emphasize something from history, as 

well as things I have related to you in the past: for an overall 

agreement, whether it is manufacturing, services, or agriculture, it 

seems to be, at least from the part of the U.S. Senate, a good agriculture agreement tends to be the locomotive that brings along everything else, and I hope manufacturing and services will help 

along that line as well, for their own good. 

Second, over the last year we have seen China and the European 

Union continue to drag their feet on approvals of certain biotechnology traits. In some cases, market disruption developed from 

the lack of regulatory approvals. I know you have been working 

hard on these issues. But what else can we do to facilitate regulatory review processes throughout the world that are sciencebased, regarding biotechnology? 

Ambassador FROMAN. Thank you, Senator. That is very much 

our perspective on this: to encourage other countries to engage in 

SPS approvals based on science. 

Let me take the two examples you give separately. With regard 

to China, in the run-up to the Joint Commission on Commerce and 

Trade in December, we had a series of dialogues with them about 

biotechnology. They approved three biotech events on the eve of the 

JCCT, and we have a commitment now to have a strategic agriculture policy working group—co-chaired by USDA and ourselves 

on our side and various Chinese ministries on their side—to work 

on the improvement of their overall process for biotech approvals; 

so not just the particular events, but how they can bring their processes into conformity with international standards. 

With the E.U., we are very much encouraging them to—and we 

were disappointed that over the course of 2014, they did not approval any biotech events. There is a backlog of biotech events that 

have been designated as safe by the European Food Safety Agency, 

and we are encouraging the new commission to take those up, consistent with its WTO obligations, and to approve those. 

Senator GRASSLEY. I have had a number of U.S. companies visit 

with me about the need to address currency manipulation in TPP. 

Has that issue been raised in negotiations? 

Ambassador FROMAN. This is an issue, as you know, of top importance to the administration, and we have been pursuing it, from 

the President on down, directly with countries such as China, but 

also through the G–7 and G–20 and the IMF, to encourage countries to move toward market-determined exchange rates. 

And I know you will be seeing Secretary Lew here soon. He obviously has the lead on those issues. It is something that he and I 

are consulting on and continue to engage with others about. 

Senator GRASSLEY. Is your answer that it is being negotiated 

with individual countries through the President’s efforts and your 

efforts? What my question was referring to is, is it being done 

through TPP negotiations, or is it not being done through TPP negotiations? And that is my last question. 

Ambassador FROMAN. At this point, Secretary Lew, who obviously has the lead on this, has been having conversations in the 

context of these other mechanisms bilaterally and with the G–7, 

the G–20, and the IMF. 

Senator GRASSLEY. But not through TPP. Thank you. 

14 

The CHAIRMAN. Senator Schumer? 

Senator SCHUMER. Thank you, Mr. Chairman. And thank you, 

Ranking Member Wyden. 

Ambassador, I think you know what I am going to say, but I am 

going to keep saying it until the administration actually hears me. 

I appreciate the value of our engagement in the Asia-Pacific region 

through TPP. However, I am skeptical about supporting another 

trade deal based on the results of our existing agreements. 

To me, the number-one issue facing America is that middle-class 

incomes are shrinking. So people can say that these trade agreements grow GDP, these trade agreements help corporate profits. 

But if they cannot show that they are going to help middle-class 

incomes increase when all the evidence is that lots of them help 

middle-class incomes decrease, I have some real problems. 

And even further, I am very skeptical about enforcement in these 

deals. It seems to me we sign these deals, we go right to the letter 

of WTO, and the other countries thumb their nose at WTO and say, 

‘‘Take us to court,’’ and we lose. 

It took 4 years for WTO to rule on China’s rare earth monopoly, 

and they captured the global market in that time. It is a neverending battle with South Korea dumping steel pipes and tubes into 

our market. While all the litigation goes on, our people get clobbered, and our workers lose jobs. India regularly waives patent 

rights on pharmaceuticals. We seem to shrug our shoulders. The 

enforcement mechanism is powerless. 

So I am exploring proposals to combat intellectual property theft 

by countries like China and streamline adjudication when U.S. 

businesses are taken advantage of by state-owned monopolies, and 

I hope you will work with me on some of these ideas. If you are 

going to have any hope of gaining support for this agenda from 

many of us on this side of the aisle, not all, the administration 

needs to prove to us and to the world that we are going to start 

fighting back. 

We need concrete, predictable and unilaterally—that is a whole 

new world—unilaterally enforceable mechanisms in place to show 

the world that we are going to protect our workers and our economy. Let us start with currency. A bipartisan majority of both the 

Senate and the House have made it clear we want strong and enforceable currency manipulation language enacted as part of any 

TPP agreement. But it also must deal with those countries that are 

not part of the TPP agreement, particularly China. 

Now, I know you cannot have that in the agreement, but we can 

have the two things go alongside one another. And I for one, as 

China continues to manipulate currency, over the years throwing 

millions of American workers out of jobs unfairly, do not want to 

go forward with another trade agreement if we are not going to finally address this issue. 

And with all due respect, Secretary Lew is great and he talks to 

me, but the administration has not done very much here. They 

have never called China a currency manipulator when it is plain 

as the nose on your face that they are. And Japan and other countries, part of TPP, distort their currency exchange rates to push up 

their trading surpluses. 

15 

And I am disappointed to hear your response to Senator Grassley 

that that will not be part of the TPP negotiations. It has very real 

consequences for jobs in the middle class. A study by the Peterson 

Institute for Economics found that foreign currency manipulation 

has cost America between 1 million and 5 million jobs. According 

to the Economic Policy Institute, eliminating currency manipulation will reduce the U.S. trade deficit by $500 billion, increase annual U.S. GDP by $300 billion to $700 billion, and add between 2.3 

million and 5.8 million new jobs. 

I have long been the advocate here—in 2003 I was, I think, alone 

when I talked about this issue, and I was very proud when both 

the Wall Street Journal and New York Times editorial pages condemned me for it. Now, people have come around and said currency 

manipulation is real, but we still do not do anything about it. Administration after administration, unfortunately, yours as well as 

President Bush’s, have taken the position that the issue can be 

dealt with, as Senator Grassley said, by country-to-country negotiation rather than legislative changes. 

Well, not for this Senator. We have had enough of country-tocountry negotiations for over a decade under Democratic and Republican administrations. So I want to make clear, I cannot support a TPP agreement if we do not, at the same time, enact new 

statutory law that includes objective criteria to define and enforce 

against currency manipulation. I will not support moving this trade 

agreement forward if we are not fighting to make sure we have the 

necessary tools to protect the American middle class and American 

jobs. You would not go to a game of baseball where your team only 

got two strikes per bat and the other team got four. 

If we enter into TPP without strong currency language, that is 

exactly what we are doing. 

The CHAIRMAN. Senator, your time is up. 

Senator SCHUMER. And I am just finished. 

The CHAIRMAN. That is a miracle. [Laughter.] 

Senator SCHUMER. All things come to those who wait. 

The CHAIRMAN. I am very proud of you, I will tell you. 

Mr. Ambassador, would you care to comment on Senator Schumer’s comments? 

Ambassador FROMAN. Well, first of all, thank you. Thank you, 

Senator, and thank you for your leadership on this issue and on 

enforcement more generally, and we very much look forward to 

working with you on it. 

I will say the following. This administration has taken enforcement very seriously. We have brought more cases than ever before, 

more than any other country. We have brought 18 cases before the 

WTO and the first 421 case against China. We have won every single case that has been brought to conclusion, and we are continuing 

to work to bring additional cases wherever we find that there is a 

problem and where we can make a case and win. 

So we look forward to working with you. We have set up the 

Interagency Trade Enforcement Center, which has allowed us to 

bring more resources from across the government, have a whole-ofgovernment approach to trade enforcement. It has allowed us to 

bring more complex and more sophisticated cases. 

16 

We look forward to working with you on the kind of enforcement 

actions that could be taken going forward, because we agree with 

you completely that it is important that it is not two strikes and 

four strikes, that there is a level playing field and that we do everything we can under our laws, consistent with our international 

obligations, to enforce our trade rights. 

Senator SCHUMER. Thank you, Mr. Ambassador. 

The CHAIRMAN. Senator Cornyn? 

Senator CORNYN. Thank you, Mr. Ambassador. I would like to 

join Senator Grassley in expressing my appreciation for your outreach on both the TPP negotiations and TPA. 

I have to think that if other members of the administration followed your good example in terms of letting Congress know what 

is going on, seeking input, we would be a lot more productive working together, as I hope we will be. 

I do not share the ambivalence that the senior Senator from New 

York has about the benefits of these trade agreements, when you 

consider the fact that 80 percent of the purchasing power in the 

world lies outside our shores. And selling our manufactured goods 

and things we grow and produce here in America to those markets 

abroad seems like an unequivocal good thing for the American middle class and for our economy and economic growth. 

I want to ask basically two questions. One really has to do with 

something outside of your immediate purview, but it is something 

I want to make sure you are aware of, and the other falls squarely 

within your purview. 

As you know, there has been a prolonged labor dispute out on 

the west coast that has resulted in a lot of our exports to Asia, particularly of our beef, pork, and poultry, basically sitting and rotting 

on the docks there at the Port of Oakland and other locations. 

The U.S. exports over 200,000 metric tons of beef, pork, and 

poultry a month to key Asian markets, and, of course, in 2014, it 

was roughly $8.4 billion that cleared west coast ports. So I know 

that the Federal mediator has now gone to try to facilitate negotiations there, but even if that dispute in the Port of Oakland was 

concluded tomorrow or today, it would take 30 to 45 days to clear 

the backlog. 

I just would like to hear from you whether you know whether the 

administration views resolving this dispute as a priority. 

Ambassador FROMAN. Well, I understand, as you suggested, that 

the parties to the dispute have asked for Federal mediation and 

that Federal mediation is now happening, and we do hope that it 

will be successful and we will get this resolved as soon as possible. 

Senator CORNYN. I appreciate that. I hope you will carry that 

message back that this is a matter of grave concern to some members of Congress, and presumably all who represent constituents 

who are engaged in selling poultry, pork, and beef to Asian markets, and those who recognize the important impact that has on 

our economy and, conversely, the negative impact it would have if 

these shipments start rotting at our ports on the west coast. 

The second issue has to do with the critical importance of protecting intellectual property for biologic medicines in the TPP. As 

you know, the founders of our great country thought it was so important to protect our intellectual property in terms of advancing 

17 

science that there is a provision, article I, section 8, known as the 

copyright clause, in our Constitution. 

Yet, a number of the countries we are negotiating with basically 

offer zero protection to intellectual property rights in their countries. And I would just like to hear from you about the administration’s commitment, particularly on the issue of biologic medicines, 

to making sure that the 12 years for data protection in particular 

is included in the Trans-Pacific Partnership negotiations. 

Ambassador FROMAN. Senator, we have 40 million Americans 

whose jobs depend on IP-intensive industries, and certainly a key 

part of what we are doing in TPP is to promote strong intellectual 

property rights, including strong enforcement of those rights, as 

well as access to medicine, consistent with the bipartisan consensus 

that has emerged here over the last several years. 

Biologics, specifically, as you suggest, of the 12 countries in TPP, 

five countries have 0 years, four have 5 years of protection, two 

have 8 years, and we have 12 years. And so this is one of the most 

difficult outstanding issues in the negotiations. We are continuing 

to make the case with our trading partners about how data protection can lead to greater innovation around the region, greater investment in this area, how to achieve access consistent with promoting strong intellectual property rights, and we are continuing 

to have that dialogue with our trading partners. 

Senator CORNYN. Thank you very much, Mr. Ambassador. I appreciate your good work, and we look forward to continuing to work 

with you. 

Senator Grassley [presiding]. For the chairman, I will announce 

that Senator Cardin is next. And after that, it looks like Isakson, 

Coats, and Carper. 

Senator Cardin? 

Senator CARDIN. Thank you very much, Mr. Chairman. I want to 

join the praise to you, Ambassador Froman, for your consultation 

with us, your working with us, the open way that we have been 

able to work together and share views and share the challenges we 

have on the trade agenda. So I very much appreciate the manner 

in which you have involved us in the process. 

As Chairman Hatch pointed out, we have a challenge, and the 

challenge is that TPP is so far along the way—normally, we would 

have had a TPA enacted, we would have voiced our negotiating objectives, you would have come back to us with consultation on those 

trade objectives, negotiating objectives, and we would have had a 

chance to adjust our expectations along the way. 

Well, TPP is so far along the way that that becomes somewhat 

awkward, whether TPA really will work in the way that it was intended to work, with congressional input. I mention that because 

you know my number-one concern. My number-one concern is, in 

TPP, that TPA has very strong negotiating objectives as it relates 

to good governance, as it relates to anti-corruption issues. 

We are dealing with countries that are challenging in TPP: 

Brunei, where the LGBT community has legitimate human rights 

concerns; in Brunei and Malaysia and Vietnam, their record on 

labor is very suspect. And on anti-corruption, they could pass laws, 

but they do not have the institutions, the independent prosecutors 

18 

and courts, to give us confidence that they would enforce those 

laws. 

So my priority from the beginning—and I think I have been very 

open about it—is that our trading objectives be very strong on good 

governance because of the TPP negotiations and that, yes, we are 

careful to make sure that we continue to have a level playing field 

on environment, on labor protections, but also on good governance, 

anti-corruption measures, and, as Senator Schumer said, enforcement, because if it is not enforceable under trade sanctions, it becomes very difficult to see whether we have really elevated the situation. 

And for those who are concerned, as I know some of my colleagues are, about mixing trade and human rights, let me just remind you that it was U.S. leadership in trade that helped change 

the apartheid government of South Africa. It was the U.S. leadership that spoke to the Soviet Union about their human rights and 

immigration issues through Jackson-Vanik that brought about 

change. 

It is critically important, if we are going to see change in Vietnam and Malaysia and Brunei and other countries that do not have 

that record, that we use this opportunity to achieve those objectives. So I will be evaluating very carefully, not just what we do 

on TPA, because we are so far down the line on TPP, but also an 

open process on both TPP and TPA as it deals with human rights 

and good governance. 

I want to ask one more question and then have your response on 

that and the second question. 

That is, TPA would deal with more than TPP. It would deal with 

TTIP, as you have already pointed out. And there is a growing concern with our European partners that they are sympathetic to BDS 

legislation dealing with boycotts, divestitures, and sanctions. I 

would be interested as to, in those discussions, whether we have 

been raising the issue that such action by our European partners 

would be considered to be against our overall trading objectives 

and whether we are using TTIP as an opportunity to protect 

against such legislation. 

I would be glad to hear your comments on both of my points. 

Ambassador FROMAN. Thank you, Senator, and thank you for 

your leadership on human rights and governance issues. 

TPP, in fact, does have strong governance and anti-corruption 

provisions in it, and really it is one of the innovations of TPP to 

make that a core part of the agreement. And it really goes throughout the whole agreement with regard to transparency, regulatory 

transparency, and across the board. And of course it has strong enforcement mechanisms generally in the agreement. So we agree 

with you on the importance of that. 

TPP has also given us an opportunity to engage with countries 

like Vietnam, Malaysia, and Brunei on the kinds of issues that you 

have mentioned. So with regard to labor rights, for example, we are 

in deep consultations with these countries about what it would 

take to bring their labor regime into conformity with international 

standards; not just in terms of changing laws, as you said, but also 

what kind of capacity-building, what kind of practice is necessary 

to really have changes on the ground. 

19 

And it is only because of TPP that we have the opportunity to 

have that kind of dialogue with Vietnam, Malaysia, and Brunei. 

And even on the human rights issue with Brunei, which has been 

raised, we are working very closely with the State Department, 

which has the lead on the human rights issues. TPP gives us the 

opportunity to engage with them about their practices and ensure 

that what they do is consistent with their international human 

rights obligations. 

So I feel good that, through TPP, we will be able to make progress in all those areas and that TPP will set a new milestone in 

terms of good governance, anti-corruption, and improving labor 

rights across the board. 

On the European issue, I am not familiar with that particular 

area of legislation. It is not something that has come up in our negotiations yet, but we are happy to follow up with you and look into 

it. 

Senator CARDIN. Thank you. Thank you, Mr. Chairman. 

Senator ISAKSON. Thank you, Senator Grassley. 

Welcome, Ambassador Froman. For Senator Cardin’s benefit, I 

was with Ambassador Froman in Addis Ababa, Ethiopia 2 years 

ago on the AGOA negotiations with the African Union and watched 

him hold Swaziland accountable for workers’ rights as a participatory requirement of the United States in terms of AGOA. 

So I have seen this man firsthand look out for exactly what you 

are talking about, and I might add that Millennium Challenge Corporation compacts have the strongest anti-corruption language of 

any agreement the United States negotiates. And I think the fact 

that TPP is talking about including that is a big benefit, because 

it has worked in Millennium Challenge. It has held people accountable who in the past have not been, and that is an excellent and 

outstanding point. 

And you do a terrific job. I will pile on with Senator Cornyn and 

with Senator Grassley and the others to thank you for the job you 

are doing. But I have a couple of questions for you. 

Question number one is—you and I have talked a lot about poultry. I traveled to South Africa a year ago with an industry representative—I think his name is Davies. I met with him at length 

at Johannesburg. Yesterday he was quoted as saying that there is 

an offer on the table regarding poultry between South Africa and 

the United States. 

To the extent that, as a negotiator, you can talk in public about 

that, is that a misleading quote or is that an accurate quote? 

Ambassador FROMAN. I saw Minister Davies a few days ago in 

Switzerland. He handed me a letter from the South African Poultry 

Association to the U.S. Poultry Association. We have not yet heard 

back from our poultry association what their reaction to that is. 

But we have made very clear to South Africa that resolving issues 

around poultry is going to be critical to moving ahead on a whole 

range of areas, including AGOA renewal. 

Senator ISAKSON. Well, I appreciate that, because that is very 

important to my State of Georgia. But Senator Coons, from Delaware, and I have joined together in a joint letter, which you will 

be receiving when you get back to the office, reinforcing our position that you use the opportunity of AGOA and the leverage that 

20 

it brings with the South Africans, to be sure that we break through 

the impasse regarding poultry. 

With regard to enforcement, which Senator Schumer was talking 

about, I think nobody has mentioned it yet, but your work with 

India, in the case we took to the WTO against India in terms of 

poultry, proved to be very successful. We just recently won that 

particular ruling, and I thank you for doing that. 

On commodities, there is another great product of my State, and it is cotton. Cotton was at $0.80 to $0.85 a pound not too long ago. 

It is $0.55 to $0.57 a pound now. China is basically hoarding, buying cotton and hoarding it and stockpiling it, and they are subsidizing their producers at twice the world market price. 

What can be done with China, through the WTO or through any 

agreements we might otherwise have, to keep them from manipulating the cotton prices and suppressing the cotton market? 

Ambassador FROMAN. Well, I think there is a very important 

point more generally, which is that the whole pattern of agricultural subsidies has changed a lot over the last 10 or 15 years. 

When the Doha round was first started, the focus on agricultural 

subsidies was really the United States and the European Union, 

but in both of those areas, subsidies have come down while subsidies from China and India in the agricultural area have increased 

and, by some measure, China is now the largest subsidizer of cotton. 

So we are engaging with them, and we had conversations also in 

the last couple of days about that, and about taking a fresh look 

at where subsidies are being provided, how they are distorting the 

market, and how that should play into global trade negotiations. 

I think it is important that we update our view of where subsidies are coming from and what impact they have. If you are a 

poor subsistence farmer in Africa, it does not matter whether the 

subsidy is coming from the U.S. or from China. It matters that the 

subsidy exists. 

So we are hoping to engage with China on this and to create 

some disciplines around this. 

Senator ISAKSON. Would that case have standing at the WTO if 

a case was brought? 

Ambassador FROMAN. We are looking at all of our options there. 

We have not yet determined whether there is a case to be brought 

in that area. 

Senator ISAKSON. One last point with regard to poultry. I was in 

Brussels shortly after a trip you had made—and I repeat again the 

respect the European negotiators have for your ability and your engagement. 

But one of the problems we have had in terms of market access 

is, on the one hand, the Europeans will talk about giving market 

access, for example to poultry, but on the other hand they will say, 

but we will not take any poultry that is washed with hyperchlorinated water. Well, that is the way it is produced in the 

United States of America, whether it is Delaware or Georgia or 

Texas or California. They use the regulation as the barrier, not the 

product. 

What are you doing in negotiations on TTIP to try to avoid that 

type of thing happening again? 

21 

Ambassador FROMAN. Well, you put your finger on it, because 

market access is not meaningful if it is just talking about tariffs 

and not talking about the other barriers that can exist. 

And our perspective on this with regard to Europe is that we are 

not interested in forcing anybody to eat anything, but we do think 

the decision about what is safe should be made by science, not by 

politics. And we are encouraging them to ensure that decisions on 

SPS standards reflect science, reflect the evidence, as based on 

safety. 

Senator ISAKSON. Thank you for your service to the country. 

Ambassador FROMAN. Thank you, Senator. 

Senator CARPER. Thanks, Senator Grassley. 

Welcome, Ambassador. It is great to see you. And others have already said this, but we very much appreciate your responsiveness, 

and, frankly, your short, crisp answers are welcome too. 

I was talking to one of my sons earlier today—I have two boys, 

24 and 26. And when they were little kids growing up, I used to 

say to them—they would make a mistake, and I would say, ‘‘There 

is nothing wrong with making a mistake; let us just make sure we 

do not make the same mistake over and over again.’’ And they are 

probably better at not making the same mistake over and over 

again than I am today. So I think it sunk in. 

NAFTA has been mentioned here before today. If we had to negotiate NAFTA all over again, we would probably do some things differently. The point that you made earlier today is that we do have 

the opportunity here to negotiate NAFTA, at least in part—maybe 

in whole, I am not sure. 

Just drill down on that particular issue. People say NAFTA has 

not been all that helpful to the U.S. It has been I think, arguably, 

very helpful to Mexico. They have a vibrant middle class today. 

There are probably as many Mexicans going into Mexico as there 

are Mexicans coming into the U.S. today. Arguably, it has been 

pretty good for the Mexicans. Not entirely bad for us, but sort of 

a mixed bag. 

But in terms of one of the issues mentioned by Senator Isakson, 

poultry, we have a real problem in NAFTA with Canada, as you 

probably know, and it is one that we can fix. But just drill down 

on the things that we know now about NAFTA. What can we do 

differently, and what are we going to do differently with respect to 

the Trans-Pacific Trade Partnership? 

Ambassador FROMAN. Thank you. NAFTA was 22 years ago and, 

as you said, there is a lot that we have learned from that experience and the experience since. There is a lot that has changed in 

the global economy and the global trading system. 

So first and foremost, I think one lesson we have learned is that 

labor and environmental issues need to be core to the agreement. 

They need to be fully enforceable just like any other provision of 

the trade agreement, and that is exactly what we are doing 

through TPP. But not just with Canada and Mexico, with 40 percent of the global economy. 

So we are spreading those enforceable labor provisions to half a 

billion workers around the world, and that reflects a very meaningful evolution of the global trading system. Whereas labor and enviVerDate Mar 15 2010 20:42 Jan 27, 2016 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 R:\DOCS\98343.000 TIMD
22 

ronment were once considered to be literally side issues, now they 

are central, and they are going to be fully enforceable. 

It has also given us an opportunity to go back and address market access issues that we could not address in NAFTA. We are still 

negotiating. We have a ways to go. But we have made clear, for example, as you said, on poultry with Canada, that this is an area 

that we are going to want to see progress on in TPP. 

And there are other issues that have arisen since: some of the 

intellectual property rights issues that have evolved over time or 

the digital economy issues that have emerged since that time before there was an Internet economy. This gives us an opportunity 

to renegotiate and update our approach in all of these respects. 

Senator CARPER. Thank you. Senator Schumer raised some serious concerns about enforcement mechanisms. There is an old saying, ‘‘justice delayed is justice denied,’’ and I think you mentioned 

that we have brought about 18 or so cases to the WTO. Those that 

have been resolved have been resolved in our favor. 

Could you just give us a breakdown of, out of the 18, how many 

have been resolved and how many are still outstanding? 

Ambassador FROMAN. I believe seven have been resolved fully 

through the process, all of them in our favor. We just recently won 

the case with Argentina on import licensing. As Senator Isakson 

mentioned, we won a case on poultry with regard to India. They 

are now appealing that case. But we have won, and up to now we 

feel confident in our approach. 

Some of the others we are resolving, we are trying to resolve 

through consultations to settle the case, and we are waiting for the 

other ones to make their way through the system. 

Senator CARPER. Is there something that we need to do in the 

Congress in order to expedite the amount of time it takes to resolve 

these issues? 

Ambassador FROMAN. Well, I think the key thing is, with TPP 

we are able to have our own dispute settlement mechanism among 

TPP countries, and we have a very strong dispute settlement mechanism that we are negotiating with our partners, and one that has 

firm timetables and schedules and which we hope will find expedited resolutions. 

Senator CARPER. The reason why Senator Isakson, yours truly, 

Senator Cardin, and Senator Warner continue to focus on poultry 

is, it is a huge industry on the Delmarva Peninsula. In Sussex 

County, DE—we only have three counties in Delaware, and Sussex 

is the third largest county in America—we raise more soybeans 

there than any county in America, and we use the soybeans and 

the corn that we raise on the Delmarva Peninsula to raise all of 

those chickens. They outnumber us 300 to 1 in Delaware, and we 

want to make sure that we can sell them to as many markets as 

possible. 

The last thing I want to say is, I just want to reemphasize a 

point made—I think it was by Senator Cornyn—on biologics. And 

you and I had an opportunity to discuss this earlier this month. 

Maryland, Delaware, Pennsylvania, other States, New Jersey, right 

along this row here, have huge interests, tens of thousands of jobs 

depend on our ability to have a fair settlement and a fair agreeVerDate Mar 15 2010 20:42 Jan 27, 2016 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 R:\DOCS\98343.000 TIMD
23 

ment with respect to biologics, and I would just continue to raise 

that issue with you. 

Ambassador FROMAN. Thank you. 

Senator CARPER. Thank you. 

Senator GRASSLEY. Senator Coats, I apologize. I passed over you 

to call on Senator Carper. I did not mean to do that. Thank you 

very much for being patient for me. So I call on Senator Coats. And 

then it would be Thune and Roberts, in that order. 

Senator COATS. Mr. Chairman, no apology needed. I am happy 

to yield to my friend and colleague from Delaware. 

Senator CARPER. I owe you one. 

Senator COATS. I am new. I am trying to figure out the rules 

here in terms of—and I rushed over to be here on time, get my 

name on the list. You saw me. I had to go out and make a quick 

stop at another place and come back. And then I thought, oh, I 

have the rules wrong, it must go back and forth between parties. 

That is fine with me. 

In any event, I appreciate your apology, though it is not necessary. 

Ambassador, thank you, first of all, for diligent work on a very 

tough subject, but a very important issue for the economy and for 

the future of our country and for many, many people from my State 

and from many States that rely on trade for their well-being and 

their lifestyle and for our economy. 

In Indiana, we are a big export State. Getting this right means 

a great deal to many, many Hoosiers, several hundreds of thousands, approaching a million, whose jobs are there because we are 

able to export agricultural products, steel, auto products, pharmaceutical products, medical devices, and a whole range of other products that are produced in my State. So I wish you nothing but success. 

I am a strong supporter of trade, and I want to affirm that some 

of the reservations that have been expressed here by my colleagues 

relative to making sure that we have a level playing field and that 

we have established the rules and they are accepted and enforced, 

will be important. 

But my question to you is this. At the State of the Union address, one of the things that brought Republicans to their feet faster than anything else that the President said was his announcement that he wanted to go forward to gain Trade Promotion Authority and move these trade agreements forward. 

To get this done, in my opinion, based on my experience, it has 

to be an all-in. It has to be above partisan politics. It has to be 

done in a bipartisan way. There have been some reservations 

raised about proclamations from the White House in terms of what 

they will support and what they will not support. I want to just 

make sure that we are all in. If we are all in, we can get this done. 

‘‘All in’’ means that Republicans and Democrats need to work together here in this committee and in the Ways and Means Committee in the House. Our colleagues have to work together to bring 

this home along with the President and the administration. 

Can you affirm to us that the President is all in on this, that the 

administration is all in, and that you have the support you need 

24 

from your administration in order to work with us to get this accomplished? 

Ambassador FROMAN. Yes, Senator. The President has made that 

clear publicly and privately—and he has been meeting with folks 

privately as well—but we also have a structure now at the White 

House, organizing a whole-of-administration effort involving virtually the entire Cabinet, to promote the overall trade agenda, 

talking to members about TPP and what is in TPP and addressing 

their concerns and their questions, and talking about the importance of moving ahead on a bipartisan basis with Trade Promotion 

Authority as well. 

So I have a great deal of support from the President on down. 

It is a priority for him. We want to work on a bipartisan basis and 

make sure we are addressing concerns of Democrats and Republicans as we move this forward. 

Senator COATS. I am happy to hear you say that. I think the voters in November sent a very strong message to all of us on both 

sides: ‘‘Get it done; get something done.’’ 

I think this ranks very close to the top in terms of things we can 

get done that will make a measurable improvement in terms of economic growth and providing jobs for people. So thank you for that. 

I wish you nothing but the best, and we look forward to working 

with you. 

Ambassador FROMAN. Thank you, Senator. 

The CHAIRMAN. Senator Thune? 

Senator THUNE. Mr. Chairman, the Senator from Kansas has 

been waiting. I would defer to him first, even though he is after 

me. 

The CHAIRMAN. Senator Roberts? 

Senator ROBERTS. I want to thank you, Senator Thune. It is remarkable that you would do that—well, it is not remarkable. As a 

matter of fact, I just appreciate it. 

Senator Coats has pretty well summed up what I was going to 

say at the first in my comments. And so I would just like to reiterate that this committee is all in, and you have heard that with 

a strong statement from Senator Hatch, and you heard it with a 

strong statement from Senator Wyden, who represents the great 

State of Oregon but was born in Kansas. And you heard it with 

pertinent questions from Senator Grassley. 

Senator Grassley asked you about this, and this is of interest to 

the chairman emeritus of the sometimes powerful Senate Agriculture Committee, Senator Stabenow: a package soon on agriculture. What is soon? 

Ambassador FROMAN. Well, the market access negotiations are 

proceeding in parallel with the negotiations over the text and over 

the rules. And literally as we speak, our negotiators are meeting 

with the other 11 countries on both sets of issues. 

The market access negotiations on agriculture are done on a bilateral basis. So we meet with the other 11 countries one-on-one 

and have our areas—— 

Senator ROBERTS. I know that. But what is soon? What do you 

think? 

Ambassador FROMAN. Well, look, I am—— 

25 

Senator ROBERTS. I know it is hard to predict, and I am not trying to put you on the spot. 

Ambassador FROMAN. Our view is that, obviously, the timetable 

should be set by the substance, but we think everyone is focused 

on trying to get done in a short period of time, in the next small 

number of months. 

Senator ROBERTS. You say that, but here we have—I am not 

going to Schumerize you now. I want some questions back and 

forth. 

With the GIs, as the USTR, you really made this an issue with 

China at the end of the year, making our argument on trademarks 

much stronger. But we had 43 members of the Senate write you 

a letter on the GI issue, the geographical indications. 

By prohibiting the use of common generic food names such as 

parmesan and bologna, pardon me, baloney, and feta—thank goodness we do not have an Italian community named ‘‘cheese.’’ Last 

year, I wrote to you, along with the 43. I want to thank you and 

your negotiators for their steadfast support. But where are we on 

that, on the GIs? 

Ambassador FROMAN. This is one of the toughest outstanding 

issues still in TPP, because we and the E.U. have diametrically opposed positions. Our view is that our system works well for Europe. 

There are 18 trademarks for parmesan reggiano in the U.S., and 

Europe sells hundreds of millions of dollars of cheese in the United 

States, and we do not sell any in Europe. 

So we have been out there fighting hard to make clear that we 

can have a system where countries can take into account common 

names and trademarks before they grant any geographical indications, and that is the only way to balance the perspectives of the 

United States and the E.U. 

Our challenge is, our trading partners are negotiating with us, 

but they also want to negotiate and want to have good relations 

with the European Union. So they are stuck in the middle, and we 

are trying to find a middle path that will protect our trademarks 

and those common names. 

Senator ROBERTS. I appreciate that. Let me bring up the biotech 

situation. There are currently 12 products awaiting final approval 

by the E.U.’s College of Commissioners. The queue is growing. I am 

more concerned now that the new European Commission announced its intention to conduct a review of the entire European 

biotech import approval process. There is concern that the 12 products pending final import approval will not advance. 

The E.U. is sort of calling for instant replays on every play, and 

that is just not going to work. Would you comment on that, please? 

Ambassador FROMAN. We share that concern. We have raised it 

in our meetings with the European Union. I have had now three 

meetings with my new counterpart, the trade commissioner. We 

have made clear these are products that their own European Food 

Safety Agency has determined are safe and that they have an obligation under the WTO. They have an obligation even under their 

European Court of Justice decisions to move ahead with these approvals, and we are encouraging them to move ahead as quickly as 

possible. 

26 

Senator ROBERTS. Thank you for answering these questions. I 

would like to repeat what Senator Coats said again. I think we 

have a unique opportunity here and you have done some excellent 

work, and I thank you for that. I think you know that every member of this committee is behind you. Each of us has our own initiatives that we are interested in. 

But I worry about the President’s seven State of the Union veto 

messages, but as Senator Coats said, we were all on our feet on the 

trade issue to help the middle class, as Senator Schumer said. 

So we are in. I know you are in. I hope the President is. And I 

thank you for the job that you do. Thank you. 

The CHAIRMAN. Thank you. Now, Senator Thune? 

Senator THUNE. Thank you, Mr. Chairman. 

Ambassador Froman, thank you for your efforts to engage the 

Chinese on agricultural biotech issues over the last year. It is critically important to American farmers, and I echo and associate myself with the comments of the Senator from Kansas and the Senator from Iowa who spoke to this issue earlier, both with regard 

to China, and I continue to emphasize how important those efforts 

are. 

Then also, with the TTIP agreement with the E.U., it is going 

to be very hard, I think, to get that agreement through unless we 

give American farmers more certainty with regard to the approval 

process for biotechnology products. 

So I wanted to make that point. I also want to just speak to an 

issue. Last year, in Brookings, SD, we had welcomed the opening 

of a state-of-the-art cheese plant by Bell Brands USA. It is a 

170,000 square foot facility and employs 250 people, with the hope 

of more in the future, especially if we can bring down what are 

very high barriers to U.S. dairy products in Canada. 

As you know, Canada’s dairy market was not sufficiently opened 

as part of NAFTA, and many of the tariff rates on dairy products 

range from 200 percent to 295 percent. So I want to strongly urge 

you to continue pushing our friends to the north when it comes to 

market access for cheese and other dairy products. And I guess I 

would appreciate any thoughts that you might want to share on 

that subject. 

Ambassador FROMAN. Well, this has been a high priority for us, 

and, before Canada joined TPP, we had a dialogue with them about 

this and how this is going to be an important part of a successful 

outcome. We are engaged with them on a whole range of outstanding issues, and they know that this is very important to us, 

and we are working toward hopefully a successful conclusion there. 

Senator THUNE. That would be very helpful. The dairy business 

in places in the Midwest, especially processing, is really starting to 

explode in some ways, and we certainly want to see more of that 

and all the jobs that come with it, but these tariffs are pretty prohibitive. 

You made remarks last June in which you highlighted data localization requirements as a significant problem for U.S. service companies working to expand into foreign markets and to compete 

globally. I agree with your view on that matter. I am concerned 

about TPP not fully addressing those types of barriers for U.S. financial services companies, such as banks and insurers. SpecifiVerDate Mar 15 2010 20:42 Jan 27, 2016 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 R:\DOCS\98343.000 TIMD
27 

cally, I understand that TPP will not explicitly prohibit our trading 

partners from requiring U.S. financial service firms to set up local 

data centers as a condition of doing business in their markets. 

That is a serious concern, and I am wondering if your office can 

work with mine to correct this oversight and to ensure that this 

omission is not repeated in other trade negotiations, such as TTIP 

and TiSA. 

Ambassador FROMAN. We are happy to work with your office on 

that. We are continuing to pursue our efforts to put disciplines on 

localization and to ensure free flow of data across borders. But we 

are happy to work with your office on that. 

Senator THUNE. It is a big issue, and for the Europeans, in particular, it is an area where they are really—for reasons unrelated, 

I think, to trade—really trying to create some of these barriers, and 

I think that would be a big mistake and certainly make it more difficult for a lot of our businesses, service industries and financial 

services being a good example, to continue to do business in that 

part of the world. 

Could you just quickly comment on—it is an issue I brought up 

with you before—the E.U.’s decision in February of 2013 to impose 

a 10-percent duty on ethanol and what steps USTR is taking to 

bring that case to the WTO? 

Ambassador FROMAN. We have engaged in dialogue with the 

E.U. about that. We have not yet resolved it. We are hoping, with 

the new commission in place, to reengage with them on this and, 

as part of our overall discussion in TTIP about areas of cooperation, to try to bring that to a conclusion as well. 

Senator THUNE. Thank you, Mr. Chairman. And I would echo 

what has already been said. We really need to get TPA done, and 

I hope that we can. The President talks about it; he talked about 

it in the State of the Union address, but we really need the administration engaged up here trying to help us as we push this across 

the finish line. 

Thanks. 

The CHAIRMAN. Senator Casey? 

Senator CASEY. Thank you, Mr. Chairman. 

Ambassador Froman, thanks for being here. Thanks for your 

service on a tough issue, which we all have deep concerns about as 

it relates to not only our States, but the country overall. 

I wanted to start with a premise, or a foundation, upon which 

I will make determinations about these agreements, and that is 

that in my home State of Pennsylvania, despite promises and assertions in the lead-up to trade agreements, too often our State has 

gotten the short end of the stick. We can debate how that happened, we can debate the reasons for that, but I have real concerns 

and real skepticism, which I know we have talked about. 

And at the same time, when it comes to what I call the short end 

of the stick—job loss or dislocation or workers not getting basic 

fairness when it comes to these agreements—that is bad enough in 

and of itself, but then they see very powerful and well-financed 

special interests, in this town especially but in other places as well, 

that do not get the short end of the stick. They do quite well. So 

I have that concern, that skepticism. And frankly, it is more than 

skepticism—it is real worry. 

28 

Then when we come to the question of, well, let us try to mitigate that somehow by remedies, trade remedies, that play out in 

the trade cases that are brought, even when we are successful, it 

seems that we are never where we ought to be as it relates to those 

workers. So I have real concerns, and I know you understand that, 

that the playing field never seems to be level when it comes to our 

workers. 

I know earlier you spoke, in answer to a question from the panel, 

about the improvements to labor rights or environmental protections or IP standards, but the question I have to get to is the question of jobs. 

Just when you look in the context of China, here is just some 

data. Between 2001, when China joined the WTO, and 2013, roughly 12 years, the trade deficit with China increased by $240 billion 

or $20 billion a year. When that plays out for Pennsylvania, we 

rank fifth in total net jobs displaced by trade with China. 

So how do you answer the question that these agreements and 

the path that you are on are good for workers in Pennsylvania? 

Ambassador FROMAN. Thank you. Thank you, Senator. Pennsylvania’s goods exports are now $41 billion. They have grown by 

150 percent over the last 10 years. More than 200,000 Pennsylvanians are employed by export-related businesses; 15,600 firms export from Pennsylvania, and almost 90 percent of them are small 

and medium-sized businesses. 

The question is whether, with these trade agreements, we can 

create more opportunities for those kinds of businesses. You talk 

about China and the trade deficit. If you take all of our FTA partners as a whole, we have a trade surplus, and that surplus has 

grown. Our trade deficit, as you note, is largely comprised of countries with whom we do not have trade agreements. 

So trade agreements are a way of shaping the forces of 

globalization, of opening markets, because our market is already 

quite open. Our average applied tariff is 1.4 percent. We do not use 

regulations as a barrier to trade, but other countries do. 

Just look at Pennsylvania’s exports, sort of the five top areas of 

your exports. Chemicals face 35-percent tariffs in some of these 

markets. Pennsylvania exported $5 billion of these products. Those 

tariffs will go to zero. Minerals and fuels, 30-percent tariffs in some 

of these markets. Pennsylvania exported $4 billion of these products. That tariff will go to zero. Metals and ores, 35 percent. And 

it goes on and on and on. 

What we are going to do through this trade agreement is open 

up markets and then level the playing field so we can protect workers, protect American jobs, and then ensure a fair and level playing 

field by raising labor and environmental standards, raising intellectual property rights standards and enforcement, and making sure 

that we are putting disciplines on the type of practices, for example 

by state-owned enterprises, that pose a real threat to workers in 

Pennsylvania. 

Senator CASEY. I have no doubt about your intention. The problem is that we have heard some of this before, and you mentioned 

some industries or some economic sectors in our State, but when 

I look at, whether it is sugar or solar panels or furniture or tires 

or paper or probably the best example would be steel, which is 

29 

iconic as it relates to our State, we have had, time and again, 

promises made prior to trade agreements and then efforts after the 

fact to bring enforcement cases that have never been commensurate with the promise that was made. 

And I would argue that, as much as I know you want to level 

the playing field, I would hope we could level the playing field long 

before we have trade agreements in place. But we will continue to 

talk, and I appreciate your time. 

The CHAIRMAN. Thank you, Senator. We will now go to Senator 

Portman. 

Senator PORTMAN. Thank you, Mr. Chairman. 

And I appreciate your being here, Ambassador Froman, and I 

thank you for what you do every day and what your team of professionals does to open up markets for the workers I represent, the 

farmers I represent, and the service providers I represent. 

We had some discussion earlier from some folks in the audience 

about how this affects people who are frustrated about the lack of 

wage growth, concerned about whether they are going to have a job 

at all going forward, and all I can say is, I think you just answered 

the question well with Senator Casey. 

If we are not selling to the 95 percent of the world outside of our 

borders, we are letting our people down. And we do have relatively 

low barriers here, as you said, but the rest of the world has a lot 

of barriers, and that is not fair. And so what you every day to 

knock down those barriers is what we want more of. 

I will give you one example. We have a little company in Akron, 

OH. You guys worked with us. We just opened up the Japanese 

market for them for their processed meat product. They were getting shut out. These are workers in Akron, OH who now have a 

chance to have a job, and, as you said, these jobs pay, on average, 

18 percent more. They also have better benefits. 

The agreements that we talked about today, people say some 

agreements are good, some are bad. I am sure we can improve all 

the agreements that we have made. But the reality is that we send 

45 percent or more of our exports to 10 percent of the world, because we only have trade agreements with 10 percent of the 

world—we do not have a trade agreement with China; we do not 

have a trade agreement with Japan or Europe—and we have a surplus with these countries. 

We have to figure out a better way to open more markets. It is 

unbelievable to me that we have not had the ability to open any 

markets since 7 years ago, because Trade Promotion Authority expired. Every President since FDR has had the ability to open up 

markets by trade negotiating authority until this President. And he 

has now asked for it. We, as Americans, ought to say—Republicans, 

Democrats, Independents, whatever—we want our President out 

there opening up markets. 

During those 7 years, there have been over 100 trade agreements 

negotiated. We are left out of all of them. You mentioned China. 

China has negotiated plenty of agreements. Out of that 100, China 

has at least 14 of those agreements that they have negotiated during that time period. Maybe some of them came just before that, 

but around that time period. One of them, by the way, is with 10 

30 

different countries, and we are not part of it. So our workers are 

getting left out. 

And I do not know how we are going to make progress in terms 

of affecting this concern on stagnant wages, lack of benefits, high 

expenses, unless we do a better job of selling to those countries all 

around the world, and we do not do a good job. I mean, our exports 

per capita, we are somewhere between Tonga and Ethiopia, I think. 

Nothing wrong with Tonga and Ethiopia, but we are not a big trader. We are just not. 

We are, I think, looking at a great opportunity here to expand 

trade if we can get this negotiating authority done, do it the right 

way, and continue to make progress on leveling that playing field. 

We also have to do a better job on imports coming in. And as you 

know—you have been very helpful to me on this—we have had a 

couple good successes, one with China, one with Korea and other 

countries in the last year alone, on tubular products. These are 

steel pipes we make in Ohio. We want to keep making them. We 

do not want unfairly subsidized imports coming into our country, 

and that is what has been happening. So it is a balance here. We 

have to both get more exports out there, but also do a better job 

of making sure that imports are being fairly traded. 

I have so many questions for you, more than half a dozen. I am 

going to submit most of them to you to answer in writing, since we 

do not have time to go through them today. But they are all about 

Ohio workers and Ohio farmers, Ohio service providers who want 

to know what more we can do to open up more markets to them. 

Twenty-five percent, a quarter of manufacturing jobs in Ohio, factory jobs, are now export jobs. We want that to increase, because 

these are good-paying jobs. 

I will ask you one question, and it is one that will put you on 

the spot. Again, having said how much I appreciate all you have 

been doing, there is one thing that does concern me, and that is 

currency. 

When I was sitting in your seat, I was asked by Chuck Schumer, 

who spoke a little earlier—he did give me a chance to respond before his time was up. This was, gosh, almost 10 years ago probably. 

But he asked me about currency, and I said, yes, I think it does 

affect trade, and it affects it negatively. And I know it is not your 

bailiwick, in a sense. The Secretary of the Treasury has the responsibility for currency. But I would just ask you today about this new 

report by Larry Summers, former Secretary of Treasury, and other 

finance ministers from around the world that says, and I quote, 

‘‘New trade agreements should explicitly include enforceable disciplines against currency manipulations that appropriately tie mutual trade preferences to mutual recognition that exchange rates 

should not be allowed to subsidize one party’s exports at the expense of others.’’ That is what it says. 

Does that affect your thinking on this, and what are your views 

on currency and what we can do in trade agreements going forward? 

Ambassador FROMAN. Thank you, Senator, and thank you for so 

much leadership on trade and for being a great source of advice 

and guidance. 

31 

Currency is a great concern to us, and it is a top priority. There 

is no difference of opinion about that. We think it is important that 

countries move toward market-determined exchange rates so that 

there is not a misalignment of exchange rates. 

The Treasury Department, the President, and everyone on down 

has been focused on that bilaterally with countries like China, 

where, after pushing them to move their currency in June 2010, 

they began to let their currency appreciate, and it has appreciated 

about 15 percent in real terms against the dollar. That is not fast 

enough, not far enough, and we need to keep on pushing toward 

full market-determined exchange rates, but we are making progress in that area. 

When Prime Minister Abe came in in Japan, the G–7 finance 

ministers got together and said, ‘‘You may want to stimulate your 

economy, but you have to do it through domestic actions for domestic purposes,’’ and the Bank of Japan has effectively done so. It has 

had an effect on currency as well, but they have done the same 

kind of thing that our Federal Reserve did with quantitative easing. 

So I think it is important. This is a very important issue. We 

need to find the right ways of achieving the results. We are fully 

committed to doing that in the administration. 

There is a wide range of views, I know, in Congress, even on this 

committee, about how best to go about addressing the issue, and 

we are looking forward to continuing that dialogue. 

Senator PORTMAN. I know my time is up. But I would hope that 

you will put some time and effort into it. I know, again, it is a 

Treasury issue, but the issue is intervention, and I do think that 

currency is something that more and more of us on this side of the 

aisle, and that side of the aisle certainly, are going to be concerned 

about, because it does affect trade. It affects our ability to have 

that level playing field we have talked about today. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. Senator Stabenow? 

Senator STABENOW. Thank you very much, Mr. Chairman. I too 

want to talk about currency. I know that is no surprise. And I do 

want to start by saying last Congress, as you know, a significant 

bipartisan majority, 60 Senators, sent a letter to you, and 230 Representatives signed letters supporting the inclusion of strong and 

enforceable currency disciplines in all future trade agreements. But 

before I get to that, I would like very much to raise something that 

came up this morning in the press. 

First of all, thank you for your enforcement. Thank you for continuing to have dialogue. I appreciate that. And I do appreciate the 

aggressive posture of the administration on enforcement. 

I care very much about agriculture, as you know, but I also care 

very much about manufacturing and about automobiles. I do not 

think we have a middle class unless we make things and grow 

things and sell both of those. The key is to export our products, not 

our jobs. That is the fundamental debate: exporting products, not 

jobs. And right now, as you know, 70 percent of our trade deficit 

with Japan is autos. 

And this morning, as reported in the Detroit News, based on 

Asian reporting, we understand that the administration will end 

32 

negotiations with Japan on standards for car imports in exchange 

for Japan’s agreement to import more U.S. rice. 

I am all for Japan importing more rice. When you and I talked 

earlier, you indicated that the auto negotiations were totally separate from agriculture. The fact is that today we cannot put an 

American automobile in a car dealership in Japan. They will not 

even allow that—you know all the restrictions. We cannot sell to 

Japan right now. 

So first, I want to know whether or not this is true that you have 

decided not to proceed in opening up the ability for us to sell automobiles into Japan. 

Ambassador FROMAN. Senator, one thing I have learned in this 

job is not to believe everything you read in the press, and particularly the Japanese press. It is categorically wrong. We are continuing to pursue the parallel negotiations on autos and to address 

the non-tariff measures, including standards, financial incentives, 

regulatory transparency, and having strong and effective dispute 

settlements around that to make sure that Japan upholds its obligations. 

Senator STABENOW. Thank you. That is critically important. So 

let me go on now to currency. All we are asking is for internationally accepted principles on currency—that countries have all agreed 

to—to be enforceable in trade agreements. 

And over and over again, we have had conversations, you and I. 

You know the numbers. We are talking about anywhere between 

$6,000 and $8,000 per vehicle, off the price of a vehicle coming in. 

We have seen numbers where, at various points, the Japanese 

automakers have made more off of manipulating currency than 

other profits on selling automobiles. 

This is a huge issue in terms of not having a level playing field. 

We are talking about millions of jobs, anywhere from 2 million to 

5 million jobs, if we were, in fact, to enforce what everybody knows 

is potential at various points—they may not be doing it right this 

minute, but we know what they have done with the Bank of Japan. 

We also know that with Korea, with China, with others that we are 

involved in with this agreement, that this is a major issue. 

So where are we on this, and are we going to see enforceable currency provisions in these trade agreements? 

Ambassador FROMAN. As I have said, this is a priority issue for 

us that the administration, with the Treasury Department in the 

lead, has been addressing since day one. 

We have been pushing countries to level the playing field by 

moving toward market-determined exchange rates. We have been 

using bilateral engagement, for example with China, where I think 

we have made some progress. We have been using our engagement 

with the G–7, the G–20, the IMF. 

I know you will have Secretary Lew up here as early as next 

week, and I refer you to him for further discussion of it. 

Senator STABENOW. Let me just stress again, as you know, this 

is an absolutely critical issue in terms of making sure that American workers and the American people are getting a good deal on 

trade agreements, and so far I have not seen anything, any indication that, in fact, we will see currency issues addressed either in 

TPA or TPP or other agreements, and that is a serious flaw. 

33 

So I would encourage you to continue to do everything you can 

and to actually give us some specifics. 

The CHAIRMAN. Thanks, Senator. 

Senator STABENOW. Thank you. 

The CHAIRMAN. Your time is up. Senator Bennet? 

Senator BENNET. Thank you very much, Mr. Chairman. And 

thank you very much for holding this hearing. 

Ambassador Froman, thanks for your efforts. Thanks for being 

here today. I know you have touched on this in the hearing today, 

and I appreciate your mentioning Colorado in your testimony and 

the importance of exports there. Nowhere is that more important 

really than in our agriculture sector, where we export roughly $2 

billion a year. It is hugely important to our State’s economic wellbeing. Our State’s wheat growers export 80 percent of what they 

grow, and even through droughts and the tough times that we have 

had, exports have continued to grow. 

About a year ago, Senator Grassley and I sent you a letter—I 

know he touched on it generally, but I wondered if you could offer 

some more details. We sent you a letter to urge you to negotiate 

in a strong fashion with Japan to make sure that that market was 

really open to our beef producers, to dairy, to wheat, and I wonder 

whether you would speak in more detail about where you feel we 

are. 

What are the hurdles that remain, and what do you hope to 

achieve in the coming weeks in the closing of your negotiations? 

Ambassador FROMAN. Thank you, Senator. We have been engaged with Japan in agricultural market access negotiations for almost the better part of a year now, and it has been an ongoing 

process of going through the 1,800 tariff lines of agriculture, including their sensitive products, what they have identified as what they 

call their ‘‘sanctuary’’ products, and working with them and our 

stakeholders to, first of all, get agreement that all products will be 

covered. 

So, even beyond what we did in our agreement with Korea, all 

products will be covered in our TPP agreement with Japan. And 

then we will go line by line through those products to maximize the 

number of products where there can be full tariff elimination. And 

where there cannot be full tariff elimination, we will have a dialogue about how to achieve commercially meaningful market access 

for our stakeholders on their priority issues. 

And that is the process we have been going through. I think we 

have made substantial progress in a number of areas, but we still 

have work to do to complete that. Those discussions are ongoing. 

Senator BENNET. Certainly, in my case, the outcomes there are 

going to be really important to deciding whether or not to support 

this going forward. Do they include the sanctuary products in the 

products that are part of the negotiation? 

Ambassador FROMAN. Yes. All products will be covered. It is a 

question of how, and that is where we have worked very closely 

with our commodity groups, our stakeholder groups, to get the best 

understanding from them as to what their priorities are and what 

can create commercially meaningful market access for them. 

Senator BENNET. Thank you for the work you are doing. Thank 

you, Mr. Chairman, for giving me a chance. 

34 

The CHAIRMAN. Thank you so much, Senator. I think we have 

completed the round. So maybe I can ask a question or two, and 

then I know you have a few questions. 

Senator WYDEN. Thank you, Mr. Chairman. 

The CHAIRMAN. Ambassador Froman, last year I expressed my 

concern that, despite Russia’s serial violations of its WTO commitments, you have not brought a single case against Russia in the 

World Trade Organization, or WTO. Now, this is despite the fact 

that the administration told Congress during consideration of 

PNTR that one of the major benefits to having Russia in the WTO 

would be our ability to bring them to dispute settlement. 

Could you explain why you have not brought a case against Russia? 

Ambassador FROMAN. Well, we have been exploring all the various issues around areas of trade friction with Russia. We have 

been consulting with other parties, such as the European Union 

and others. 

All the options are on the table. We are considering how best to 

address the outstanding issues and where to devote our efforts. So 

it is an area that we are keenly focused on, but not one that we 

have brought a case on yet. 

The CHAIRMAN. I suggest that you consider that. 

It is very important that the Trans-Pacific Partnership agreement provide for transparency and procedural fairness in reimbursement decisions regarding medical devices and pharmaceuticals. These are crucial elements which build public trust in 

national health care systems. And I consider strong provisions addressing transparency and procedural fairness in reimbursement 

decisions crucial to the strength of the final TPP agreement. 

I understand that some countries, such as Japan, may be resisting these efforts. What are you doing to ensure that strong provisions will be included in the agreement? 

Ambassador FROMAN. Well, we are working with our trading 

partners, but also our stakeholders here, to have a transparency 

provision that is based off of U.S. law and U.S. practice, the national coverage determinations process, that applies to Medicare. 

Nothing that we are doing is going to require any change of U.S. 

law. It is not going to affect Medicaid or veterans’ benefits or anything else in our system. 

It is taking a national coverage determination process, as you 

say, the fairness and due process, and encouraging other countries 

to have that as well. It does not affect the level of reimbursement 

that a country might decide on. It simply makes sure that an individual can raise a request that a medical device, for example, be 

covered by their national health system. And we think that kind 

of procedural due process would be a positive development in this 

region, and we are continuing to negotiate on that. 

The CHAIRMAN. The Transatlantic Trade and Investment Partnership, or TTIP, is an opportunity to improve upon the already 

deep relationship between the world’s two largest financial markets, the European Union and the United States. Now, do you 

agree that the inclusion of a financial services framework, including regulatory cooperation, is an essential part of a successful, comprehensive TTIP? 

35 

Ambassador FROMAN. Our view is that financial services are a 

key part of our transatlantic relationship and should be part of this 

trade agreement, as in any other trade agreement, in terms of market access. 

In terms of regulatory cooperation, this is an area where there 

has been an explosion of activity since the financial crisis, whether 

it is in the Financial Stability Board, the Basel Committee, the 

G–20, or bilaterally. We have a bilateral dialogue with the E.U. 

over financial regulatory issues that the Treasury Department 

leads on behalf of our regulators. And our position has been that 

that is where we ought to make progress in parallel, alongside 

TTIP on financial services regulation, by looking at and strengthening existing mechanisms. 

The CHAIRMAN. Thank you. Senator Wyden? 

Senator WYDEN. Thank you, Mr. Chairman. 

Ambassador, I want to talk to you for a couple of minutes about 

the importance of a free and open Internet. It is obviously critically 

important to the economy, but it is also a platform not just for commerce, but for the free exchange of ideas. Of course, there have 

been a lot of battles, a lot of them waged in this room, to come up 

with the policies that will ensure that the Net stays free and open. 

I know that years ago we were faced with the challenge that, if 

you owned a website, you could be held liable for something that 

was posted on the site, which would have pretty much meant you 

would not have had social media, because nobody would have been 

comfortable investing in it. 

So what I would like to hear briefly is how you are going to make 

sure that nothing in these trade agreements will undermine an 

open Internet? 

In effect, our challenge here is to buttress what we have accomplished in the United States to keep the Net free and open, and 

then do everything we can to build those principles into discussions 

and agreements we are having with our partners. And I do not 

think I am the only one who feels strongly about it, and I would 

be interested in your views on that. 

Ambassador FROMAN. Well, that is exactly right, Senator, and 

that is exactly our perspective. We view TPP as an opportunity to 

bring into the digital economy fundamental principles from the 

‘‘real’’ or the physical economy, including the importance of the free 

flow of information and data across borders and maintaining a free 

and open Internet. 

So what we are pursuing in TPP is based on the approach that 

has been crafted here under U.S. law, including around issues like 

ISP liability, or around technology protection measures, or around 

copyright, making sure there are strong copyright laws. But at the 

same time, this is the first trade agreement in history that we will 

put forward that allows for exceptions and limitations to copyright 

consistent with U.S. practice. So our approach has been very much 

consistent with that approach. 

Senator WYDEN. I just think that millions of Internet users want 

it clear and they want it straightforward that nothing is going to 

be done to undermine an open Internet. And particularly they want 

to buttress the victories that have been won here and look to overseas opportunities for the same kind of policies. 

36 

Let me get into one other area, and that is the relationship of 

TPA to TPP. And suffice it to say, there are a fair number of people 

in Washington scratching their head trying to think through the 

relationship. 

We all know that TPA basically tells the President here, in effect, are the negotiating objectives for a trade agreement. And so 

people say, okay, that is what TPA is about. Then they open up 

their morning newspaper, and the morning newspaper says that 

TPP is pretty much done or close to being done and the like. 

I think it would be helpful as we wrap up to have your sense of 

what are the outstanding issues still left in the Trans-Pacific Partnership agreement and how does the procedural issue, the Trade 

Promotion Authority discussion, impact what is still being discussed in the Trans-Pacific agreement. 

Ambassador FROMAN. TPP is really two parallel negotiations, one 

on market access and one on a set of rules. So on market access, 

as we discussed here, we have made very good progress, but we 

still have remaining issues, whether it is in agricultural access to 

Japan, Canada, a few other markets, or resolving manufacturing 

tariffs in a few countries, or in the services area what we call nonconforming measures. And so we have bilateral negotiations with 

the other 11 partners to resolve those issues. 

On the rules side, we have made very good progress and continue 

to make progress this week in terms of closing out various issues, 

but there are, I would say, in the intellectual property rights area 

still a number of open issues; in the environmental area, still a 

couple of issues; some in state-owned enterprises and investment. 

And those are all areas where we have been working with our partners bilaterally and in groups to try to find an appropriate landing 

zone to close out these agreements. 

In terms of the relationship with TPA, we had the expiration of 

TPA in 2007. Notwithstanding that, we have worked with Congress 

to ensure that we are consulting throughout the negotiation and 

getting input from this committee and from other members about 

what our negotiating objectives should be, and we have benefitted 

enormously from that give-and-take and that feedback. 

And I feel confident that, as we work in parallel on completing 

TPP consistent with the high-standard, ambitious, comprehensive 

objectives we set out, and securing TPA consistent with the work 

that has been done and continues to be done to try to build bipartisan support, we will be able to achieve those objectives. 

Senator WYDEN. Ambassador, thank you. That is helpful. And 

suffice it to say I am sure you are going to get that question in 

other forums too, of the relationship between TPA and TPP. 

I will tell you, your answer also enforces something you and I 

have talked about, and that is the fact that the more information 

you can make available in a fashion that is understandable to 

Americans, the more likely, particularly middle-class families, who 

have been skeptical of trade agreements, are going to say, ‘‘This 

makes sense.’’ 

The days are over when the American people are going to say, 

‘‘Hey, they can just go negotiate this thing, we will take their word 

for it.’’ I think that last point just reinforces, as these discussions 

go forward, how important it is to make the information that is 

37 

available, available to the public and to do it in an understandable 

fashion. 

Ambassador FROMAN. If I could just comment on that, Senator. 

We completely agree, and our objective is to achieve maximum 

transparency, whether it is with Congress, stakeholders, or the 

public, consistent with being able to negotiate the best possible 

agreement. 

I would say that this morning, for example, we have launched a 

new website as part of our continuing effort to increase transparency. We have added a number of features to increase the accessibility and facilitate communication between the administration 

and the public, including a new TPP information center on the 

website. And this is just one step. 

We can always do a better job of being more transparent and are 

committed to working with all of you to determine the best way to 

do so. 

The CHAIRMAN. Senator Menendez? 

Senator MENENDEZ. Thank you, Mr. Chairman. 

And thank you, Ambassador, for your testimony. 

Before I start my line of questioning, I just want to say I think 

you are one of the brighter lights in the administration and certainly very responsive. So I appreciate your responsiveness on so 

many different issues. 

Now, I know this question has been asked—and I have been in 

between hearings and trying to glean from the TV and meetings 

your answer, but I still do not quite get it. And that is, you say 

you need fast-track from Congress to provide you with marching orders for negotiations and that it puts Congress in the driver’s seat. 

Yet, the TPP is almost complete. 

So I am not quite sure how it is that the things that some of us 

who might contemplate supporting TPP would want to see in TPP, 

ultimately have an effect if your negotiations are almost complete. 

Ambassador FROMAN. Well, the Trade Promotion Authority that 

I believe this committee and Ways and Means have been working 

on, of course, is broader than TPP. It encapsulates TTIP, it encapsulates agreements that we might negotiate at the WTO. 

It is intended to be not just for this agreement in this year, but 

for a longer term. 

Senator MENENDEZ. I get that. But TPP is first up at bat, and 

that is almost finished. 

Ambassador FROMAN. And with TPP, that is one reason why we 

have spent so much effort consulting with Congress, both this committee, Ways and Means, but also the membership more broadly, 

to get input throughout on what they would like to see us negotiate 

on it, whether it is on the digital economy or state-owned enterprises, market access, or labor and environment. Those are all 

issues that, through our consultations with this committee and others, we have been able to put on the table in our TPP negotiations, 

and I am confident we will come up with a positive result. 

Senator MENENDEZ. All right. Some of us are very concerned 

about strong labor provisions, given the inclusions of countries like 

Vietnam and Brunei and Malaysia, just to mention a few. But that 

is all going to come, from my perspective, after the fact. 

38 

So this is one of my concerns. What is the use of TPA if you have 

a deal done? Let me just join those colleagues, I think, including 

the chairman, who have talked about intellectual property rights, 

which is a critical issue for our country. We lead the world in this 

regard, and we see it stolen very often with impunity. 

And particularly, as part of that, in a State like New Jersey, 

which is the medicine cabinet to the world, there is the question 

of pharmaceutical intellectual property, including the goal to have 

12 years of data protection for biologics within TPP as currently 

stipulated in U.S. law. 

I know you have talked about that, but I just want to make it 

very clear to you that this is a critical issue in my consideration 

of either TPP or, for that matter, any individual trade agreement. 

If we cannot protect, at the end of the day, the intellectual property 

of our companies, and if we cannot give them a reasonable time to 

recoup their investment after they invest billions of dollars in research—sometimes it works out and sometimes it does not—then 

it is a real problem. 

Let me ask you one other question. Getting the details right in 

TPP is particularly important because the agreement, as I understand it, will feature a docking mechanism that allows other countries to join in the future: Korea, China, Taiwan are potential newcomers. How is that docking mechanism going to work? For example, will the ascension of China, in the future, require new Trade 

Promotion Authority or any other role for Congress, or will they be 

able to dock and accede to such an agreement that is already in 

place? 

Ambassador FROMAN. As you suggest, Senator, the TPP is intended to be a platform which other countries that are able and 

willing to meet the high standards could potentially join with the 

consent of all of the countries around the table, and that consent 

has to reflect their domestic processes as well. 

So no country would be able to join TPP without Congress’s involvement and approval. 

Senator MENENDEZ. So each future country that wishes to accede 

to any agreement that would be made would need, individually, 

Congress’s approval? 

Ambassador FROMAN. They would need Congress’s approval. 

Senator MENENDEZ. And finally, on CAFTA, several of our current free trade partners in Central America have raised concerns 

that if the final TPP includes concessions requested by Vietnam regarding rules of origin and short supply lists for textile and apparel, it will result in severe job losses and potentially gut the textile and apparel industry in the western hemisphere. 

As someone who is very concerned about our challenges already 

with Central America—its stability, its prosperity, and, as we saw 

last year in those who seek to flee their country because of instability and whatnot—this would be an enormous blow. 

How do you intend to deal with that reality? 

Ambassador FROMAN. We have worked in the textile area 

through the forward rule, the short supply list, rules of origin, and 

customs enforcement and cooperation, to take those issues into consideration, and we have been working very closely with our textile 

manufacturers in the U.S. who are part of the supply chain with 

39 

Central America to get a best understanding of what their sensitivities are and to take that into account in our negotiations. 

Senator MENENDEZ. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. Senator Scott? 

Senator SCOTT. Thank you, Mr. Chairman. 

Ambassador, how are you today? A quick question for you on the 

Information Technology Agreement. 

As conversations continue surrounding the expansion of the 

WTO’s ITA, China has recently agreed to include multi-component 

semiconductors into the agreement. This is a huge step forward, as 

China is one of the largest importers of semiconductors and could 

represent hundreds of millions of dollars for the U.S. semiconductor 

industry. 

Considering the importance of the Multi-Component Integrated 

Circuits or MCO agreement to the U.S. and to the ITA, what is the 

USTR’s plan to bring the ITA to completion? 

Ambassador FROMAN. Thank you, Senator. We reached a significant breakthrough with China in November along the lines that 

you mentioned, which allows us to restart the ITA negotiations in 

Geneva. We have made some progress there, but there are remaining issues, particularly between China and Korea, and we are encouraging both parties to come to the table to negotiate. 

We are trying to create enough benefit for all the parties around 

the table to sign onto the agreement, and we are encouraging 

China to show flexibility in accommodating some of Korea’s interests in order to bring ITA to a close. As you know, it would be a 

significant agreement for the U.S. and for the world. It would cover 

$1 trillion of trade. It is estimated to increase global GDP by $190 

billion, including 60,000 jobs in the U.S. And so we are very focused on trying to resolve the remaining differences. 

Senator SCOTT. Thank you. During the State of the Union address, the President asked both parties to come together on TPA, 

and we have heard lots of conversation today about TPA, and it 

certainly is something that is important to my State of South Carolina, without any question. It is perhaps one of the States that 

would benefit the most from such an agreement. 

But when I look at the President’s record as it relates to negotiating on behalf of the Nation, I turn my attention to things like the 

Iran sanctions negotiations, where we have seen delay after delay 

after delay. I think about the freeing of dangerous terrorists who 

really seem to be bent on killing more Americans or the deal with 

China on carbon emissions. We are going to work toward a 15-year 

timeline, and theirs really does not start until 2030. 

So my question to you is, what type of confidence—while I realize 

that the agreement has to come back to Congress for approval, my 

question to you really is, what kind of confidence should we have 

on the type of deals that will be structured going into the future 

with TPA? 

Ambassador FROMAN. Well, we are consulting closely with this 

committee and other members of Congress throughout the negotiations—and with stakeholders and with the public—to come back 

with the best possible agreement for the U.S. 

I think we have a strong record of doing that. For example, when 

we were renegotiating KORUS to deal with some of the auto 

40 

issues, the President walked away from the negotiation, because 

the deal was not good enough. And 3 months later, we got a much 

better deal, and we were able to bring it back to Congress and get 

it approved with strong bipartisan support. 

So that is the model that we use. We want to bring back strong 

agreements that promote jobs in the U.S., go straight to the middle 

class, promote growth here, help create good, well-paying jobs 

across all the areas—manufacturing, services, agriculture—that 

level the playing field, while protecting American jobs and American workers. 

We are creating a fair and level playing field by raising these 

standards and making sure that they are fully enforceable. And 

one thing that is very important is, we really are facing an important choice here, because we are out there trying to work on an 

agreement that reflects American values and American interests, 

and to us that has the greatest prospect of supporting and protecting American workers and businesses here. 

But there are others out there negotiating agreements that do 

not have these kinds of protections, whether it is labor and environment or intellectual property rights or state-owned enterprises 

or additional economic benefits. It is critically important to American workers and American businesses that it is the U.S. that leads 

and that we do not cede that role to another country. 

Senator SCOTT. Thank you. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. 

I want to thank you, Ambassador Froman, for your good testimony and for being with us today. I want to thank all the members 

who asked questions and everyone who was also able to attend the 

hearing today, even our noisy friends at the beginning of the hearing. 

The hearing record will remain open for 48 hours for any member’s written questions. 

With that, you will be happy to know, Mr. Ambassador, the hearing is adjourned. 

[Whereupon, at 12:05 p.m., the hearing was concluded.] 

(41) 

A P P E N D I X 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

PREPARED STATEMENT OF HON. SHERROD BROWN, 

A U.S. SENATOR FROM OHIO

Mr. Chairman, I want to thank you for holding today’s hearing on the 2015 trade 

agenda. The Administration is pursuing an aggressive trade agenda, and it is important that Congress continue to provide equally aggressive oversight of all trade negotiations. I look forward to legislative hearings on the individual elements of U.S. 

trade policy, particularly on fast track. 

The United States Trade Representative is negotiating numerous, far-reaching 

trade agreements this year. USTR is aiming to conclude the Trans-Pacific Partnership in the next few months. Talks with Europe on the Trans-Atlantic Trade and 

Investment Partnership will pick back up. And negotiations on the Trade In Services Agreement and the Environmental Goods Agreement at the World Trade Organization will advance. 

President Obama has requested fast track from Congress for all of these trade 

agreements. It has been more than 12 years since Congress passed this type of bill. 

Fast track is truly singular legislation that gives full authority to the White House 

to negotiate U.S. trade policy and restricts Congress to an up or down vote on that 

trade policy. Besides budget reconciliation, no other procedure in the Senate expedites consideration of legislation and limits Congress’ ability to amend it. 

These agreements will have major consequences for workers and companies in the 

U.S. and the global economy. They will shape the flow of goods and services and 

wages and employment and investment. They will affect our manufacturers, our 

farms, our service providers, our communities, and our families. 

If they have the same impact as previous trade agreements, they will erode the 

U.S. manufacturing sector, offshore jobs, and hurt American workers. Congress’ task 

this year is to redirect our trade policy and prevent us from repeating these mistakes. We must work to ensure trade agreements create good-paying jobs here in 

the U.S. 

Trade agreements that grow the U.S. manufacturing sector, increase workers’ 

wages, and create opportunities for the middle class would get broad bipartisan support in both chambers of Congress. They would not need to be considered under 

strict rules with limited amendments. They would pass overwhelmingly. 

I look forward to participating in more hearings on trade this year, and I hope 

my colleagues on the Finance Committee will join me in pursuing trade policies that 

benefit the middle class. 

Thank you. 

PREPARED STATEMENT OF HON. MICHAEL FROMAN, 

U.S. TRADE REPRESENTATIVE, EXECUTIVE OFFICE OF THE PRESIDENT

Chairman Hatch, Ranking Member Wyden, Members of the Senate Finance Committee, thank you for the opportunity to testify on the President’s trade agenda. 

The Obama Administration’s economic agenda of creating jobs, promoting growth, 

and strengthening America’s middle class is supported by the work we do at USTR: 

opening markets and leveling the playing field to ensure that American workers, 

42 

farmers, ranchers; manufacturers and service providers; innovators, creators, investors and businesses—both large and small—can compete in the world’s fastest growing markets. 

BUILDING ON RECORD-BREAKING U.S. EXPORTS

In 2014, USTR built on record-breaking exports, market opening initiatives, intensive engagement, and trade enforcement to achieve strong results for America’s 

economy. The data is compelling: Unemployment has dipped to 5.6 percent and we 

are creating more than 200,000 jobs per month. Those jobs include a gain of 786,000 

new manufacturing jobs over the last five years. Manufacturing exports have grown 

by 9 percent a year on average. Our total exports have grown by nearly 50 percent 

and contributed nearly one-third of our economic growth since the second quarter 

of 2009. In 2013, the most recent year on record, American exports reached a record 

high of $2.3 trillion and supported a record-breaking 11.3 million jobs. 

It’s clear, more exports means more good jobs and more jobs are dependent upon 

exports than ever before. That’s why we’ve worked hard to open more markets to 

Made-In-America goods and services, agricultural products, innovation, and investment. In the last four years, the increase in U.S. exports has supported 1.6 million 

more good jobs, which typically pay 13–18 percent more on average than jobs not 

related to exports. 

Done right, trade policy unlocks opportunities for Americans. Done right, trade 

policy promotes not only our interests, but also our values. And it gives us the tools 

to make sure others play by the same rules as we do. The United States is an open 

economy and our borders are already open to trade. But other countries still erect 

real barriers to our exports. 

EXPORTS DRIVE SMALL BUSINESS GROWTH AND CREATE JOBS

ACROSS THE UNITED STATES

Over the past year, I heard many of the stories behind these statistics. I listened 

to workers, small business owners, farmers and ranchers talk about their efforts to 

grow their businesses and create jobs. I traveled to Iowa to promote President 

Obama’s ‘‘Made in Rural America’’ export and investment initiative through the 

White House Rural Council and meeting with dairy farmers in Wisconsin to talk 

about USTR’s efforts to open new markets. I toured a small brewery in Denver and 

a waste water treatment equipment manufacturer in Cleveland, where I heard 

about each company’s contribution to Colorado and Ohio’s record-breaking exports 

last year. I met with a high-tech firm in San Antonio and an advanced manufacturer in Baltimore to discuss the future of the digital economy and share how our 

trade agreements can unlock opportunities for their businesses. Today, more small 

businesses are exporting than ever before, and by tapping into global markets, these 

companies are able to increase their sales and their payrolls. 

But we know that the status quo is not an option to compete in the global economy. And we know that our workers are competing against workers in countries 

that lack even the most basic labor rights. Our businesses are competing against 

companies that get subsidies from their governments or that don’t have to maintain 

any environmental standards. If we sit on the sidelines, we will be faced with a race 

to the bottom in global trade instead of continuing to promote a race to the top. 

That’s not how we want to compete. As the President said last week, we should be 

the ones to engage and lead. We want to take the field, establish the rules of the 

game that reflect our interests and our values, and do so with all the tools we need 

to win. 

Our trade agreements will support American jobs by boosting Made in America exports from our businesses, farms, and factories. In fact, for every $1 billion we 

export, between 5,400 and 5,900 jobs are supported here at home. By opening rapidly expanding markets with millions of new middle-class consumers in parts of the 

globe like the Asia-Pacific, our trade agreements will help our businesses and workers access overseas markets, where 95 percent of the world’s consumers and 80 percent of the world’s purchasing power reside. Combined with our supply of energy, 

highly skilled work force, and culture of innovation, our trade agreements will help 

once again make America the global production platform of choice. 

USTR PRIORITIES FOR 2015

In 2015, USTR will take steps to: (1) lead the Administration’s effort to secure 

Trade Promotion Authority with bipartisan support; (2) make significant progress 

to bring home high-standard trade agreements, including the successful conclusion 

43 

of the Trans-Pacific Partnership (TPP) negotiations and the plurilateral deal to expand the Information Technology Agreement (ITA), and the advancement in the 

Transatlantic Trade and Investment Partnership Agreement (T–TIP), the Trade in 

Services Agreement (TiSA), and the Environmental Goods Agreement (EGA); (3) 

harness the preferential access provided by our FTA agreements to further expand 

exports of U.S. goods, services, and investment with those countries; (4) strengthen 

key trade and investment relationships, including with China, India, Burma, Taiwan, Brazil, and the countries of Sub-Saharan Africa; and (5) ensure that our trading partners honor their commitments, including in the WTO and under our trade 

agreements. 

UNLOCKING OPPORTUNITIES THROUGH U.S. JOB-SUPPORTING TRADE AGREEMENTS

We’re working harder than ever to bring home trade agreements that will unlock 

opportunities by eliminating barriers to U.S. exports, trade, and investment while 

raising labor, environment, and other important standards across the board. 

Trans-Pacific Partnership (TPP) 

In 2014, we significantly advanced negotiation of the TPP, a state-of-the-art trade 

agreement that will guarantee expanded U.S. access to the rapidly growing economies in the Asia Pacific. Together with the 11 other TPP countries, we have made 

important progress in the market access negotiations for agricultural products, industrial goods, services and investment, and government procurement. We have also 

made substantial progress on ambitious, high-standard trade rules that will promote U.S. commercial interests and values in the region, in such areas as intellectual property, digital trade, competition with State-owned enterprises, and labor 

and environmental protections. The Peterson Institute for International Economics 

estimates that TPP will add $123.5 billion to U.S. exports each year when it is fully 

implemented. 

We continue to make progress in closing gaps related to autos, agriculture, and 

other market access issues in our bilateral negotiations with Japan. Japan agreed 

upfront to provide the longest staging of any TPP products for U.S. autos and truck 

tariffs, and we continue to work with Japan to address the long-standing barriers 

to American autos in the Japanese market. We will continue to closely consult with 

our auto workers and industry as the negotiations proceed in order to get the best 

deal possible for them. In agriculture, we continue to work hard to dismantle high 

tariffs, restrictive quotas, and complex administrative policies to create new opportunities for U.S. producers. 

At the TPP Leaders meeting in November convened by President Obama, all 12 

countries took note of the progress that has been made on TPP, and agreed that 

the end of the negotiation is now coming into focus. And the TPP countries reaffirmed their commitment to concluding a comprehensive, high-standard agreement, and to work toward finalizing the TPP agreement as soon as possible. 

Transatlantic Trade and Investment Partnership (T–TIP) 

With the new European Commission, the United States and the European Union 

see an opportunity for a fresh start in the T–TIP negotiations as we work to bolster 

our economic partnership that already supports $1 trillion in two-way annual trade, 

$4 trillion in investment, and 13 million jobs across the Atlantic. In November, 

President Obama and EU leaders reaffirmed their commitment to an ambitious, 

comprehensive, and high-standard T–TIP agreement. We look forward to building 

on the progress we’ve made at the 8th T–TIP negotiating round next week in Brussels and we hope to make good progress across all chapters in 2015. 

World Trade Organization (WTO) 

At the WTO, the United States played a critical role in building consensus on the 

first-ever fully multilateral trade agreement in the 20-year history of the WTO, the 

Trade Facilitation Agreement (TFA). As WTO Members move towards TFA implementation, the cost of trading for developed and developing countries alike will be 

significantly reduced. By some estimates, the global economic value of the new WTO 

deal could be worth hundreds of billions of dollars. In November, the United States 

and China announced a major breakthrough in negotiations to expand the scope of 

goods covered by the WTO Information Technology Agreement (ITA), which provided the basis for the resumption of plurilateral negotiations in Geneva. We are 

working closely with all ITA participants to bring about the successful conclusion 

of an ITA expansion deal as soon as possible. This would be the first major tariffcutting deal at the WTO in 17 years and help boost American exports to growing 

markets around the world. When completed, the ITA expansion is estimated to 

44 

cover roughly $1 trillion in trade, adding $190 billion to the global economy and 

supporting tens of thousands of good-paying U.S. manufacturing and technology 

jobs. The United States will also work with WTO Members to develop a post-Bali 

work program that ensures balance among the largest Members in areas such as 

agriculture and industrial market access in the Doha Round negotiations. 

Trade in Services Agreement (TiSA) 

The United States is the largest exporter of services in the world, and in 2013, 

services exports accounted for a majority of U.S. export growth. Services liberalization abroad is necessary to sustain that growth for industries such as information 

technology and communications, distribution, energy services, environmental services, professional services, express delivery services, and more. U.S. service providers should have opportunities and fair treatment abroad that other countries’ 

firms already enjoy in the United States. To support this vital sector, the United 

States engaged in the Trade in Services Agreement (TiSA) negotiations, a free trade 

agreement focused exclusively on services. TiSA brings together nearly two dozen 

countries, which makes up more than two-thirds of the global trade in services market. In 2015, we will continue to push for greater access and promote fair and open 

competition across a broad spectrum of service sectors. 

Environmental Goods Agreement (EGA) 

In July 2014, 14 WTO Members, including the United States and China, launched 

negotiations on the Environmental Goods Agreement (EGA) at the WTO. The goal 

in 2015 is to make essential progress toward our environmental protection and economic goals by eliminating tariffs faced by American exporters on a range of environmental goods. Tariffs on these environmental goods, including wind turbines, 

solar water heaters, and catalytic converters are unnecessarily high and limit the 

technological advancement for green technologies. In fact, as I speak, my team is 

in Geneva at the 4th round of negotiations pushing for the inclusion of key clean 

energy technologies, of which the United States is a major producer. 

Agriculture 

In 2013, U.S. farmers and ranchers exported a record $148.7 billion of food and 

agricultural goods to consumers around the world. And we expect that we had another record year in 2014. Going into 2015, the Administration aims to help build 

on that record performance. America’s strong competitive advantage is greatly due 

to our agricultural exports, and liberalizing trade in agricultural goods remains a 

priority issue in all of our bilateral engagements. We will open new export markets 

through our ongoing trade negotiations, including TPP and T–TIP. We will continue 

to work to remove non-science based sanitary and phytosanitary measures restricting exports of a variety of U.S. agricultural products. 

Manufacturing 

In 2013, the United States exported nearly $1.4 trillion in manufactured goods, 

which accounted for 87 percent of all U.S. goods exports and 61 percent of U.S. total 

exports. Here too, we expect that 2014 was a record year. In 2015, the Obama Administration will continue to pursue trade policies aimed at supporting the growth 

of manufacturing and associated high-quality jobs here at home and maintaining 

American manufacturers’ competitive edge. U.S. manufacturing is vital to our economy and the Obama Administration is committed to making sure that the United 

States is competitive in attracting businesses to locate here. This is why we support 

a dynamic manufacturing sector and research and development policies to support 

broad-based innovation and advanced manufacturing that will help U.S. workers 

and firms win the future. As American manufacturers increase their capacity to 

produce more advanced and value-added goods, consumers around the world continue to place a high value on Made-in-America products. Across our trade negotiations, we aim to create rules that ensure state-owned enterprises (SOEs) do not 

compete unfairly with private firms, and seek to ensure that rules of origin and 

global supply chain provisions create conditions for manufacturers to locate here in 

the United States. 

Innovation, Intellectual Property, and the Digital Economy 

America’s economic growth and competitiveness depend on its capacity to innovate. Our trade agreements, including TPP and T–TIP, promote strong and balanced 

IP protection and enforcement while opening markets for U.S. produced IP-intensive 

goods and services. In negotiations, like TPP, we are working to ensure access to 

affordable life-saving medicines, including in the developing world, and create incentives for the development of new treatment and cures that benefit the world and 

which create the pipeline for generic drugs. And to ensure we are advancing a balVerDate Mar 15 2010 20:42 Jan 27, 2016 Jkt 000000 PO 00000 Frm 00048 Fmt 6601 Sfmt 6621 R:\DOCS\98343.000 TIMD
45 

anced policy and defending jobs that rely on innovation, we are committed to receiving input from across the spectrum of the U.S. economy: those who create, distribute, produce, and use intellectual property. 

We will continue to support a free and open Internet that encourages the flow of 

information across the digital world. We know that the impact of digital trade is 

enormous, and thus that a supportive trade framework is critical for its continued 

expansion. Therefore, among the other twenty-first century issues we are addressing, we are modernizing our trade agenda to promote growth in the digital economy 

in particular. We will continue to work closely with Congress and all our stakeholders on a wide range of trade issues related to the protection and enforcement 

of copyrights, trademarks, patents, trade secrets, and other forms of IP. We will also 

work to push back against efforts by our trading partners to improperly use geographical indications to limit the ability of our farmers and exporters to use common 

food names and trademarks for their products. 

The theft of U.S. intellectual property puts American jobs at risk and generates 

counterfeit products that can pose a threat to the health and safety of consumers 

around the world. We utilize our annual ‘‘Special 301’’ Report to identify and resolve 

IP concerns with many trading partners. This year, it included specific focus on 

India through an out-of-cycle review during which we were able to highlight the 

need for India to increase its engagement with the U.S. Government and with U.S. 

stakeholders on a broad range of IPR issues identified in the Special 301 Report. 

Use of the out-of-cycle review helped to secure commitments from India in the 2014 

Trade Policy Forum on a broad range of IP issues of concerns to the United States 

and its stakeholders. And Israel, Italy and the Philippines were removed from the 

Watch List for their important legislative and regulatory reforms in enhancing intellectual property enforcement. 

ENFORCEMENT TOOLS UTILIZED TO PROTECT U.S. TRADE RIGHTS AROUND THE WORLD

As we work to open markets around the world, we are simultaneously working 

to hold our trading partners accountable for their commitments under existing 

agreements so that American workers, businesses, farmers and ranchers get the full 

benefit of all the economic opportunities the United States has negotiated over the 

years. From day one, the Obama Administration has shown an unwavering commitment to enforce our trade rights around the world. Within existing resources, we 

have undertaken a bold and ambitious trade enforcement agenda reflected in the 

scale, scope, and systemic importance of our disputes. And for every part of our 

economy, USTR is fighting on their behalf—from American auto workers to farmers 

to high-tech manufacturers that need rare earth metals to American service providers. 

WTO Enforcement 

USTR is building upon significant WTO victories for the United States as we 

move forward with a robust monitoring and enforcement agenda in 2015. We continue to build on our strong success with major victories in several WTO disputes. 

In June, the WTO found that China had breached WTO rules by imposing on American cars and SUVs unjustified extra duties, which were assessed on over $5 billion 

of U.S. auto exports in 2013. In August, the WTO found that China again breached 

WTO rules by imposing duties and quotas on exports of rare earths, tungsten, and 

molybdenum, which discriminate against U.S. manufacturers of hybrid car batteries, wind turbines, energy-efficient lighting, steel, advanced electronics, automobiles, and more. In October, a WTO panel found India’s ban on U.S. agricultural 

products—such as poultry—allegedly to protect against avian influenza was imposed 

without sufficient scientific evidence, among other things. And earlier this month, 

the WTO finalized the outcome of a dispute against Argentina’s import licensing requirement and other import restrictions that were imposed as protectionist measures against billions of dollars of Made-In-America electronics, aerospace, pharmaceuticals, precision instruments, medical devices and motor vehicles and parts. 

These outcomes are an example of our strong record on trade enforcement. For the 

18 WTO complaints filed since 2009, every single case that has been decided has 

resulted in a win for the United States. And when you consider those victories I 

just mentioned—the range of trading partners, the types of trade barriers, and 

value and diversity of exports involved—the power of robust trade enforcement becomes clear. We’re absolutely committed to ensuring American workers get all the 

benefits of U.S. trade agreements because we’ve seen that trade, done right, supports high-quality, middle class American jobs. 

46 

Enforcement of U.S. Free Trade Agreements 

The Administration also continued to vigorously monitor our FTA partners’ implementation of their obligations under Congressionally-approved FTAs. Under the 

CAFTA–DR, the Administration proceeded with a labor rights enforcement case 

against Guatemala to ensure it implements the labor protections to which its workers are entitled. We convened Labor Affairs Council meetings with our counterparts 

in Peru and Panama to discuss labor rights, including labor inspections and subcontracting arrangements. We convened FTA labor subcommittee meetings with Jordan 

and Morocco, where we discussed Jordan’s progress on the Labor Implementation 

Plan, which was signed by both governments in 2013, and a U.S. Department of 

Labor (DOL) technical assistance project to combat child labor and empower women 

in Morocco. We engaged in constructive FTA labor consultations with Bahrain in 

2014. Also working together with DOL, USTR released a report in April describing 

the progress and the work that remains in Colombia to address concerns about labor 

protection and labor rights. We also convened Environmental Affairs Councils and 

other bilateral meetings with our CAFTA–DR partners, as well as with Morocco, 

Panama, and Peru to review progress under our environmental chapters and discuss 

concerns. To ensure that the U.S.-Korea FTA is fully implemented, we worked closely with our Korean counterparts to make important progress in resolving issues related to customs origin verification, financial services, and automotive issues. 

We will continue to be vigilant in 2015 to ensure that Korea, along with our other 

current FTA partner countries, fully adheres to the letter and spirit of their FTAs. 

DEEPENING OUR TRADE AND INVESTMENT PARTNERSHIPS AROUND THE WORLD

The Administration continues to work to deepen our trade relationships around 

the world. This includes engagement with China, India, Burma, Sub-Saharan Africa 

and other regions to address concerns with our bilateral trading partners. 

China 

On China, the Administration made progress on a wide range of issues, including 

protection and enforcement of trade secrets and other intellectual property rights, 

as well as SOEs, investment, services, global drug supply chain integrity, and transparency at the U.S.-China Strategic and Economic Dialogue in July. These engagements yielded concrete changes which support jobs and exports from the United 

States. We also made significant progress on key issues like transparency and a 

level playing field in competition law enforcement, agricultural biotechnology, the 

protection and enforcement of trade secrets, and technology localization at the 25th 

Joint Commission on Commerce and Trade held in December. There was further 

progress in the pharmaceutical sector at the JCCT, where China agreed to streamline its approval processes for pharmaceutical and medical devices. We also intensified our negotiations toward a Bilateral Investment Treaty (BIT) with China and 

expect to initiate the critical ‘‘negative list’’ market access negotiations in early 

2015. 

India 

In November, I led a U.S. delegation to the U.S.-India Trade Policy Forum (TPF), 

the first TPF since 2010 and an important step in invigorating our bilateral relationship. The TPF provided the forum for the discussion of several key trade and 

investment issues, including intellectual property rights, agriculture, services, manufacturing and others. The meeting resulted in substantive work plans for regularized engagement across these priority issues. In advance of this meeting, India and 

the United States worked together to address outstanding concerns arising from the 

WTO Bali package which, with the support of the other WTO members, will now 

allow the Trade Facilitation Agreement to be fully implemented. For 2015, we are 

planning a significant ramp up of our engagement with India to strengthen our bilateral relationship and work to address outstanding concerns in a number of areas. 

Burma 

In November, the United States launched an initiative with the Government of 

Burma, the International Labor Organization, Japan and Denmark to improve fundamental labor rights and promote responsible business practices in Burma through 

a multi-year labor law reform plan and a stakeholder consultative mechanism. This 

is part of broader efforts to promote responsible trade and investment practices and 

sustainable economic development. Earlier in the year, the United States held the 

first-ever Trade and Investment Framework Agreement meeting with Burma to address economic reform, implementation of Burma’s WTO commitments and labor 

rights. 

47 

Taiwan 

We continue to make progress with Taiwan on a broad range of trade and investment issues through the TIFA Council, during which Taiwan took concrete steps to 

lift data center localization requirements, address technical barriers to trade, and 

clarify investment criteria. Taiwan also made important commitments involving investment, agriculture, pharmaceuticals, and medical devices. In 2015, we look forward to make progress on these and other trade and investment issues important 

to the United States and Taiwan. 

Brazil 

After resolving the long-standing cotton dispute with Brazil, we are looking to enhance cooperation on trade and investment through the U.S.-Brazil Agreement on 

Trade and Economic Cooperation. Brazil is one of the most dynamic countries in the 

world and a top customer of the United States for value-added goods, such as machinery, aircraft, chemicals and fuels. Our 2013 goods trade surplus of $16.5 billion 

is our largest in the hemisphere. In 2015, we will explore opportunities to deepen 

cooperation on a number of issues of mutual concern, including innovation, trade 

facilitation, and technical barriers to trade, and working together to reduce barriers 

to agriculture trade in third markets. 

Africa 

In August, President Obama welcomed leaders from across the African continent 

for the historic U.S.-Africa Leaders Summit, which marked the largest event any 

U.S. President has held with African heads of state and government. During the 

Summit, I convened the AGOA Forum Ministerial with African trade ministers to 

discuss the future of the African Growth Opportunity Act (AGOA) program and opportunities to strengthen trade and investment ties between the United States and 

Africa—one of the world’s most dynamic and fastest-growing regions. Before those 

meetings, President Obama determined that Swaziland would no longer be eligible 

for AGOA benefits because it failed to meet AGOA’s eligibility criteria related to 

internationally recognized worker rights. The President also determined that Madagascar should regain its AGOA eligibility, following that country’s return to democratic rule following a 2009 coup d’e ́tat. Later in the year, the President determined 

that Guinea-Bissau would regain its AGOA eligibility following its return to democratic rule, and that The Gambia and South Sudan would lose their AGOA eligibility for reasons related to AGOA’s human rights criteria. In addition, USTR hosted 

separate Trade and Investment Framework Agreement (TIFA) Council meetings 

with Nigeria and Angola. The Administration stands ready to work with Congress 

to renew the AGOA program prior to its September 30, 2015 expiration. 

Generalized System of Preferences (GSP) 

The United States is committed to creating economic growth and development 

around the world through our trade preference programs, trade capacity building, 

and other initiatives. The Generalized System of Preferences (GSP)—the oldest and 

most widely used U.S. preference program—provides developing countries with 

duty-free access on a range of goods. The GSP program promotes economic growth 

in developing countries while also helping to improve competitiveness for U.S. business because it reduces the cost of imported inputs used in U.S. manufacturing and 

production. We have made effective use of the GSP statute’s labor provisions to encourage trading partners such as Bangladesh to make greater efforts to ensure respect for internationally recognized labor standards within their economies. The Administration urges Congress to expeditiously renew authorization of the GSP program, which lapsed in July 2013, and we stand ready to work with you to that end. 

In addition to important emerging markets, the United States will continue our 

robust engagement with trading partners around the world as we seek additional 

bilateral and regional trade and investment opportunities to help increase U.S. exports and grow our economy. The United States will seek to advance trade-enhancing investment measures with key trading partners in order to continue attracting 

the best jobs and industries here in America. 

Trade Promotion Authority (TPA) 

Let me build upon the President’s remarks on trade at the State of the Union. 

As the President made clear last week, the Administration is committed to securing 

bipartisan Trade Promotion Authority. America has always been strongest when it 

speaks with one voice, and that’s exactly what Trade Promotion Authority, or TPA, 

helps us do. TPA puts Congress in the driver’s seat to define U.S. negotiating objectives and priorities for trade agreements. It clarifies and strengthens public and 

Congressional oversight by requiring consultations and transparency throughout the 

48 

negotiating process. It makes clear to our trading partners that the Administration 

and Congress are on the same page negotiating high standards in our trade agreements. There is no other area of policy that reflects closer coordination between the 

Executive branch and Congress than trade policy. And in return, I can promise you 

that we’ll continue working hard to strike balanced agreements that benefit our 

workers, employers, our environment and the economy at large. 

The previous TPA legislation was passed over a decade ago and we agree with 

the Congressional voices that an update is necessary. The global economy has 

changed significantly since 2002 and Congressional views on labor, environment, innovation, and access to medicines need to be memorialized while the rise of the digital economy and the increasing role of SOEs need to be addressed. We agree with 

the broad group of stakeholders that these issues should be reflected in a new TPA 

bill. 

The Administration looks forward to continue working with this Committee and 

the new Congress as a whole to secure TPA that has bipartisan support. We also 

look forward to renewing Trade Adjustment Assistance (TAA), which helps provide 

American workers with the skills to compete in the 21st century. 

PROMOTING INCREASED ENGAGEMENT AND TRANSPARENCY IN NEGOTIATIONS

As we work to open markets to support more American jobs, an important part 

of that work is keeping the public, Congress, and a diverse array of stakeholders 

engaged and informed. We believe that public participation, Congressional input, 

and an open national debate enhance trade policy. And to ensure these agreements 

are balanced, we seek a diversity of voices in America’s trade policy. 

The Administration has taken unprecedented steps to increase transparency. 

Those steps have resulted in more public dialogue and outreach on trade agreements like TPP and T–TIP than on any other free trade agreements in history. This 

includes the more than 1,600 consultations we’ve had on TPP alone. We have provided access to the current negotiating texts of both agreements to Members of Congress. We have previewed every new U.S. proposal with the Committees of jurisdiction before tabling them in both negotiations. And we have briefed interested Members of Congress before and after every negotiating round—seeking feedback at 

every stage of the game. 

The Administration has also engaged with the public around its trade agenda in 

new ways. We have held public hearings soliciting the public’s input on the negotiations and suspended negotiating rounds to host first-of-a-kind stakeholder events so 

that the public can provide our negotiators with direct feedback on the negotiations. 

We have also shared information on the current status of the negotiations through 

an array of tools on our website. 

We are always looking for new ways to engage the public and welcome input, including from your committee, which will help inform and guide our trade policy. Enhancing transparency will remain a priority, consistent with the ability to deliver 

on our ultimate mission, which is to deliver agreements that achieve the maximum 

possible benefit for the American people. 

CONCLUSION

The Obama Administration’s trade agenda is focused on expanding opportunities 

to export more Made-in-America products, support jobs at home, and create economic growth by opening overseas markets and leveling the playing field for American workers, farmers, and businesses. In doing so, we will continue to advocate for 

strong, enforceable rules that promote core U.S. values and interests, including protection of U.S. creativity and innovation, access to medicines, fundamental labor 

rights, and robust environmental commitments. We can only accomplish these 

shared goals and priorities through strong bipartisan cooperation between Congress 

and the Administration. We look forward to working with you to ensure our trade 

policy creates opportunities for all Americans. 

Thank you again for the opportunity to testify today. I am happy to take your 

questions. 

49 

QUESTIONS SUBMITTED FOR THE RECORD TO HON. MICHAEL FROMAN

QUESTIONS SUBMITTED BY HON. ORRIN G. HATCH

Question. Strong intellectual property (IP) rights and enforcement are vitally important to our economy. In the Transatlantic Trade and Investment Partnership 

(TTIP), both the United States and the EU are already home to robust IP regimes. 

For that reason, TTIP provides an important opportunity for the two sides to demonstrate international leadership and to establish minimum benchmark standards 

that the United States and the EU should seek in future trade agreements with 

third parties. Even though the United States and the EU have strong, sophisticated 

systems in place to protect and enforce IP, each also faces challenges to the protection of those intellectual assets elsewhere in the world. How can the United States 

and the EU use TTIP to address critical issues surrounding the erosion of IP rights 

by our trading partners? 

Answer. T–TIP provides a significant opportunity to build on the shared transatlantic commitment to strong IPR protection and enforcement, consistent with our 

respective systems, to enhance our joint leadership in this area and to continue our 

work to promote those high standards, including in other markets. We start these 

negotiations in a unique and fortunate position, where both sides already have 

among the highest levels of IPR protection and among the most robust IPR enforcement in the world, as well as a successful track record of joint coordination. The 

United States and the EU are the world’s most creative economies, and IP protection and enforcement are essential for encouraging innovation in new technologies, 

stimulating investment in research and development, and contributing to exports of 

U.S. products and the creation of American jobs. Nearly 40 million American jobs 

are directly or indirectly attributable to ‘‘IP intensive’’ industries. These jobs also 

pay higher wages to their workers, and these industries drive about 60 percent of 

U.S. merchandise exports and a large fraction of services exports. Our T–TIP objectives seek to build on our common IP strengths and successes to address IP issues 

in our own markets, while promoting good policies in third countries and international organizations as well. 

Question. As you know we will soon be considering legislation to renew the Generalized System of Preferences and to extend the African Growth and Opportunity 

Act. Forced localization in many of these beneficiary countries hurts U.S. exporters 

of high-tech goods and services, as well as many other U.S. producers of goods and 

services. For example, in Asia, we are seeing that Indonesia is systematically introducing a host of measures that force local manufacturing in order to sell in that 

market, without any due process or notice. The measures range in scope, requiring 

local content to manipulating its licensing regime, or both, along with a host of 

measures to force local production of ICT products and local storage of data. Another example is Nigeria, where Nigeria has imposed a host of local content and localization measures affecting ICT hardware, software, services, and data. 

I don’t think we need to revise the eligibility criteria to deal with this problem. 

Countries that deliberately disregard their existing international obligations need to 

understand that there will be consequences to taking such action. I would like to 

know what you are doing to enforce existing prohibitions to local content manufacturing in beneficiary countries. 

Answer. Localization barriers to trade distort trade, result in higher costs for consumers, lower quality, reduce foreign investment and, over time, lessen employment 

in countries that have them. The U.S. Government has advocated against the development and implementation of local content requirements in both Indonesia and Nigeria, including in the ICT industry. We have raised concerns both bilaterally with 

Indonesia, including during the U.S-Indonesia Trade and Investment Framework 

Agreement (TIFA) meetings, and multilaterally in multiple committees at the WTO. 

I most recently raised this in January 2015 with the Indonesian Minister of Trade. 

USTR has also raised this issue with senior members of the Nigerian government 

on a number of occasions, including during the most recent U.S.-Nigerian TIFA 

Council meeting in Washington in March 2014. We will continue to address these 

trade and investment distorting practices around the world. 

Question. Even though we have a free trade agreement with Australia, U.S. beef 

has not been approved for sale to Australian consumers even though there is no legitimate science-based reason to restrict U.S. beef. Meanwhile, Australia is one of 

the largest sources of beef imports for the United States with over $1 billion of 

Aussie beef consumed by Americans in 2013. What is USTR doing to resolve this 

50 

issue with Australia so that American ranchers can compete on a level playing field 

with Australian ranchers? 

Answer. USTR is working closely with the U.S. Department of Agriculture 

(USDA) to regain access to Australia for U.S. beef and has raised this issue in a 

number of meetings with the Government of Australia. Under Australia’s food safety import requirements, Food Standards Australia New Zealand (FSANZ), a regional food safety agency, conducts an individual country risk assessment. In August 2013, an audit team from FSANZ conducted an inspection of U.S. production 

and processing facilities. The United States reviewed the draft report from that inspection, and the final report is currently being completed by FSANZ. In addition 

to the FSANZ review, the Australian Department of Agriculture conducts a separate 

import risk analysis for each exporting country to address animal health issues. 

USTR and USDA will continue to urge Australia to open its market fully to U.S. 

beef and beef products based on science, the OIE guidelines, and the United States’ 

BSE negligible risk status. 

Question. As you know, we recently received the findings from the U.S. International Trade Commission’s report on India. The report documented a number significant barriers to trade faced by U.S. business in India, including customs procedures, tariffs, IP protection, and local content requirement. In particular, it found 

that improved protection for intellectual property would improve economic engagement in India and increase U.S. exports in all sectors, with pharmaceutical exports 

increasing the most by almost 200 percent. As you know, I am profoundly disappointed that there is no meaningful action plan in place to address these problems. With a rising share of U.S. companies substantially adversely affected by Indian policies, how do you plan to work to address the challenges identified in the 

report? 

Answer. We appreciate the report produced by the U.S. International Trade Commission on India, and look forward to the subsequent report that will take into account the economic reform efforts of the new government under Prime Minister 

Narendra Modi. We have seen a significant increase in our engagement with the 

Modi government on trade and investment issues, including on those issues that the 

report highlights as having the most significant effect on U.S. companies operating 

in India, namely, tariffs and customs procedures, taxes, and financial regulations. 

We have also increased our engagement on intellectual property rights (IPR) related 

issues. Through this new and regularized engagement across trade and investment 

issues with India, we will continue to encourage the Indian Government to adopt 

policy reforms that address measures that have the most significant effect on U.S. 

companies operating in India. During the November 2014 Trade Policy Forum 

(TPF), India committed to structured work plans for continued engagement in 2015 

on IPR, promoting investment in manufacturing (tariffs and customs procedures, 

and localization), agriculture (tariff and non-tariff barriers), and services (financial, 

distribution, and professional). 

With respect to IPR, we are actively engaging India on how to create an ecosystem that supports innovation through strong IPR protection and enforcement. 

USTR conducted a Special 301 Out-of-Cycle Review of India’s IPR environment, focused on the level of government engagement with the U.S. on IPR issues, and during that OCR, we were able to achieve—for the first time ever—the establishment 

of a joint U.S.-India annual high-level Intellectual Property Working Group based 

on the common recognition of the need to foster innovation in a manner that promotes economic growth and job creation. We also continue to work with India on 

the entire range of IPR concerns under the Trade Policy Forum, including through 

intensive, technical discussions on policies to provide adequate protection for trade 

secrets and patents. We are also working closely on efforts to increase information 

sharing and enforcement against copyright infringement that affects U.S. and Indian industries alike. 

Question. It is my understanding that U.S. films are not able to freely enter the 

Chinese market today. However, almost three years ago the U.S. and China entered 

into an agreement to address China’s WTO trade violations restricting access of U.S. 

films to the China market. Why has this agreement not been fully implemented? 

What steps must the U.S. take to ensure that China fulfills its trade commitments? 

Answer. In February 2012, the United States and China signed a memorandum 

of understanding (MOU) with regard to certain film-related findings and recommendations in a WTO case that the United States had won. The MOU provided 

for substantial increases in the number of foreign films imported and distributed in 

China each year, along with substantial additional revenue for foreign film proVerDate Mar 15 2010 20:42 Jan 27, 2016 Jkt 000000 PO 00000 Frm 00054 Fmt 6601 Sfmt 6621 R:\DOCS\98343.000 TIMD
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ducers. While work under the MOU continues, significantly more U.S. films have 

been imported and distributed in China since the signing of the MOU, and the revenue received by U.S. film producers has increased significantly. Benefits that have 

accrued to date under the MOU flow primarily to U.S. film producers whose films 

are imported and distributed in China on a revenue-sharing basis. China needs to 

do more on certain MOU commitments regarding film distribution opportunities for 

imported films that are distributed in China on a flat-fee basis rather than a revenue-sharing basis. The United States has been pressing China on these issues, and 

will continue to do so until U.S. concerns are fully resolved. 

Question. Many of our TPP negotiating partners share the goal of the United 

States of opening the TPP agricultural markets to greater trade. I am concerned, 

however, that certain partners, especially Japan and Canada, are currently unwilling to make the types of commitments needed to achieve a strong outcome for U.S. 

farmers and ranchers. I am particularly concerned as to whether we will achieve 

a balanced market access in the dairy sector, where other TPP partners also have 

a strong interest in our market. I ask for your assurance that you will achieve a 

strong and balanced market access package for U.S. farmers and ranchers, including 

dairy producers. 

Answer. We are working to provide new and expanded export opportunities for 

all American farmers and ranchers, including for U.S. dairy farmers, across the TPP 

markets. This will be achieved through tariff elimination, deep tariff reductions, and 

new preferential tariff rate quotas. Gaining new and commercially meaningful dairy 

market access in Canada and Japan are top priorities of the TPP agricultural market access negotiations, as it gains valuable new market access for U.S. dairy products exported to Vietnam and Malaysia. We are mindful of the sensitive nature of 

dairy imports in the United States, and are taking these sensitivities into account 

as we discuss providing expanded access to the U.S. market as part of the TPP negotiating process. 

QUESTIONS SUBMITTED BY HON. MIKE CRAPO

Question. In your March 2014 hearing QFRs, you asserted that you ‘‘are looking 

at Japan and Canada . . . to provide comprehensive and meaningful access to its 

[sic] agricultural markets, including for U.S. dairy products. . . .’’ How do you define ‘‘comprehensive and meaningful access?’’ 

Answer. We are working to build on the recent strong export performance of our 

agricultural sector and provide new and expanded opportunities for U.S. farm products, including dairy products in all of the TPP markets. This will be achieved 

through tariff elimination, deep tariff reductions, and new preferential tariff rate 

quotas. Gaining new and commercially meaningful dairy market access in Canada 

and Japan are top priorities of the TPP agricultural market access negotiations, as 

it gains valuable new market access for U.S. dairy products exported to Vietnam 

and Malaysia. We continue to work closely with U.S. stakeholders to ensure we reflect their priorities and concerns. 

Question. Many Members of Congress support a full enforcement dispute settlement mechanism for sanitary and phytosanitary measures. If USTR seeks any exclusion from comprehensive enforceable dispute settlement, how will such variances 

be determined? 

Answer. We have reflected on feedback received from our extensive consultations 

with Members of Congress and U.S. stakeholders on the TPP SPS chapter, including 

with respect to dispute settlement. Although the United States is confident that 

under the TPP SPS chapter U.S. regulators will be able to continue ensuring the 

safety of our food and protecting animal and plant health, we prefer excluding two 

provisions from dispute settlement to maintain the utmost flexibility and minimize 

any defensive concerns. We are also mindful that we can always take countries to 

dispute settlement in the World Trade Organization over SPS measures not based 

on science. 

Question. Meaningful market access for agricultural and service products must result from the U.S.-Japan bilateral negotiations. Can you assure the committee that 

significant additional market access for commodities Japan considers ‘‘sensitive’’ will 

be included in any TPP agreement? 

Answer. U.S. exports of agricultural products to Japan reached nearly $13.2 billion in 2014, up 8 percent from a year earlier. Shipments of beef, pork, rice, wheat, 

and dairy products—identified by Japan as being their leading agriculture-related 

52 

sensitivities—combined to account for over $5.1 billion of that total. Through the 

TPP negotiations, we are working to build on this already strong foundation and 

deliver new and expanded market access opportunities in Japan for all U.S. food 

and agricultural products including with respect to Japan’s co-called sensitive products. We expect this outcome to be achieved through a combination of tariff elimination, deep tariff reductions, and new preferential tariff-rate quotas. 

Question. Given that we allowed Mexico to export potatoes to the U.S. without 

first ensuring a viable agreement to permit U.S. potatoes into Mexico, what steps 

is USTR taking to address backsliding by Mexico, given its long history of noncompliance on SPS? Do you consider the Mexican government’s own defense of its 

March 2014 rules sufficient? 

Answer. Prior to joining the TPP negotiations, Mexico reaffirmed its commitment 

to science-based SPS decisions, in line with the high standards of the WTO SPS 

Agreement. In March 2014, Mexico issued a final rule to expand access for U.S. potatoes. However, a Mexican court granted an injunction pending resolution of a lawsuit filed by the Mexican potato industry. We will continue to monitor this legal 

issue closely and press for an outcome that results in further market opening for 

U.S. potato exports. 

Question. With the potential expiration of the SLA in 2015, what changes to the 

agreement is USTR negotiating with Canada to address better the persistent Canadian flouting of the lumber restrictions? 

Answer. The nearly-decade-old 2006 Softwood Lumber Agreement (SLA) has been 

the most successful of several agreements reached over the past three decades to 

address U.S. concerns about imports of Canadian softwood lumber. USTR is continuing to consult with domestic stakeholders. To date, the Government of Canada 

has said it cannot consider any changes to the 2006 agreement. We continue to encourage the Government of Canada to engage with its stakeholders on a path forward. 

Question. Many Senators are concerned that, once implemented, the unnecessary 

and duplicative USDA catfish inspection program will harm the business interests 

of many American food producers and threaten our trade interests. As the program 

may officially be implemented in the near future, to what extent is this program 

a part of TPP negotiations? Do you have recommendations for Congress to consider 

on the future of the USDA catfish inspection program? 

Answer. The Congressionally-mandated change to how the United States assures 

the safety of catfish is not part of the TPP negotiations, although Vietnam as a TPP 

partner has raised concerns. USTR is working with USDA to ensure that any final 

rule is consistent with our international obligations and prevents unnecessary trade 

disruptions. 

Question. It is critical the TPP yields meaningful market access for the U.S. dairy 

producers, particularly with regard to Canada and Japan. As you know, concern 

persists among commodity groups that TPP negations may come up short in securing real market opportunities for U.S. exporters. What assurances can you share 

that USTR is diligently working to ensure significant market access for dairy in 

Canada and Japan? 

Answer. We are working to provide new and expanded opportunities for U.S. 

dairy products in all of the TPP markets. This will be achieved through tariff elimination, deep tariff reductions, and new preferential tariff rate quotas. Gaining new 

and commercially meaningful dairy market access in Canada and Japan are top priorities of the TPP agricultural market access negotiations, as it gains valuable new 

market access for U.S. dairy products exported to Vietnam and Malaysia. We continue to work closely with U.S. stakeholders to ensure we reflect their priorities and 

concerns. 

Question. Despite its WTO accessions commitments, Russia has banned the import of U.S. beef and other agricultural products for two years. What substantial 

progress has USTR made in ending this problem since your previous testimony before this committee? 

Answer. In August, 2014, Russia banned imports of U.S. beef and other agricultural products from countries that have imposed sanctions in response to Russia’s 

illegal actions in Ukraine. By imposing an import ban on food items, the Russian 

government is placing a burden on its own citizens. We are sensitive to the negative 

impact that this ban has had on specific agricultural producers. Nevertheless, the 

overwhelming reaction from U.S. industry has been one of solidarity with the overVerDate Mar 15 2010 20:42 Jan 27, 2016 Jkt 000000 PO 00000 Frm 00056 Fmt 6601 Sfmt 6621 R:\DOCS\98343.000 TIMD
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all objective of not condoning Russia’s illegal actions in Ukraine and efforts to use 

trade as a political weapon. We have and will continue to use the tools of the WTO 

to ensure that Russia implements the WTO Agreement on Sanitary and Phytosanitary Measures, and the commitments in its Working Party Report. For example, 

USTR and USDA met numerous times with Russian officials to open the Russian 

market to U.S. exports of, among other items, beef, pork, poultry and dairy, both 

at the technical expert level and at senior levels. We were able to make some 

progress and restart some U.S. exports of turkey and pork before Russia banned 

general food imports from the United States. 

QUESTIONS SUBMITTED BY HON. MICHAEL B. ENZI

Question. In his State of the Union address, President Obama said that we 

shouldn’t let China write the rules for the world’s fastest-growing region, as that 

would put our workers and businesses at a disadvantage. One of the ways that 

China puts U.S. exporters at a disadvantage is through its use of value-added tax 

(VAT) policy to distort trade. China incentivizes exports of soda ash, for example, 

by giving a 9 percent rebate of its VAT on soda ash that is exported. As you may 

know, soda ash is the largest exported product from Wyoming. In the context of the 

2012 JCCT, China committed to have discussions with the United States to work 

toward a trade-neutral VAT system in China. Will the Administration commit to following through on these VAT-related consultations with China? 

Answer. Since the 2012 meeting of the U.S.-China Joint Commission on Commerce and Trade (JCCT), the Administration has continued to press China to move 

toward a trade-neutral VAT system, using both the JCCT process and the U.S.- 

China Strategic & Economic Dialogue (S&ED) process. This past year, at the 2014 

S&ED meeting, China recognized ‘‘the importance of fostering a more streamlined, 

efficient, and market-based business environment in which the market plays a decisive role in allocating resources’’ and committed ‘‘to improve its Value Added Tax 

rebate system, including actively studying international best practices, and to deepen communication with the United States on this matter, including regarding its impact on trade,’’ as set forth in the Joint Fact Sheet reflecting the outcomes of discussions between the United States and China. China acknowledged that this approach 

would support ‘‘strong, sustainable, and balanced economic growth’’ in China and 

‘‘the transformation of China’s economic development pattern.’’ Going forward, the 

United States is committed to following through in this area with China. 

Question. The Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and 

Investment Partnership (T–TIP) are very important to the U.S. soda ash industry, 

based in Green River, Wyoming. Soda ash production is a shining example of U.S. 

competitiveness. The industry exports over $1 billion annually, about half its total 

output. The soda ash industry faces continuing challenges from subsidized suppliers 

such as China’s soda ash industry; however, it is very important that soda ash tariffs imposed by Japan and Vietnam are eliminated immediately in the TPP, and by 

Europe in the TTIP. Can you speak to the status of the industrial tariff negotiations 

in these trade negotiations? 

Answer. USTR is aiming for rapid elimination of tariffs on a broad range of industrial goods in the TPP and T–TIP negotiations, including soda ash, which will enhance market access to the European market, as well as three key Asia-Pacific markets—Japan, Malaysia, and Vietnam. In addition, in both TPP and T–TIP, we are 

seeking to include disciplines to ensure that state-owned enterprises compete fairly 

and do not cause harm to U.S. companies and workers as a result of subsidies or 

other advantages they receive from the governments that own them, which would 

address a significant global challenge U.S. soda ash exporters face. 

Question. A number of my colleagues touched on the status of agricultural trade 

in a number of areas but I am concerned specifically about U.S. lamb exports. What 

opportunities do you see in the Trans-Pacific Partnership (TPP) and the TransAtlantic Trade and Investment Partnership (T–TIP) for U.S. lamb producers? 

Answer. While most TPP countries’ tariffs on lamb meat are already zero, Vietnam maintains a 7 percent tariff, which we would expect to be eliminated under 

the TPP agreement. More broadly, the TPP region encompasses a number of countries characterized as having an expanding middle class base and rising consumer 

incomes, where we would expect a growing market in lamb meat. Under T–TIP we 

also aim to increase market access for U.S. lamb exports. For those countries, like 

EU Member States and Japan, that maintain SPS-based market access restrictions 

on U.S. lamb, USDA is continuing its work at the technical level to address and 

54 

resolve these constraints. As such, we would expect to see new market opportunities 

emerge over the coming years for high-quality U.S. lamb. 

QUESTIONS SUBMITTED BY HON. JOHN CORNYN

Question. Ambassador Froman, as you know, farmers and ranchers in Texas rely 

heavily on exports. However, an example of one question that I get from producers 

is this: ‘‘It is great to have trade agreements but what is the United States doing 

to ensure that the parties to all of our agreements are playing by the rules that 

they agreed to’’? We continue to see foreign governments use tariff and non-tariff 

barriers to restrict U.S. agriculture products. 

Can you tell us what you are doing to ensure that countries who sign trade agreements with the United States are living up to their commitments? 

Answer. President Obama has made trade enforcement a top priority for U.S. 

trade policy. USTR and USDA continuously monitor and work to resolve barriers 

to U.S. food and agricultural products through a variety of mechanisms, and where 

we cannot resolve issues, we use dispute settlement as needed to enforce U.S. 

rights. For example, USDA has staff posted around the world that work to resolve 

unwarranted trade barriers on a daily basis. USTR and USDA also work together 

to resolve barriers, such as opening Malaysia to U.S. pork last year, and getting 

Mexico to fully open its market to U.S. beef. We utilize the consultation mechanisms 

in bilateral agreements where we have them to find resolution to barriers, such as 

pet food exports to Panama. Where needed, we have taken dispute settlement cases 

in the World Trade Organization, such as against India on its prohibitions on poultry and against China on its antidumping duties on poultry. The Administration 

will continue to work to hold trading partners accountable for trade agreement obligations and vigorously enforce the rules-based trading system to stand up for American workers, families, farmers and businesses. As we seek to dismantle unwarranted foreign SPS barriers, we need to ensure that the United States maintains 

a rigorous science-based approach to our own regulations. 

Question. For over ten years, U.S. beef has been out of the Chinese market over 

BSE concerns. Even though some U.S. beef may find its way to stores and restaurants in China, U.S. beef is officially banned in China. China has proven to be 

a great market for U.S. pork and poultry exports as well as beef exports from our 

competitors in Australia, New Zealand, and South America. In 2013 the United 

States received the safest declaration possible from the World Organization for Animal Health (OIE), that of ‘‘negligible risk’’. Thankfully, USDA and USTR have 

worked with Hong Kong and Mexico to lift remaining age-based restrictions on U.S. 

beef and exports have increased as a result (Hong Kong and Mexico were both $1 

billion markets for U.S. beef exports in 2014). Unfortunately, many countries in addition to China have age-based restrictions on U.S. beef. For example, beef is only 

acceptable if the cow was slaughtered before it reaches 30 months in age. 

What is USTR doing to lift the remaining age-based restrictions in China, Japan, 

and Vietnam? 

Answer. Full market access globally for U.S. beef, consistent with international, 

science-based standards—including lifting of the remaining age-based restrictions on 

beef, is a high priority for the Administration. One of USTR’s top priorities has been 

to reopen China’s market in a manner that is based on science, consistent with 

international standards, and commercially viable. Despite high-level engagement 

last year, we were not able to come to agreement with China on the opening of its 

market due to persistent demands from China that were neither scientifically necessary, nor commercially practicable. We are working with USDA to consider next 

steps. 

In February 2013, Japan allowed imports of beef from cattle less than 30 months 

of age, compared to the previous limit of 20 months, among other steps. In 2014, 

the value of U.S. beef and beef product exports to Japan, the United States top export market on a value basis, approached $1.58 billion, up 14 percent from the previous year. Efforts to address Japan’s remaining access constraints are ongoing. 

While Vietnam lifted a ban on U.S. pork, poultry, and beef offal last year, we continue to work with the Government of Vietnam to ensure effective and full implementation of that decision, as well as to achieve full market access for U.S. beef, 

consistent with international standards. 

55 

Question. Last fall, USDA–APHIS solicited comments on a proposed rule that will 

allow the importation of fresh and frozen beef from Brazil. Many of the cattlemen 

in my home state of Texas have raised serious concerns over this proposed rule due 

to USDA’s lack of transparency and thorough risk assessment and analysis, especially given Brazil’s long history of foot-and-mouth disease. As you know, the beef 

industry is still recovering from one isolated BSE case in 2003 that cost the industry 

billions in lost export opportunities. 

How long do you think it would take to recover lost market access, and do you 

have the resources to focus on regaining market access from a foot-and-mouth disease outbreak? 

Is it wise to risk the entire U.S. cattle herd over one rule that lacks transparency 

and a thorough risk analysis? 

Answer. USDA is responsible for the regulatory process for imports of beef from 

Brazil, consistent with U.S. law and science. USDA issued a proposed rule on December 23, 2013 and the public comment closed on April 22, 2014. 

QUESTIONS SUBMITTED BY HON. JOHN THUNE

Question. Ambassador Froman, thank you for your leadership and high-level engagement with China regarding its process to approve new ag biotech products, 

which, as you will agree, is essential to both the health of innovative R&D in agriculture here at home and the nearly $17 billion worth of U.S. grain that is shipped 

there each year. 

Thanks to your leadership, there have been some great outcomes that should materialize into long-term gains. However, I remain concerned about the short term. 

I understand there are now five new products in the final stage of China’s review 

process. Under normal circumstances, these products would secure a final import 

approval in early 2015. 

Given what is at stake for America’s farmers and the future of innovation in agriculture, is it your belief that China will pursue a science-based decision-making 

process and approve these products? 

Answer. Advancement in agricultural technology are critical to helping feed the 

world’s growing population and reduce the impact of agriculture on the environment. USTR works closely with other U.S. government agencies, including the U.S. 

Departments of Agriculture and State, to ensure export markets are open to U.S. 

agricultural products. Central to this effort is a strategy to address trade disruptions resulting from differences globally in approval systems. 

We engaged China on this important issue at the December 2014 Joint Commission on Commerce and Trade (JCCT). Around these meetings, China approved three 

products that had faced considerable delays. We also agreed to a new bilateral dialogue with China to discuss innovation in agriculture. We continue to use opportunities like the JCCT and other meetings to press China to improve the timeliness and 

transparency of its biotech approvals process and make decisions based on science. 

Question. We have seen a disturbing trend in recent years whereby countries are 

ignoring international commitments and standards for patent issuance in a veiled 

attempt to support certain domestic industries and constituencies. These decisions 

are shortsighted and ultimately discourage innovation, investment, and job growth. 

What is your agency doing to enforce existing intellectual property commitments 

and deter countries from weakening such standards in their own IP regimes, whether that is in India, Canada, or other trading partners? Additionally, can you also 

speak to your agency’s efforts to secure IP protections that mirror U.S. law through 

the Trans-Pacific Partnership trade agreement? 

Answer. One of our key priorities is to protect intellectual property rights around 

the world and to ensure effective enforcement of IP rights to maintain markets for 

the full range of job supporting exports of products and services embodying American creativity and innovation. We use every possible avenue to engage with countries to strengthen their IPR systems, including their patent systems. 

We are actively engaging India on how to create an ecosystem that supports innovation through strong intellectual property rights protection (IPR) and enforcement. 

USTR conducted a Special 301 Out-of-Cycle Review of India’s IPR environment, focused on the level of government engagement with the U.S. on IPR issues, and during that OCR, we were able to achieve—for the first time ever—the establishment 

56 

of a joint U.S.-India annual high-level Intellectual Property (IP) Working Group 

based on the common recognition of the need to foster innovation in a manner that 

promotes economic growth and job creation. We also continue to work with India 

on the entire range of IPR concerns under the Trade Policy Forum, including 

through intensive, technical discussions on policies to provide adequate protection 

for trade secrets and patents. We are also working closely on efforts to increase information sharing and enforcement against copyright infringement that affects U.S. 

and Indian industries alike. 

As detailed in the 2014 Special 301 report, we are actively engaged with Canada 

on issues related to the patent utility standard, as well as in other areas, including 

copyright and border enforcement. We are closely monitoring developments, consulting with affected stakeholders, and pressing Canada to address our concerns. As 

the United States’ largest bilateral trading partner, it is critical for Canada to promote innovation through strong intellectual property rights protection, which is essential to economic growth throughout North America. 

For the TPP, we seek to obtain strong standards of IPR protection and enforcement that are grounded in U.S. law, and that will stand alongside those of U.S. 

FTAs in the Asia Pacific region, foster regional integration, and support U.S. economic growth and the creation and retention of American jobs. 

Question. As the world’s fourth most populous country, Indonesia is a huge potential market for American goods and services. I understand, though, that the Indonesian government has enacted onerous local content requirements for mobile telecommunications devices, likely in violation of WTO commitments, that will harm 

the American technology industry. 

What is your office doing to combat this and other protectionist measures that 

would deny American companies access to the Indonesian market? 

Answer. We have been concerned about the rise of localization requirements, such 

as domestic manufacturing and local content, in Indonesia over the last couple 

years, especially recent efforts by Indonesia to force the development of a domestic 

IT industry. We have been raising our concerns both bilaterally with Indonesia, as 

well as in multiple committees at the WTO. Several other WTO Members, including 

Japan and the EU, have expressed similar concerns. This issue will be a priority 

for us in our discussions with the new government in Indonesia. 

Question. As you know, there has been a protracted labor dispute between the 

Longshoremen’s Union and the Pacific Maritime Association, which has resulted in 

severe port congestion that could impact the economy by up to $1 billion per day. 

While a federal mediator has joined the talks, there has been no resolution, and the 

situation continues to deteriorate. 

What else can the administration do to resolve this issue as soon as possible? 

Answer. The Administration is engaged and we have urged both sides to resolve 

this dispute quickly at the bargaining table. Successful resolution of these negotiations is critical to both the ports—the employers, workers and communities—and 

our exports, including agricultural products, which depend on the smooth functioning of the ports to reach their markets. As you noted, the two parties in this 

labor negotiation, the International Longshore and Warehouse Union (ILWU) and 

the Pacific Maritime Association (PMA), have jointly requested federal mediation, 

and the Federal Mediation and Conciliation Service (FMCS) has begun mediation 

to assist the two parties to secure an agreement. In addition, out of concern for the 

economic consequences of further delay, the President directed Secretary of Labor 

Tom Perez to travel to California to meet with the parties to urge them to resolve 

their dispute quickly at the bargaining table. Secretary Perez arrived in San Francisco on February 16 and will keep the President fully updated on his meetings with 

the parties. 

Question. The U.S. film and television industry is a network of 108,000 small 

businesses, 85 percent of which employ fewer than 10 people. With a trade surplus 

of $12.2 billion in 2011, or 6 percent of the total U.S. private sector exports in services, I am concerned by the European Commission’s effort to remove this sector from 

the scope of the T–TIP services negotiations. 

What are you doing to ensure that this sector is included within the scope of the 

T–TIP services and ecommerce negotiations? 

Answer. The EU and several of its Member States support policies designed to 

promote national content in television, film, and radio programming. We are conVerDate Mar 15 2010 20:42 Jan 27, 2016 Jkt 000000 PO 00000 Frm 00060 Fmt 6601 Sfmt 6621 R:\DOCS\98343.000 TIMD
57 

fident that the consumer appetite for U.S. content is sufficient to support both U.S. 

and EU industries, and that we can find ways in T–TIP to accommodate EU sensitivities without unnecessarily restricting trade in a sector in which both EU and 

U.S. firms are globally competitive. 

QUESTIONS SUBMITTED BY HON. RICHARD BURR

Question. In 2009, the U.S. and EU reached the U.S./EU WTO Agreement on Bananas, under which the EU committed not to discriminate against U.S. banana 

service suppliers on licensing measures. Since then, it is my understanding that the 

country of Italy has levied sizable discriminatory penalties against U.S. banana 

service suppliers for engaging in licensing arrangements that were widespread and 

permitted under EU law. Italy’s practices raise important questions about the EU’s 

willingness to honor its trade agreements. 

Although USTR has protested these Italian measures in Brussels for nearly two 

years, the European Commission has not corrected the problem. What further enforcement actions, including consultations under the 2009 Agreement and other recourse, does USTR intend to take in the short term to uphold the Agreement and 

WTO ruling and remedy the situation? 

Answer. The United States in 2010 signed a bilateral agreement on bananas with 

the EU, which entered into force on January 24, 2013. That agreement was in turn 

related to a banana tariff-cutting agreement the EU concluded at the same time 

with a number of Latin American banana exporting countries. Both agreements 

were designed to bring an end to the longstanding bananas-related disputes then 

pending in the WTO. On November 8, 2012, the EU and Latin American countries 

announced they had settled all bananas-related disputes and claims pending between them. 

We have been in frequent contact over recent months with representatives of 

Chiquita, as apparently the sole affected U.S. banana service supplier, regarding the 

company’s concerns about actions taken by Italian customs authorities, and related 

decisions taken by Italian courts, challenging Chiquita’s use of certain EU banana 

import licenses under pre-2006 EU banana import regulations. 

Because Chiquita is insisting that its use of import licenses during the period in 

question was consistent with EU governing regulations in effect at the time, we 

have been pressing the European Commission to clarify its position on this matter, 

and will continue to do so. 

Before taking further action to settle the U.S.-EU dispute settlement proceeding 

on bananas, the United States will consider whether the EU has fulfilled the undertakings to which it committed itself under the U.S.-EU bilateral agreement. 

Question. North Carolina is home to some of the most groundbreaking research 

and development that is taking place anywhere in the world. I’m proud of this important work being done in North Carolina and it is important that our policies respect and reflect the hard work and many years that go into developing these lifesaving products. 

It’s critically important that robust intellectual property protections for biopharmaceuticals in general, and biologic drugs specifically, be included in trade 

agreements like the Trans-Pacific Partnership. Biologics have already given us 

treatments for cancer and asthma, and could help us uncover the secrets of some 

of our most debilitating diseases. The current standard of 12 years regulatory data 

protection for biologics, in addition to being U.S. law, is supported by a wide bipartisan consensus and is vital for ensuring R and D dollars continue to flow toward 

development of next-generation medicines like biologics. 

Given the important role strong intellectual property protections play in supporting the research and development of these life-saving medicines, what is being 

done to safeguard IP for biologics in these trade negotiations? 

Answer. Biologic drugs offer great potential for new treatments and cures that 

will benefit all of humankind, and this sector also is one in which U.S. companies 

are leading global innovators and competitors. As is our traditional practice, the 

U.S. approach to trade negotiations has been to base U.S. proposals on existing U.S. 

law, where the current standard is 12 years. In the TPP negotiations, views vary 

on the best term of data protection for biologics, and standards also vary across the 

TPP region. Some TPP countries currently have no data protection for biologic 

58 

drugs, while some have five years and others have eight. We have been engaging 

intensively with TPP counterparts to try to resolve our differences on this issue. 

QUESTIONS SUBMITTED BY HON. ROB PORTMAN

Question. In December 2013, I, along with a number of my colleagues, wrote you 

about our concerns for the glassware industry in these negotiations. As you may 

know, Toledo is the ‘‘Glass City’’—anchored by hundreds of workers at Libbey Glass 

for over 125 years. Another Ohio company, The Anchor Hocking Co. was founded 

in 1905, and continues its work in Lancaster. The glass making sector has been 

treated as import sensitive for more than 30 years, and now is not the time to 

change that designation for workers in the Glass City and beyond. I understand 

there are efforts to complete the TPP negotiations later this year, can you reassure 

these Ohio workers that your negotiators will continue to treat this sector as import 

sensitive and ensure that that designation is fully reflected in the treatment it receives on rules of origin and on potential tariff phase-outs? 

Answer. We continue to treat glassware as an import-sensitive sector in TPP, and 

as such, are seeking a long tariff phase-out and a rule of origin that would require 

that glassware products be entirely formed, finished, and packaged in TPP countries. 

Question. I would like to reiterate the importance of the TPP Transparency and 

Procedural Fairness (TPF) provision to medical device companies in the state of 

Ohio and around the country, noting the provision has the potential to not only support trade and investment in medical devices between the U.S. and the TPP countries but it will also set an important precedent in future trade agreements for a 

key U.S. industry. I would also like to thank you for your outstanding support to 

date on securing this TPF provision in the TPP agreement. The medical device industry in Ohio is concerned about Japan’s intransigence on the TPF provision as 

it pertains to medical device reimbursement policies. Specifically, the industry is 

concerned about concessions made to date on the TPF provision (i.e., the positive 

coverage list and no commercial dispute settlement). I would like to stress the importance of making sure the TPF provision is included without any further dilution. 

Could you please elaborate on how talks are going concerning the TPF provision in 

the TPP agreement? 

Answer. Transparency and good governance are key priorities for the Obama Administration’s trade policy, and we are negotiating in the TPP specific transparency 

and due process provisions. These elements are already an integral part of the U.S. 

system, and through the TPP, we are seeking to promote a similar level of transparency throughout the Asia-Pacific region. We are engaging actively with all TPP 

partners, including Japan, to secure a robust outcome for these important provisions. 

Question. I understand the Administration has said throughout the Trans-Pacific 

Partnership talks that it is negotiating as if the 2002 TPA law were still in place. 

Given that, the TPA objective for Intellectual Property is to obtain a standard of 

protection similar to that found in U.S. law. Current U.S. law regarding data-protection for biologics is clearly set at 12 years. So—consistent with TPA and current 

U.S. law—my firm hope is that the Administration and its trading partners will 

agree to 12 years of data protection for biologics as a part of these negotiations. Can 

you assure us that this is still your intention? 

Answer. Biologic drugs offer great potential for new treatments and cures that 

will benefit all of humankind, and this sector also is one in which U.S. companies 

are leading global innovators and competitors. As is our traditional practice, the 

U.S. approach to trade negotiations has been to base U.S. proposals on existing U.S. 

law, where the current standard is 12 years. In the TPP negotiations, views vary 

on the best term of data protection for biologics, and standards also vary across the 

TPP region. Some TPP countries currently have no data protection for biologic 

drugs, while some have five years and others have eight. We have been engaging 

intensively with TPP counterparts to try to resolve our differences on this issue. 

Question. I understand that a factor in the TPP negotiations for USTR is to consider the implications of an agreement on the Western Hemisphere textile and apparel supply chain. The Nicaragua Tariff Preference Level (TPL), which expired at 

the end of last year, has enabled companies to produce uniforms and certain other 

types of garments competitively in the CAFTA–DR region. At the same time, the 

special provision on woven trousers, which is part of the TPL, promotes the use of 

59 

U.S. made fabrics. I think the extension of the Nicaragua TPL is even more important with, hopefully, the conclusion of the TPP negotiations on the horizon. This 

issue is vital to Cintas, which is headquartered in Ohio with over 3,000 workers in 

our state. Will USTR work with Congress to extend this important program and 

strengthen global supply chains? 

Answer. The Administration has not yet taken a position on extending the Nicaragua one-for-one program. However, we will continue to consult closely with Congress and the various stakeholders on this important issue. 

Question. I believe reaching agreement on the Information Technology Agreement 

is very important for American manufacturers and entrepreneurs. How is the U.S. 

helping to reach a final deal in 2015? 

Answer. Expanding the Information Technology Agreement’s (ITA) product coverage to include new, technologically advanced products is a key U.S. trade policy 

priority, and one of the key initiatives we are pushing at the World Trade Organization (WTO). The benefits of an expanded ITA would be significant, and it is a result 

that could be achieved in the very near term if China and Korea are willing to work 

towards a bilateral compromise. 

We were disappointed that we were not able to reach a conclusion of the ITA expansion negotiations in Geneva last December, especially in light of the major 

breakthrough with China at APEC that allowed the multilateral talks in Geneva 

to resume. But we will continue to work closely with key players, and with WTO 

Director General Azevedo, in an attempt to break the current impasse, and conclude 

this important agreement as soon as possible. An expanded ITA would be the first 

major tariff-cutting deal at the WTO in 17 years and help boost American exports 

to growing markets around the world. When completed, the ITA expansion is estimated to cover $1 trillion in trade, adding $190 billion to the global economy and 

supporting tens of thousands of good-paying U.S. manufacturing and technology 

jobs. 

Question. I understand the U.S. is negotiating an environmental goods agreement 

that impacts a number of sectors, including glass composite manufacturers like 

Owens Corning, headquartered in Toledo, Ohio. This sector is very interested in the 

ongoing environmental goods agreement negotiations. Will the US support the inclusion of categories of glass fiber without consideration given to the application of 

these glass fiber products? 

Answer. The Administration is working to negotiate an environmental goods 

agreement (EGA) under the auspices of the WTO that advances our national priorities. We are currently in the process of evaluating a wide range of products for potential inclusion in the EGA. We will continue to consult closely with interested 

stakeholders as this important negotiation continues in order to ensure a strong outcome for the United States. 

Question. Mr. Ambassador, in remarks last June, you highlighted data localization 

requirements as a significant problem for U.S. services companies working to expand into foreign markets and compete globally. Specifically, you stated: 

‘‘Restrictions on the flow of data across borders or requirements that companies 

duplicate their IT infrastructure in a country in order to serve that market makes 

it harder for companies of all sizes, based in all countries, to compete, and for buyers of all types to connect.’’ 

I support your efforts to ensure that such barriers are addressed in ongoing trade 

negotiations, including the TPP. However, I am concerned that TPP won’t fully address these barriers for U.S. financial services companies including insurers, reinsurers, banks, and electronic payments services providers. Specifically, I am concerned that the TPP won’t explicitly prohibit our trading partners from requiring 

U.S. financial services firms to set up local data centers as a condition of doing business in their markets. Will your office work to ensure that this is not repeated in 

other trade negotiations, such as TTIP and TiSA? 

Answer. The significant increase in localization barriers to trade around the world 

is of serious concern to the Obama Administration. We are advancing efforts to reduce and prevent the proliferation of localization barriers to trade, including restrictions on data flows and requirements to establish infrastructure domestically, 

through the full range of bilateral, multilateral, and regional forums, including the 

WTO, APEC, and the OECD. We have also created for the first time ever a specific 

group in the T–TIP negotiations to develop concrete ways that the United States 

and the European Union can cooperate to address these issues around the world. 

60 

Question. I would like to express my concerns with a recent WTO Appellate Body 

ruling that found a provision of U.S. trade remedy law which requires the International Trade Commission to assess the effects of subsidized imports with the effects of dumped, non-subsidized imports for purposes of its material injury analysis 

(i.e., cross cumulation), inconsistent with the United States’ WTO obligations. Given 

the serious implications this ruling could have on domestic industries who rely on 

the trade remedy laws to counter foreign competitors’ unfair trade practices, can you 

commit to us that you will brief this committee on our options for compliance should 

the U.S. Government decide to comply with this ruling and work with us to ensure 

we do not undermine the effectiveness of our trade remedy laws? 

Answer. The findings of the WTO Appellate Body were disappointing. USTR has 

consulted with the Committee regarding this and other issues raised in the dispute 

on a number of occasions. It is the responsibility of the International Trade Commission (ITC) to determine whether and how to comply with the WTO findings regarding cross-cumulation. We welcome the Committee’s views on this issue, and will continue to consult with both the ITC and USTR’s committees of jurisdiction, as well 

as interested Members, regarding compliance with the findings in this dispute. 

Question. Ambassador Froman, what can you tell me about the current situation 

with the West Coast ports and what can the Administration do to resolve this issue 

as soon as possible? 

Answer. The Administration is engaged and we have urged both sides to resolve 

this dispute quickly at the bargaining table. Successful resolution of these negotiations is critical to both the ports—the employers, workers and communities—and 

our exports, including agricultural products, which depend on the smooth functioning of the ports to reach their markets. As you noted, the two parties in this 

labor negotiation, the International Longshore and Warehouse Union (ILWU) and 

the Pacific Maritime Association (PMA), have jointly requested federal mediation, 

and the Federal Mediation and Conciliation Service (FMCS) has begun mediation 

to assist the two parties to secure an agreement. In addition, out of concern for the 

economic consequences of further delay, the President directed Secretary of Labor 

Tom Perez to travel to California to meet with the parties to urge them to resolve 

their dispute quickly at the bargaining table. Secretary Perez arrived in San Francisco on February 16 and will keep the President fully updated on his meetings with 

the parties. 

Question. As you know, a Grain Oriented Electrical Steel, or GOES, dispute with 

China has been ongoing since 2010 which has a direct impact on Ohio workers. China’s non-compliance is costing American jobs and hurting U.S. exports. What steps 

has the Administration taken to persuade China to comply with its WTO obligations 

including the removal of these duties? Did the United States raise this issue at the 

JCCT in December? If not, why not? If so, can you share any of the conversation? 

Further, the Secretaries of Commerce and Energy are planning an upcoming trade 

mission to China on energy efficient technology. Will you recommend this issue as 

a topic of discussion with Chinese officials during that trip? 

Answer. In November 2012, the WTO adopted the panel and Appellate Body reports in the GOES dispute. In July 2013, China issued its compliance measure, 

which continued the imposition of duties on GOES. We consider that China has not 

addressed the inconsistencies found by the WTO in the original GOES dispute. As 

a result, the United States initiated compliance proceedings against China in January 2014. This is the first-ever compliance proceeding initiated against China. A 

meeting with the compliance panel took place in October 2014. The compliance 

panel is expected to issue its final public report in the first half of this year. Because 

we are pressing forward on the GOES matter in an active dispute at the WTO, we 

did not raise this matter at the JCCT in December 2014. We will determine on next 

steps once we receive the compliance panel’s decision. 

Question. The U.S. Department of Defense and U.S. Department of Energy have 

identified several critical materials whose availability is restricted but which provide essential functionality for defense systems and renewable energy production, 

respectively. Likewise, the European Commission has identified 20 substances it 

considers to be in short supply and essential for the European economy. The metal 

beryllium is an example, which DoD has designated as the only critical and strategic material for national security, and the EC has recognized as critical. Our European trading partners are proposing workplace exposure and REACH (Registration, 

Evaluation, Authorization and Restriction of Chemicals) regulations that will restrict the use of beryllium and other critical materials, essentially creating non-tariff 

trade barriers for U.S. exports to Europe. It is my understanding support for either 

61 

of these restrictive regulatory policies is not uniform within EU Member States or 

within all branches of the EU federal government. Have you or your office objected 

to these trade restrictions on U.S. critical materials? What is USTR doing on a bilateral basis to oppose these proposed regulations before they become legal requirements? 

Answer. USTR is carefully examining this issue and is engaged with other U.S. 

agencies and stakeholders. Generally, the U.S. Government has urged the Commission and individual Member States to ensure transparency in the development of 

regulations. We have also stressed that regulation should be based on science and 

that all parties, including U.S. exporters, should have the opportunity to provide 

meaningful input on options under consideration. 

Question. Ambassador Froman, as you move forward with trade negotiations, you 

know that Congress will be watching the extent to which the Administration is enforcing existing trade policies and rules. However, in the sanctions area, the Belarus 

Government, led by President Lukashenko, one of the most reviled leaders of our 

time, appears to be evading U.S. sanctions without sufficient enforcement by the 

Administration. Lukashenko has engaged in a corporate maneuver to split off 

Belaruskali, the state-owned potash company, from a sanctioned entity, permitting 

them to argue Belaruskali is no longer subject to the sanctions. If Lukashenko succeeds, this would put Lukashenko in the driver’s seat in deciding the force of U.S. 

sanctions. Those charged with enforcing U.S. trade and sanctions policy should not 

permit that to happen. Will the Administration conduct an investigation of this sidestepping of U.S. sanctions and ensure that they are rigorously enforced? 

Answer. Enforcing U.S. sanctions is a key objective of the Administration. However, U.S. sanctions, such as those imposed against Belarus, are administered by 

the Office of Foreign Asset Control (OFAC) of the Department of Treasury and the 

U.S. Department of the Justice. I will share these concerns with these agencies, and 

work with them to ensure that our sanctions are enforced. 

QUESTIONS SUBMITTED BY HON. PATRICK J. TOOMEY

Question. U.S. law provides 12 years of data protection for biologic medicines. The 

biopharmaceutical research industry maintains that this exact amount of time is 

necessary to recoup the costly R&D investments that are made to bring new treatments to market. I am pleased that you working to ensure that this high level of 

intellectual property protection is included in the final Trans Pacific Partnership 

(TPP) agreement, but I understand you are facing some opposition from our negotiating partners. What are you and your staff doing to ensure that other nations 

agree to implement the full 12 years of data protection for biologics; and that nothing in this agreement threatens the future ability of American research firms to develop new lifesaving treatments? 

Answer. Biologic drugs offer great potential for new treatments and cures that 

will benefit all of humankind, and this sector also is one in which U.S. companies 

are leading global innovators and competitors. As is our traditional practice, the 

U.S. approach to trade negotiations has been to base U.S. proposals on existing U.S. 

law, where the current standard is 12 years. In the TPP negotiations, views vary 

on the best term of data protection for biologics, and standards also vary across the 

TPP region. Some TPP countries currently have no data protection for biologic 

drugs, while some have five years and others have eight. We have been engaging 

intensively with TPP counterparts to try to resolve our differences on this issue. 

Question. The dairy industry is very important to my state and the PA Milk Marketing Board estimates that dairy related activity supports over 60,000 direct and 

indirect jobs in Pennsylvania. To date, the dairy industry has been generally supportive of finalizing TPP negotiations and very excited about the possibility of selling their products in new markets. That said, I am concerned that some of our negotiating partners—namely Canada and Japan—may refuse to open their markets to 

U.S. dairy products. Can you assure me that if TPP is finalized, it will offer new 

and meaningful market access opportunities for the U.S. dairy industry in these key 

markets? 

Answer. We are working to build on the recent strong export performance of our 

agricultural sector and provide new and expanded opportunities for U.S. farm products, including dairy products in all of the TPP markets. This will be achieved 

through tariff elimination, deep tariff reductions, and new preferential tariff rate 

quotas. Gaining new and commercially meaningful dairy market access in Canada 

62 

and Japan are top priorities of the TPP agricultural market access negotiations, as 

it gains valuable new market access for U.S. dairy products exported to Vietnam 

and Malaysia. We continue to work closely with U.S. stakeholders to ensure we reflect their priorities and concerns. 

Question. On December 19, 2014, the Commerce Department signed suspension 

agreements with Mexico to restrain U.S. imports of Mexican sugar. On net, these 

agreements will negatively impact our economy by limiting the supply of an essential input for U.S. food manufacturers, thereby reducing their global competitiveness. Do you recognize that policies prohibiting foreign sugar from entering the 

United States are detrimental to domestic sugar using industries and place the 

600,000 jobs they provide at risk? Will you seek provisions in ongoing trade negotiations that ensure American food manufacturers have adequate access to foreign 

sugar, such as that produced in Australia and other nations? 

Answer. Several countries in the TPP are seeking access into the U.S. market for 

sugar and sugar containing products. Our goal in these and all trade negotiations 

is to achieve a comprehensive market access package that reduces barriers and 

opens markets for U.S. food and agricultural exports. We also are guided by the 

laws passed by the U.S. Congress, and will seek to negotiate TPP in a way that 

does not undermine the U.S. sugar program as enacted by the U.S. Congress. 

Question. Mack Trucks employs over 1,800 of my constituents at their Macungie, 

Pennsylvania plant where they build heavy-duty work trucks. Exports of work 

trucks to Colombia face a high tariff—currently 9 percent—that decreases by only 

1.5 percent every year under the U.S.-Colombia Trade Promotion Agreement. Exports of competing trucks from Mexico, however, enter Colombia duty free, placing 

American made trucks at a competitive disadvantage. I first highlighted this issue 

three years ago in a bipartisan, bicameral letter that urged USTR to negotiate with 

the Colombians to accelerate the reduction of the tariff on U.S. work trucks. I want 

to thank you and your staff at USTR for commencing that process and continuing 

to act with urgency on this matter. Will you continue to task your staff with getting 

this done as soon as possible? How do you see the process playing out? 

Answer. As a result of a USTR notice in the Federal Register, a number of U.S. 

stakeholders proposed products for tariff acceleration under Article 2.3 of the U.S.- 

Colombia Trade Promotion Agreement, including certain tariff lines for heavy 

trucks. Based on responses received, we have identified for Colombia products for 

possible tariff acceleration and are encouraging Colombia to inform us about any 

products for which Colombia wishes to seek tariff acceleration in order to develop 

a balanced package. Once a balanced package of products is jointly agreed upon, 

both sides would need to carry out their respective domestic procedures before the 

new tariff staging would enter into force. In the case of the United States, the domestic process follows statutory requirements and includes, among other things, advice from the ITC and advisory committees, a period of consultation and layover, 

and publication in a Presidential Proclamation. Engagement with Colombia on this 

issue slowed during Colombia’s election season in 2014; however, we are working 

with Colombia to move this process forward as soon as possible. 

Question. As you know, the Colombian government has enacted an anticompetitive regulation that requires Colombian businesses to scrap old commercial vehicles 

before they can purchase newly constructed ones. This policy is a blatant violation 

of Colombia’s WTO commitments and your office estimates it has prevented the sale 

of three thousand American made trucks in Colombia. I understand and appreciate 

that USTR has been working to resolve this issue for nearly two years. What 

progress can you report thus far and what additional actions will you take to settle 

this matter? 

Answer. We have been pressing the Government of Colombia to address this 

issue. The United States has sought to address this issue in multiple fora and at 

multiple levels, including in the negotiations on Colombia’s membership in the 

OECD. Both USTR and other U.S. Government agencies have voiced strong concerns on this issue with senior Colombian officials. Colombia took some steps to improve the situation of the existing inventory of trucks in Colombia and has recently 

taken some additional actions intended to facilitate compliance with the scrappage 

program. We are continuing to press for a comprehensive solution that will restore 

market access for U.S. exports of trucks as soon as possible. 

63 

QUESTIONS SUBMITTED BY HON. DANIEL COATS

Question. What is USTR doing to ensure that provisions are included in the TPP 

that provide for transparency and procedural fairness in the process by which reimbursement decisions are made for medical devices and pharmaceuticals? What 

progress has been made with Japan, in particular, on this important issue? 

Answer. Transparency and good governance are key priorities for the Obama Administration’s trade policy, and we are negotiating in the TPP specific transparency 

and due process provisions. These elements are already an integral part of the U.S. 

system, and through the TPP, we are seeking to promote a similar level of transparency throughout the Asia-Pacific region. We are engaging actively with all TPP 

partners, including Japan, to secure a robust outcome for these important provisions. 

Question. What is USTR doing to ensure the TPP provides for 12 years of regulatory data protection for biologics? What is the status of the TPP negotiations with 

regard to this important issue? 

Answer. Biologic drugs offer great potential for new treatments and cures that 

will benefit all of humankind, and this sector also is one in which U.S. companies 

are leading global innovators and competitors. As is our traditional practice, the 

U.S. approach to trade negotiations has been to base U.S. proposals on existing U.S. 

law, where the current standard is 12 years. In the TPP negotiations, views vary 

on the best term of data protection for biologics, and standards also vary across the 

TPP region. Some TPP countries currently have no data protection for biologic 

drugs, while some have five years and others have eight. We have been engaging 

intensively with TPP counterparts to try to resolve our differences on this issue. 

Question. What is USTR doing to address Canada’s standards for patent utility 

to ensure that pharmaceuticals and medical devices will be protected under the 

TPP? What is the status of the patent utility negotiations with Canada? 

Answer. As detailed in the 2014 Special 301 report, we are actively engaging Canada on intellectual property issues. We are closely monitoring developments, consulting with affected stakeholders, and pressing Canada to address our concerns. As 

the United States’ largest trading partner, it is critical for Canada to promote innovation through strong intellectual property rights protection, which is essential to 

economic growth throughout North America. With respect to the TPP, we are seeking to obtain strong standards of IPR protection and enforcement that will stand 

alongside those of other U.S. FTAs in the Asia-Pacific region. 

Question. What is USTR doing to address the growing global subsidization of steel 

and its impact on domestic U.S. producers? What is USTR doing on this issue in 

the context of the TPP? 

Answer. The Administration is committed to strong enforcement of U.S. trade 

remedy laws to ensure that U.S. industry can effectively address subsidized injurious imports. Using WTO dispute settlement, USTR has vigorously defended U.S. 

trade remedy laws and enforced WTO rules on practices that provide unfair advantages to foreign steel producers, including prohibited export subsidies programs, export restraints on raw materials, and misuse of anti-dumping and countervailing 

duties against U.S. exporters. USTR is also actively engaged with other countries 

on steel trade and policy issues at the OECD Steel Committee. The OECD provides 

helpful statistical and analytical work on steel capacity and trade, but also provides 

a venue for the United States and other like-minded countries to raise subsidy concerns. In June 2014, the United States was joined by the Governments of Canada 

and Mexico in a joint statement urging other governments to refrain from subsidies 

and other policies that can contribute to global excess steelmaking capacity. 

USTR’s International Trade Enforcement Center has also devoted significant resources to identifying steel subsidy programs in China. These efforts resulted in the 

counter notification to the WTO of over a dozen steel Chinese subsidy programs. We 

remain committed to working with industry to identify trade-distorting subsidies in 

the global steel industry and address them wherever possible. On February 11, the 

Administration launched a new WTO case on prohibited export subsidies that the 

Chinese are providing to a variety of industrial sectors, including textiles, apparel 

and footwear, advanced materials and metals, light industry, specialty chemicals, 

medical products, hardware and building materials, and agriculture. 

The steel industry in a number of developing economies is dominated by Stateowned and State-supported enterprises. While subsidies rules are generally governed by the WTO, the TPP negotiations provide us with a unique opportunity to 

64 

lay down rules to ensure that State-owned enterprises compete fairly with private 

companies, and do not put U.S. exporters, workers, and investors at a disadvantage. 

Question. What is USTR doing to engage with China on its subsidies related to 

steel? 

Answer. The Administration is engaging with China on multiple fronts in an effort to address the subsidies that China provides to its steel sector. The Administration has made sure to include excess capacity as a key part of its engagement with 

China. This past year, at the U.S.-China Strategic & Economic Dialogue (S&ED) 

meeting in July 2014, the Administration secured China’s agreement to ‘‘establish 

mechanisms that strictly prevent the expansion of crude steelmaking capacity and 

that are designed to achieve, over the next five years, major progress in addressing 

excess production capacity in the steel sector’’ in the context of China’s ‘‘efforts to 

rein in excess production capacity in key manufacturing sectors and to foster a business environment in which the market can play a decisive role in allocating resources.’’ In addition, at the December 2014 meeting of the U.S.-China Joint Commission on Commerce and Trade (JCCT), the Administration held a candid, highlevel strategic dialogue with China on excess capacity, including steel. 

At the same time, the Administration is committed to strong enforcement of U.S. 

trade remedy laws. Indeed, last year, the Commerce Department initiated a total 

of 52 antidumping (AD) and countervailing duty (CVD) investigations involving 

products from numerous countries, of which 33 were steel-related investigations. 

Through WTO dispute settlement, the Administration also has been successfully 

challenging Chinese government practices that have provided unfair advantages to 

the Chinese steel industry, including not only prohibited export subsidies programs, 

but also export restraints on raw materials and the misuse of AD and CVD investigations. The United States won a WTO dispute on China’s export quotas and export duties on tungsten and molybdenum, two important steel inputs. And we 

brought the first WTO challenge to a Chinese compliance action addressing duties 

that China imposed on U.S. grain-oriented electrical steel. USTR has devoted significant resources to identifying steel subsidy programs in China. Recently, these efforts resulted in the counter notification to the WTO of over a dozen Chinese subsidy programs benefiting the steel sector. 

QUESTIONS SUBMITTED BY HON. RON WYDEN

Question. Within the 2011 USTR Green Paper on Conservation and the TransPacific Partnership, you outlined a proposed conservation framework to address 

trade in illegally harvested or traded natural resource products, including timber, 

wildlife, and fish. This is an area of serious concern in the Asia-Pacific region. For 

this reason, with respect to conservation, the words on paper in the trade agreement 

must translate into meaningful action on the ground. If a deal is concluded, with 

respect to conservation, what tangible improvements do you expect to see in countries like Japan, Vietnam and Malaysia? 

Answer. The United States has put forward ambitious proposals in TPP to include 

provisions that would address some of the region’s most urgent environmental challenges, including wildlife trafficking, illegal logging and fishing, and harmful fisheries subsidies. Once concluded, the TPP environment chapter will provide us with 

trail-blazing, first-ever tools to effect on-the-ground change in places like Japan, 

Vietnam, and Malaysia, including by spurring environmental reforms, and providing 

for enhanced cooperation and enforcement efforts. 

Question. In recent trade agreements, the United States has required trading 

partners to commit to adopt and maintain laws implementing core labor standards 

such as freedom of association and the right to collective bargaining, and to effectively enforce their labor laws. Yet several countries participating in the TransPacific Partnership negotiation, such as Vietnam, do not currently adhere to these 

important standards, and many question whether they will follow through on commitments once made. Indeed, serious labor concerns remain in countries that made 

labor commitments in connection with previous trade agreements, including Colombia and Mexico. How do you intend to ensure that TPP partners live up to their 

labor obligations if an agreement is reached? 

Answer. TPP will provide an important tool for ensuring protection of worker 

rights in Vietnam and other TPP parties. We are working closely with Vietnam and 

other TPP parties to ensure that they are prepared to live up to the high standard, 

enforceable commitments of a final agreement. Vietnam’s inclusion in the TPP negoVerDate Mar 15 2010 20:42 Jan 27, 2016 Jkt 000000 PO 00000 Frm 00068 Fmt 6601 Sfmt 6621 R:\DOCS\98343.000 TIMD
65 

tiations presents an unprecedented opportunity to make historic progress on labor 

rights and working conditions. Under the TPP, Vietnam would be expected to undertake significant reforms, particularly in the area of freedom of association, but also 

concerning forced labor, child labor, and employment discrimination. Officials from 

USTR and the Department of Labor have engaged closely with Vietnam to discuss 

needed reforms and will closely monitor Vietnam’s continued implementation of 

these reforms, including the ability of workers to exercise freedom of association, 

after the agreement is in place. 

Question. In the town hall meetings I have held throughout Oregon, many citizens 

have expressed concern about the impact of investor-state dispute settlement on the 

ability of the U.S. government to adopt regulations that protect Americans’ health 

and safety. Many are worried that TPP will simply lead to more corporations challenging U.S. laws, and that this will exacerbate problems dating to NAFTA. Given 

all of the concerns expressed to date, why is the United States Trade Representative 

pursuing investor-state dispute settlement procedures in TPP? If a final TPP agreement contains these procedures, how will it be any different from NAFTA? 

Answer. Ensuring that U.S. investors operating abroad receive fair, transparent, 

and non-discriminatory treatment—the same kind of treatment foreign investors receive in the United States under U.S. law—is an important component of our trade 

and investment policy. In our trade agreements, we advance this objective through 

rules establishing a level playing field and basic rule of law protections for our investors, and through procedures for neutral arbitration of investment disputes. We 

are seeking in TPP to establish meaningful investor-state dispute settlement (ISDS) 

procedures that are in keeping with the goals of fair, expeditious, and transparent 

dispute resolution. As in the U.S. model bilateral investment treaty, our approach 

in these negotiations is to seek a high level of protection for our investors while also 

ensuring that legitimate governmental interests in regulating in the public interest 

are fully protected. Through these negotiations, we seek to raise the standards for 

ISDS, including by adding important procedural safeguards, such as provisions on 

expedited review of potentially frivolous claims, transparency in investor-state proceedings, and participation of civil society organizations and other members of the 

public in investor-state proceedings. While the United States has never lost a case 

under NAFTA, the TPP investment rules will include significantly stronger safeguards than in NAFTA, including clearer definitions of key legal rules (e.g., incorporation of key U.S. Supreme Court criteria on expropriation) and stronger procedural 

safeguards, such as stronger transparency provisions and rules on expedited review 

and dismissal of claims. 

Question. Many citizens in my town hall meetings in Oregon are worried that obligations in the TPP will make the drugs they buy more expensive by delaying the 

marketing of generic drugs, and that other requirements being considered could 

hurt Medicare and Medicaid. Will you commit to ensure that any TPP agreement 

does not contain provisions that increase drug prices for ordinary Americans or require changes to U.S. health programs such as Medicare and Medicaid? 

Answer. Access to healthcare, strengthening the U.S. health system, and safeguarding programs such as Medicare and Medicaid are key priorities for the Obama 

administration. U.S. TPP intellectual property (IP) and pharmaceutical reimbursement proposals will not require any changes to U.S. law relating to IP or pharmaceuticals, including the legal framework that has fostered a marketplace in which 

8 out of 10 prescriptions are filled with generic pharmaceuticals, resulting in billions 

of dollars in savings to U.S. consumers annually. Nor will these proposals undermine the ability of the U.S. Government to set healthcare expenditure priorities or 

negotiate or manage pharmaceutical drug prices. 

Every U.S. trade agreement negotiated in the past 15 years has contained intellectual property provisions relating to pharmaceuticals. Yet, the proportion of generic drugs sold in the United States has nearly doubled from 43 percent of all 

drugs sold in 1996 to at least 80 percent of all drugs sold today. As stated in the 

‘‘U.S. Objectives’’ for the TPP, the U.S. Government is seeking, ‘‘pharmaceutical IP 

provisions that promote innovation and the development of new, life-saving medicines, create opportunities for robust generic drug competition, and ensure affordable access to medicines, taking into account levels of development among the TPP 

countries and their existing laws and international commitments.’’ 

Question. The open, global Internet is transforming the way people express themselves, share ideas, and engage in commerce. Non-discrimination is a pillar of an 

open Internet just as it is to international rules. What do you expect to see in a 

final TPP agreement that promotes an open, global Internet that facilitates speech, 

66 

discourse, and commerce? Will the U.S. agree to any proposal that constrains the 

U.S. in ensuring net neutrality, or will it agree to any intellectual property rights 

obligations that are more rigid than those found in the U.S.? 

Answer. We are looking to include in the TPP provisions that support an open 

Internet, including provisions that: (1) facilitate the ability of U.S. suppliers to invest in and operate Internet-based platforms in TPP markets, and to supply Internet-based services on a cross-border basis; (2) move data cross-border; and (3) ensure that products distributed digitally do not face discrimination. In addition, we 

are seeking to affirm the principle that consumers should have access to legitimate 

products and services of their choice, consistent with net neutrality principles. Nothing being proposed would constrain implementation of any net neutrality proposals 

of which we are aware. With respect to intellectual property rights obligations, nothing the United States is proposing would be inconsistent with U.S. law. 

QUESTIONS SUBMITTED BY HON. CHARLES E. SCHUMER

Question. New York’s largest agricultural sector is the dairy industry and it supports a significant number of jobs in my state. Can you provide assurances that the 

U.S. will insist on concluding a package that will result in a balanced market access 

outcome for my state’s dairy industry where new imports from big dairy countries 

are able to be offset by sizable, across-the-board new access into Canada and Japan? 

Answer. We are working to build on the recent strong export performance of our 

agricultural sector and provide new and expanded opportunities for U.S. farm products, including dairy products in all of the TPP markets. This will be achieved 

through tariff elimination, deep tariff reductions, and new preferential tariff rate 

quotas. Gaining new and commercially meaningful dairy market access in Canada 

and Japan are top priorities of the TPP agricultural market access negotiations, as 

it gains valuable new market access for U.S. dairy products exported to Vietnam 

and Malaysia. All TPP partners are working to conclude an agreement that is comprehensive and high standard, and Canada agreed to these goals when it joined 

TPP. We are mindful of the sensitive nature of dairy imports in the United States 

and we continue to work closely with stakeholders to ensure we reflect their priorities and concerns. 

Question. The European Union continues to pursue the creation of monopolies in 

markets around the globe, including right here in the United States, by excluding 

other countries from using common, generic food names like ‘‘parmesan,’’ ‘‘bologna,’’ 

and ‘‘feta.’’ Last year I joined my colleagues on letters to you and USDA Secretary 

Vilsack expressing our concern for the continued use of cheese names, signed by 55 

Senators, and meat names, signed by 45 Senators. Thank you for your work on this 

‘‘geographic indications’’ issue—the Administration has been helpful in pushing back 

against the Europeans’ aggression, and in protecting American jobs and preserving 

our domestic market and markets overseas. Congratulations on your recent progress 

with China on this issue at the end of last year. This issue is critical for my producers and processors in New York. What is the latest update on this issue? 

Answer. The United States and the EU have long-standing differences over the 

scope and level of intellectual property rights protection for geographical indications 

(GIs). We have raised our strong concerns regarding the impact of the EU’s GI policies on made in America products, including those that use generic food names, such 

as ‘‘parmesan,’’ ‘‘bologna,’’ and ‘‘feta.’’ Within the Transatlantic Trade and Investment Partnership (T–TIP) negotiations, we have been clear with the EU regarding 

our strong opposition to existing and future barriers. We will continue to press the 

EU to expand market access for U.S. producers into the EU and third country markets, including through the removal of barriers such as over-broad GI protection for 

EU products. 

QUESTIONS SUBMITTED BY HON. DEBBIE STABENOW

Question. During his State of the Union address last week, President Obama 

asked for Congress to give him Trade Promotion Authority. As you enter the late 

stages of the Trans-Pacific Partnership negotiations, how would Trade Promotion 

Authority alter those negotiations? 

What if Congress were to mandate a negotiating objective that required strong 

and enforceable currency disciplines in our future trade agreements? 

How exactly would such a requirement work, if a deal is nearly done? 

67 

Answer. Addressing currency misalignments is a top priority for President Obama 

and this Administration. The Administration, led by the Treasury Department, 

which is responsible for currency issues, has worked hard to promote a level global 

playing field by moving major economies to market-determined exchange rate systems with transparent and flexible exchange rates that reflect underlying economic 

fundamentals. We have leveraged our engagement in the most important multilateral fora—the G–7, the G–20, the International Monetary Fund (IMF), and the 

World Trade Organization—as well as bilaterally, including, in particular, with 

China through the Strategic and Economic Dialogue (S&ED) and other fora. 

With regard to addressing exchange rates in our trade initiatives, we will continue to engage with Congress and our domestic stakeholders on how best to achieve 

our policy objectives in this area. 

Question. The administration oversaw the highly successful restructuring of the 

domestic auto industry, directly saving almost one million jobs and leading to commitments by the domestic automakers to create thousands of new American jobs 

going forward. More than two-thirds of the U.S. trade deficit with Japan is in automotive goods. I remain concerned that the Trans-Pacific Partnership could make 

this trade imbalance with Japan even worse. As you continue with bilateral negotiations, what are the primary auto-related issues you are still negotiating with Japan? 

Will you commit to consulting closely with me and my staff on these issues—including on rules of origin—as you enter the home stretch of these negotiations? 

Answer. Since early 2009, employment in the U.S. auto industry has been increasing steadily, dramatically reversing a five-year period of declining industry employment. This job growth has been supported by growing U.S. exports. From 2009 to 

2013, U.S. auto exports doubled to $65 billion, and U.S. exports of auto parts increased by more than 70 percent, with exports of both autos and auto parts now 

at all-time record highs. U.S. auto exports to our FTA partners have increased by 

442,000 vehicles. We are pursuing a two-prong strategy with Japan—working to 

keep our auto and truck tariffs in place for as long as possible, while addressing 

the wide range of non-tariff measures in Japan that have impeded access to the Japanese market for U.S. vehicles for decades. Japan has agreed that the timetable for 

eliminating U.S. motor vehicle tariffs will be the longest for any product in the TPP, 

and that the phase-out period will be back-loaded. With respect to non-tariff measures, we are making good progress in our parallel negotiations with Japan to address such issues as transparency in regulations, standards, certification, financial 

incentives, and distribution. We are also pursuing commitments for strong and accelerated dispute settlement procedures with stiff penalties in the event of noncompliance. We will continue to work with Congress as we negotiate with Japan to 

achieve the best possible deal in all of these areas. 

Question. You mentioned during your testimony that the Trans-Pacific Partnership incorporates many proposals suggested and supported by the U.S. labor community. Beyond the so-called, ‘‘May 10 Agreement,’’ will you please highlight some 

of those proposals? 

Answer. The provisions that the United States is seeking on labor in TPP include 

the key May 10 requirement for each TPP country to ‘‘adopt and maintain’’ fundamental labor rights as recognized by the International Labor Organization, including freedom of association and the right to collective bargaining. We are also pursuing first-ever obligations to improve worker rights and working conditions in TPP 

countries—specifically, provisions to discourage trade in goods produced by forced 

labor, including forced child labor; establish acceptable conditions of work, including 

minimum wages, maximum hours, and safe workplace conditions; and ensure labor 

protections in export processing zones. All the obligations of the TPP Labor chapter 

would be subject to the same dispute settlement mechanism as the rest of TPP including trade sanctions. 

We have also consulted with the U.S. labor community on a broad range of TPP 

issues beyond the labor obligations, and have worked to incorporate their suggestions, including with regard to disciplines on state-owned enterprises, rules of origin, tariffs, transparency in export licensing procedures, technology transfers, and 

reforms to investor-State dispute settlement. 

Question. You have argued that the Trans-Pacific Partnership will create U.S. jobs 

and grow the economy. Yet, that is at odds with our experiences with other free 

trade agreements, including NAFTA and the U.S.-Korea Free Trade Agreement. 

Will you please explain in which sectors you expect to see the greatest U.S. job and 

wage growth as a result of finalizing the Trans-Pacific Partnership? 

68 

Answer. U.S. exports have grown to all of our existing FTA partners, ranging 

from 587 percent growth to Israel, 513 percent to Chile, and 505 percent to Jordan. 

U.S. goods exports to NAFTA countries are up 289 percent, while U.S. goods exports 

to Korea (despite its economic downturn during the first two years of entry into 

force of the Agreement) are up 2.5 percent. U.S. exports to FTA partners supported 

an estimated 4.1 million jobs in 2013. Every billion dollars of U.S. exports supported 

between 5,400 and 5,900 jobs in 2013. Jobs supported by exports pay an estimated 

13 to 18 percent more than non-export jobs. 

TPP will open many new export opportunities for U.S. agricultural, manufacturing, and services exporters in sectors where high tariffs and non-tariff barriers 

currently exist. 

In agriculture, the largest gains are expected to occur in the high value categories 

of meats, dairy, fruits and vegetables, and a variety of processed foods and beverages. For example, U.S. apples and poultry exporters face tariffs of 10 percent and 

40 percent, respectively, in Vietnam; U.S. beef and wine exporters face tariffs of 38.5 

percent and 50 percent, respectively, in Japan; and U.S. tree nuts exporters face tariffs of 20 percent in Malaysia. 

By addressing tariffs and easing non-tariff barriers, TPP will support increased 

U.S. exports and the development and expansion of regional supply chains, and will 

promote the competitiveness of both large and small U.S. manufacturers. For example, U.S. beauty and skin preparations exporters currently face tariffs of 20 percent 

in Vietnam, U.S. auto exporters face tariffs of 30 percent in Malaysia, U.S. construction equipment exporters face tariffs of 5 percent in New Zealand, and U.S. exporters of aluminum bars and rods face tariffs of 7.5 percent in Japan. 

TPP will ensure fair and open markets in the dynamic Asia-Pacific region for our 

world-class service providers, which employ nearly 80 percent of Americans. TPP 

will prohibit tariffs on digital trade, which will benefit all U.S. producers of software 

and audiovisual products stakeholders. Prohibiting restrictions on data flows and 

local server requirements will benefit all U.S. companies that do business over the 

internet. Establishing a level playing field with postal operators abroad will lead to 

benefits to our express delivery industry here in the United States. TPP will be the 

first trade agreement specifically guaranteeing rights to provide electronic payment 

services on a cross border basis, benefiting U.S. suppliers of such services. 

Question. In Michigan and many states across the country, agriculture has played 

a leading role in the economic recovery. Farm exports are a big part of that success 

story. Michigan’s dairy sector, for example, continues to break its own export 

records year after year and supports nearly 40,000 jobs. When trade deals are done 

right, American agriculture wins big. 

With respect to the Trans-Pacific Partnership, significant and comprehensive market access in both Japan and Canada is critical to achieving a balanced package for 

farmers and ranchers, including Michigan’s dairy farmers. Will you please update 

the Committee on the status of market access negotiations with Japan and how 

USTR’s agriculture team plans to engage Canada, which has only half-heartedly 

participated in farm issue discussions thus far, before concluding the agreement? 

Answer. We are working to build on the recent strong export performance of our 

agricultural sector and provide new and expanded opportunities for U.S. farm products, including dairy products in all of the TPP markets. This will be achieved 

through tariff elimination, deep tariff reductions, and new preferential tariff rate 

quotas. Gaining new and commercially meaningful dairy market access in Canada 

and Japan are top priorities of the TPP agricultural market access negotiations, as 

it gains valuable new market access for U.S. dairy products exported to Vietnam 

and Malaysia. All TPP partners are working to conclude an agreement that is comprehensive and high standard, and Canada agreed to these goals when it joined 

TPP. 

Question. One of the biggest challenges facing U.S. agriculture in the ongoing 

T–TIP negotiations is the issue of geographic indications (GIs). As you know, the 

EU is keen on protecting GIs for certain food products, including many that are produced widely in the U.S. The GI issue is especially pressing for our dairy farmers 

and cheese manufacturers, which could be blocked from accessing European markets if the protective measures pushed by EU negotiators manifest in a final T–TIP 

agreement. I greatly appreciate your efforts thus far on the GI issue, and there is 

broad support in the Senate for maintaining the pressure. Could you please provide 

me with an update on where the negotiations currently stand with respect to GIs? 

69 

Answer. The United States and the EU have long-standing differences over the 

scope and level of intellectual property rights protection for geographical indications 

(GIs). We have raised our strong concerns regarding the impact of the EU’s GI policies on made in America products, including those produced by U.S. dairy farmers 

and cheese manufacturers. Within the Transatlantic Trade and Investment Partnership (T–TIP) negotiations, we have been clear with the EU regarding our strong opposition to existing and future barriers. We will continue to press the EU to expand 

market access for U.S. producers into the EU and third country markets, including 

through the removal of barriers such as over-broad GI protection for EU products. 

QUESTIONS SUBMITTED BY HON. MARIA CANTWELL

Question. According to Reuters and the Brookings Institution, the middle class 

around the world is expected to more than double in size from 2 billion today to 

4.9 billion by 2030. A majority of this growth is expected to occur in Asia and by 

2030, Asia is expected to have 64 percent of the global middle class and account 

for 40 percent of consumption. But less than five percent of U.S. small businesses 

are currently exporting. How can we do more to raise awareness about this great 

potential market for all U.S. businesses, both large and small? Additionally, how 

does the Export-Import Bank help reduce the risk to exporting to markets with a 

rising middle class that have other challenges such as corruption and limited access 

to financial markets? 

Answer. USTR is actively reaching out to companies of all sizes, especially small 

businesses, about the benefits of U.S. market-opening trade agreements in Asia, Europe, and around the world since 95 percent of the world’s consumers, representing 

roughly 80 percent of the world’s purchasing power, live outside our borders. Small 

business are especially poised to benefit from the elimination of tariffs, reduced 

costs and red tape, greater transparency, regulatory cooperation, and the rule of law 

afforded by the TPP agreement being negotiated between the United States and 11 

other Asia-Pacific countries. For example, of the 12,510 companies that exported 

from Washington State locations in 2012, 90 percent (11,262 companies) were small 

and medium-sized enterprises with fewer than 500 employees. In 2014, Washington 

State exported $26.9 billion in goods, with 30% of total goods exports to TPP markets. To raise awareness about this great potential market for all U.S. businesses, 

USTR is teaming up with the U.S. Small Business Administration and briefing hundreds of small businesses around the country through webinars, conference calls, 

and meetings with business groups about the potential benefits of the agreement. 

The Export-Import Bank has also held 75 Exporter Forums over the past four years, 

including Washington State forums in Bothell, Seattle and Tacoma, to provide insights and expertise to small businesses seeking access to global markets. 

Question. In 2014 the Export-Import Bank provided $7.2 billion in financing for 

small businesses in Washington state and proved to be instrumental for increasing 

market access for small to medium size businesses. With your extensive experience 

can you explain some of the barriers that companies face in exporting their products 

overseas, especially when countries like China, Brazil, and India offer below-market 

concessionary financing? 

Answer. Ensuring a level playing field for U.S. exporters is a core U.S. government objective, and specifically with regard to export financing, our goal is to ensure 

that our exporters are able to compete based on the quality and price of their goods 

and services, rather than based on the availability of any government-supported financing. Advancing this objective requires both U.S. government ability to match 

the financing that other governments provide their exporters, and for all major providers of official export credit support to operate within a set of international export 

credit guidelines. 

In early 2012, the Administration secured a commitment from China to establish 

the International Working Group on Export Credits (IWG) to negotiate a new set 

of international export credit disciplines that would apply to all major export credit 

providers. Through the IWG, the United States seeks to discipline official export 

credit support provided by China, Brazil, India and other large emerging market 

countries by developing new international export credit guidelines that that would 

bring their official export credit activities within a set of clear financing and transparency standards. Important progress has been made in these negotiations, including during President Obama’s November 2014 visit to China, where the Administration secured China’s commitment to take all steps necessary to advance the IWG 

70 

initiative, such as by supporting the start of negotiations on horizontal guidelines 

as soon as possible, and by supporting comprehensive guideline coverage. 

Question. The current EU import ban on both frozen and fresh shellfish unfairly 

prevents U.S. shellfish harvesters from entering the European market. This has a 

particularly detrimental effect on certain American Indian communities along the 

West Coast who rely heavily on Geoduck export revenues and want to diversify 

their export markets. Recognizing SPS issues are going to be one of the toughest 

parts of the TTIP negotiations, what are you doing to ensure lifting the shellfish 

import ban is part of the SPS conversation? What, in particular, are you doing to 

open up the EU market to U.S. Geoduck? 

Answer. Recent bilateral technical exchanges are helping to establish a path forward for U.S. exports of molluscan shellfish, including Geoduck, to the European 

Union (EU). The next step will be an EU audit of the U.S. food safety system for 

molluscan shellfish in March 2015. 

Question. Trade is an essential component of the economy of Washington State, 

with nearly one in every three jobs directly supported by international commerce. 

It is particularly important to the high-tech industry, and Washington is home to 

many global leaders in this vibrant sector. 

By lowering tariffs on a wide range of tech products, the WTO’s Information Technology Agreement (ITA) has helped facilitate domestic job creation and growth in 

the U.S. tech sector and U.S. economy over the past decade and a half. In fact, from 

1996 to 2008, total global trade in ITA products has increased more than 10 percent 

annually, from $1.2 trillion to $4 trillion. 

While technological innovation has continued to grow, the list of products covered 

by the agreement has not been updated. As I understand it, trade negotiators have 

begun to meet monthly in Geneva to expand this agreement. If confirmed, do you 

intend to make this a high priority at USTR and within the Administration to ensure expansion of the ITA is completed by the end of this summer? What concrete 

steps will you take to get these important negotiations across the finish line? 

Answer. Expanding the Information Technology Agreement’s (ITA) product coverage to include new, technologically advanced products is a key U.S. trade policy 

priority, and one of the key initiatives we are pushing at the World Trade Organization (WTO). The benefits of an expanded ITA would be significant, and it is a result 

that could be achieved in the very near term if China and Korea are willing to work 

towards a bilateral compromise. 

We were disappointed that we were not able to reach a conclusion of the ITA expansion negotiations in Geneva last December, especially in light of the major 

breakthrough with China at APEC that allowed the multilateral talks in Geneva 

to resume. But we will continue to work closely with key players, and with WTO 

Director General Azevedo, in an attempt to break the current impasse, and conclude 

this important agreement as soon as possible. An expanded ITA would be the first 

major tariff-cutting deal at the WTO in 17 years and help boost American exports 

to growing markets around the world. When completed, the ITA expansion is estimated to cover $1 trillion in trade, adding $190 billion to the global economy and 

supporting tens of thousands of good-paying U.S. manufacturing and technology 

jobs. 

Question. In the NAFTA agreement, Canada included a broad cultural carveout, 

allowing them flexibility to limit US exports to Canada. That agreement is now 20 

years old and Canada is pursuing a similar policy now in the TPP. What are your 

thoughts on that? 

Answer. We have had longstanding concerns on the issues of cultural carve-outs, 

particularly as countries seek to extend these carve-outs to the digital realm. We 

are working to try to address this issue in the TPP in a way that allows countries 

to promote their cultural heritages without impacting U.S. exports of products or 

services of so-called ‘‘cultural industries,’’ in which the United States is highly competitive. 

QUESTION SUBMITTED BY HON. BILL NELSON

Question. As we all know, Haiti is still reeling from a terrible earthquake in 2010. 

Damages were estimated at $7.8 billion, which was greater than Haiti’s gross doVerDate Mar 15 2010 20:42 Jan 27, 2016 Jkt 000000 PO 00000 Frm 00074 Fmt 6601 Sfmt 6621 R:\DOCS\98343.000 TIMD
71 

mestic product (GDP) in 2009. Haiti is the poorest country in the Western Hemisphere, and one of the poorest in the world. 

According to the World Bank, over 2.5 million people—about 24 percent of the population—live on under $1.24 per day, and almost 60 percent of the population 

lives under the national poverty line of $2.44 per day. 

This isn’t a far-off country in a distant land. This is a country that’s 597 miles 

from the coast of Florida. And that has consequences for regional security. 

It benefits no one to have so many people living in abject poverty. That’s why I 

believe we must renew the trade preference program for Haiti. It’s not only good 

for American consumers, but it’s also good for our producers. A stronger Haiti will 

in turn create a better market for our higher-quality goods. It just plain makes 

sense. What are your thoughts on this? 

Answer. Haiti remains the poorest country in the Americas and one of the poorest 

in the world (with a GDP per capita of $820 in 2013) with significant needs in basic 

services. We expect donor financing to continue to decline, making it all the more 

critical for the Haitian government to use domestic and external resources more efficiently and effectively, as well as seek to develop the private economy. The IMF estimates economic growth was 3.75 percent in 2014 for Haiti, down from 4.3 percent 

in 2013, and per capita GDP in 2014 was estimated at $853. Factors contributing 

to the slight slowdown in 2014 include delays in budget approval and adverse 

weather conditions that affected agricultural production. 

We see timely renewal of the HOPE II preference program for Haiti, which expires in part in 2018, as one way to remove uncertainly for those companies seeking 

to invest in Haiti. The HOPE II program has had a clear and direct role in supporting the creation of thousands of jobs in the textile and garment sectors, while 

providing important protections to workers. In 2013, total export revenues from the 

textile and garment industry accounted for 91 percent of national export earnings 

and 10 percent of national GDP. The apparel industry is also among the largest employers within Haiti, creating jobs for nearly 30,000 people; sixty-five percent of 

these workers are women. 

QUESTIONS SUBMITTED BY HON. ROBERT MENENDEZ

Question. Can you please explain in which U.S. sectors you expect to see the 

greatest job and wage growth due to the TPP? How many jobs do you expect to be 

created due to the TPP within the first year, 5 years, and 10 years? 

Answer. U.S. exports have grown to all of our existing FTA partners, ranging 

from 587 percent growth to Israel, 513 percent to Chile, and 505 percent to Jordan. 

U.S. goods exports to NAFTA countries are up 289 percent, while U.S. goods exports 

to Korea (despite its economic downturn during the first two years of entry into 

force of the Agreement) are up 2.5 percent. U.S. exports to FTA partners supported 

an estimated 4.1 million jobs in 2013. Every billion dollars of U.S. exports supported 

between 5,400 and 5,900 jobs in 2013. Jobs supported by exports pay an estimated 

13 to 18 percent more than non-export jobs. 

TPP will open many new trade opportunities for U.S. agricultural, manufacturing, 

and services exporters in sectors where high tariffs and non-tariff barriers currently 

exist. 

In agriculture, the largest gains are expected to occur in the high value categories 

of meats, dairy, fruits and vegetables, and a variety of processed foods and beverages. For example, U.S. apples and poultry exporters face tariffs of 10 percent and 

40 percent, respectively, in Vietnam; U.S. beef and wine exporters face tariffs of 38.5 

percent and 50 percent, respectively, in Japan; and U.S. tree nuts exporters face tariffs of 20 percent in Malaysia. 

By addressing tariffs and easing non-tariff barriers, TPP will support increased 

U.S. exports and the development and expansion of regional supply chains, and will 

promote the competitiveness of both large and small U.S. manufacturers. For example, U.S. beauty and skin preparations exporters currently face tariffs of 20 percent 

in Vietnam, U.S. auto exporters face tariffs of 30 percent in Malaysia, U.S. construction equipment exporters face tariffs of 5 percent in New Zealand, and U.S. exporters of aluminum bars and rods face tariffs of 7.5 percent in Japan. 

TPP will ensure fair and open markets in the dynamic Asia-Pacific region for our 

world-class service providers, which employ nearly 80 percent of Americans. TPP 

72 

will prohibit tariffs on digital trade, which will benefit all U.S. producers of software 

and audiovisual products stakeholders. Prohibiting restrictions on data flows and 

local server requirements will benefit all U.S. companies that do business over the 

internet. Establishing a level playing field with postal operators abroad will lead to 

benefits to our express delivery industry here in the United States. TPP will be the 

first trade agreement specifically guaranteeing rights to provide electronic payment 

services on a cross border basis, benefiting U.S. suppliers of such services. 

Question. News reports from last year indicated that the United States was attempting to strike language related to climate change from the TPP. Can you comment on whether the final TPP will include commitments specifically related to climate change? 

Answer. The TPP Environment Chapter is still under negotiation. Proposals to enhance cooperation on issues such as energy efficiency, deforestation, development of 

cost-effective, low emissions technologies and alternative, clean, and renewable energy sources, are under active discussion. 

Question. I would like to follow up on my question regarding the docking mechanism that will presumably be included in the TPP. You assured the Committee that 

the accession of a new country to TPP would be subject to a vote in the U.S. Congress. Please address how that would work. 

If a new country attempts to join TPP while U.S. Trade Promotion Authority is 

in place, would the Congressional vote on this new country’s accession be subject 

to expedited consideration as a trade deal would be under TPA? 

Can Congress impose additional conditions on that country at the time of the 

vote? 

Will docking require the unanimous approval of all TPP members? 

Answer. TPP is intended be open to accession by new members willing and able 

to meet its high standards. The precise terms of any accession would need to be 

agreed by all TPP Parties after each Party had completed applicable domestic legal 

procedures. For the United States, this would include compliance with TPA procedures. As with the consideration of entrants to the initial group of TPP Parties, the 

Administration would consult with Congress and stakeholders as it engages with 

any candidate country. The United States would also expect to consult in depth bilaterally with any TPP candidate country before agreeing to its participation in accession negotiations. During this time, the United States would seek to ensure that 

the candidate country could demonstrate its readiness to adopt the high standards 

and ambitious commitments of TPP, as well as to address bilateral issues of concern. 

Question. I appreciate the attention you have given to our Latin American trading 

partners with regard to their concerns over TPP’s effect on US–CAFTA trade, particularly in the apparel sector. During the hearing, you mentioned that the Administration is working to address some concerns of CAFTA countries. 

How specifically do you plan to address the potential negative impact the TPP 

could have on the apparel industry in Central America? Will this be done by amending the CAFTA agreement or through other means? 

Answer. We understand the importance of the textile and apparel sector to our 

FTA partners in Central America, as well as to our domestic industry, which provides much of the yarn and textile inputs utilized for these products. USTR has 

worked closely with our domestic industry in crafting our approach to TPP so as 

to take full account of their concerns and sensitivities, including with respect to the 

Central American apparel industry. We are committed to working with Congress 

and stakeholders to ensure these concerns will continue to be considered. 

Question. When we met last September, I expressed my interest in beginning negotiations for a bilateral investment agreement (BIA) with Taiwan in tandem with 

our bilateral investment treaty (BIT) negotiations with China. 

What is the administration’s current position on pursing a BIA with Taiwan? 

In your opinion, would opening BIA negotiations with Taiwan at this point in 

time significantly undermine efforts to finalize the BIT with China? 

What is the Administration’s current understanding of the legal framework under 

which we would pursue such an agreement? 

73 

Answer. We are continuing to look at the complex issues that would be raised by 

BIA negotiations with Taiwan. Consistent with the Taiwan Relations Act, a BIA 

would need to be entered into between the American Institute in Taiwan (AIT) and 

the Taiwan Economic and Cultural Representative Office (TECRO). This raises difficult and novel challenges. Even as we continue to consider these issues, we are 

concurrently working through other channels such as the investment dialogue established under the Trade and Investment Framework Agreement (TIFA) to address 

concrete investment barriers for U.S. firms in the Taiwanese market and to 

strengthen the bilateral investment relationship between the two economies. 

Question. USTR has conducted several six-month reviews of Bangladesh’s 

progress toward achieving the commitments it made under the GSP Action Plan. 

These reviews helped focus attention on areas of the action plan that required further progress, like the protection of workers’ rights. I understand that USTR no 

longer plans to conduct these reviews every six months, but will initiate a review 

only after developments warrant one. I am concerned by the vagueness of this 

threshold. Please provide details on the conditions under which USTR would initiate 

a review of Bangladesh’s progress on its commitments under the GSP Action Plan. 

Answer. Since the President’s June 2013 decision to suspend Bangladesh’s trade 

benefits under the Generalized System of Preferences (GSP), USTR has led three, 

formal interagency reviews of Bangladesh’s progress in implementing the GSP Action Plan. Each review concluded that more progress was needed on worker rights 

and worker safety issues before reinstatement of Bangladesh’s GSP benefits could 

be considered. Moving forward, USTR believes that a more flexible review cycle 

would encourage more open and effective discussions with the government of Bangladesh on the GSP Action Plan. Accordingly, USTR does not plan to conduct the 

next formal review until significant further progress on the GSP Action Plan has 

been reported, the Government of Bangladesh requests a review, or other circumstances warrant a review. Our ongoing engagement with the government of 

Bangladesh and other stakeholders on the GSP Action Plan will continue. This engagement, which involves USTR, the Departments of State and Labor, the U.S. 

Agency for International Development, and the U.S. Embassy in Bangladesh includes (1) high-level discussions in Bangladesh under the ‘‘3+5’’ consultation mechanism, (2) consultations with Bangladesh, the EU and the International Labor Organization (ILO) under the July 2013 Sustainability Compact, (3) bilateral discussions 

with the government of Bangladesh in Dhaka and Washington, and (4) continuing 

discussions with project implementers, including the ILO, on technical assistance 

programs. USTR will also continue to coordinate closely with Members of Congress 

and their staffs on worker rights and worker safety issues in Bangladesh and to 

brief congressional offices on progress under the GSP Action Plan. 

Question. Would the Administration support a democracy and human rights 

clause in a future TPA bill that would limit expedited consideration of trade agreements to only those with nations that respect the freedom of association, free 

speech, fundamental human rights, and similar American values as determined by 

our State Department? 

Answer. The Administration is a strong advocate for democracy and human 

rights, including labor rights, and has a strong record promoting these American 

values through our international engagement. The Administration supports reflecting in TPA the protections that we have been negotiating in TPP and TTIP with 

respect to freedom of association, the right to collectively bargain, the right to be 

free of child and forced labor and to non-discrimination in employment. The Administration also supports the inclusion in TPA of provisions relating to rule of law and 

good governance that are the basis of a functioning system of basic human rights. 

Further, the Administration will continue to vigorously promote democracy and 

human rights using all of the leverage afforded by trade agreements as well the 

broad range of diplomatic and economic tools that we have available. 

Question. The recently implemented Sharia law in Brunei allows gay persons to 

be flogged, unmarried mothers to be imprisoned and Christians to be whipped. How 

are those practices consistent with your commitment to include strong labor and 

human rights protections in the TPP? 

Answer. We have serious concerns about aspects of Brunei’s new Penal Code, 

which is in the process of being implemented. USTR has been working closely with 

the Department of State in conveying the strong concerns of both the Administration and Congress to the Bruneian government. In recent meetings with senior 

Bruneian government officials, we have made clear that protecting human rights— 

including the rights of LGBT individuals, women, and religious minorities—is a core 

74 

U.S. value, and have stressed that Brunei should abide by its international human 

rights commitments. Brunei has not yet implemented certain sections of the law. 

As we work to conclude TPP, we will continue to engage closely with Brunei to address this issue. Brunei’s engagement in TPP negotiations gives us a mechanism to 

press for action on human rights. 

Question. Mr. Ambassador, you have frequently stated that the labor chapter of 

the TPP will include high labor standards. Will the TPP prohibit signatory countries 

from repressing its citizens who try to exercise these rights? How will you deal with 

countries such as Vietnam that will be out of compliance from day one? 

Answer. We are working closely with Vietnam and other TPP parties to ensure 

that they live up to the high standard, enforceable commitments of a final agreement. Vietnam’s participation in the TPP negotiations presents an unprecedented 

opportunity to make historic progress on labor rights and working conditions. Under 

the TPP, Vietnam would be expected to undertake significant reforms, particularly 

in the area of freedom of association, but also concerning forced labor, child labor, 

and employment discrimination. Officials from USTR and the Department of Labor 

have engaged closely with Vietnam to discuss needed reforms and will closely monitor Vietnam’s continued implementation of these reforms, including the ability of 

workers to exercise freedom of association, after the agreement is in place. TPP will 

provide an on-going tool for ensuring protection of worker rights in Vietnam and 

other TPP parties. 

Question. USTR has outlined in a blog that the U.S. ‘‘will insist on a robust, fully 

enforceable environment chapter in the TPP or we will not come to agreement.’’ Will 

you only finalize such an agreement if it has: (a) a compliance mechanism for the 

Environment Chapter that is based on the exact same structure as the commercial 

chapters; and (b) binding and enforceable obligations and timelines for countries to 

improve their public health, environmental, and conservation standards in the nearterm that will have a tangible impact on the ground? 

Answer. Environmental stewardship is a core value of the United States, and advancing environmental protection and conservation efforts across the Asia-Pacific region is a key priority for the United States in the TPP. We continue to insist that 

the TPP environment chapter be fully enforceable through the same type of dispute 

settlement mechanism and timetable that apply to the commercial obligations in the 

agreement, and that countries effectively enforce their environmental and conservation laws. The Administration is also insisting on the inclusion of provisions that 

will address illegal logging and fishing, wildlife trafficking, and other environmental 

challenges. The Administration believes that these trail-blazing, first-ever conservation commitments will have a near-term, tangible impact on our work to tackle 

some of the region’s most urgent environmental challenges. 

QUESTION SUBMITTED BY HON. THOMAS R. CARPER

Question. Mr. Ambassador, I believe a comprehensive Transatlantic Trade and Investment Partnership (T–TIP) with the European Union represents enormous opportunities for U.S. manufacturers, farmers, and service providers. These opportunities 

exist by way of eliminating tariff and non-tariff barriers to trade as well as in enhanced regulatory cooperation. 

Financial regulation is one area where I believe regulatory cooperation could be 

mutually beneficial. As you know, the enactment of Dodd-Frank was the most comprehensive financial regulatory reform in the U.S. since the Great Depression. In 

this comprehensive legislation, we sought to empower a robust regulatory regime, 

and protect American consumers and taxpayers. 

However, as the law is being implemented, we have seen that many of the rules 

our regulators are working to propose have cross-border implications, and greater 

cooperation and dialogue could result in a more efficient and effective implementation of regulations. 

Can you give me a sense of how you plan to use the T–TIP negotiations to increase regulatory cooperation between the U.S. and the EU? 

Answer. Financial services are a critical part of our transatlantic economic relationship. In T–TIP, as in all of our free trade agreements, the Administration seeks 

robust market access commitments for financial services to help protect U.S. financial services suppliers from discriminatory treatment in foreign markets. 

75 

The United States is pursuing an ambitious and comprehensive agenda on regulatory cooperation in the financial sector—multilaterally in the G–20 and the Financial Stability Board, bilaterally with the European Union in the Financial Markets 

Regulatory Dialogue, and in international standard-setting bodies. The Administration believes that financial regulatory cooperation should continue to make progress 

in existing and appropriate bilateral and multilateral fora, in parallel alongside the 

T–TIP negotiations. 

QUESTIONS SUBMITTED BY HON. BENJAMIN L. CARDIN

Question. As I’m sure you know, Colombia in 2011 began a 10 year, $55 billion 

plan to update its infrastructure. As the U.S. Commercial Service has recognized, 

that makes it a top export opportunity for companies like Mack Trucks, whose 

unionized workers build engines that go into trucks exported to Colombia in a manufacturing plant in Hagerstown. But those truck exports to Colombia face a very 

high tariff, whereas competing truck exports from Mexico face no tariff at all. Under 

the U.S.-Colombia Trade Promotion Agreement, the tariff facing U.S. truck exports 

will not be at parity with Mexican exports until 2021, the year the Colombia’s investment infrastructure plans are to end. Every month Mack sees significant sales 

lost in Colombia due to the high tariff. I raised this issue during your confirmation 

hearing. In answers to questions for the record from your confirmation you stated, 

‘‘If confirmed, I will ensure that USTR continues to pursue an agreement with Colombia on accelerated tariff elimination.’’ 

Where do those efforts stand? What do we have to do to get that done quickly 

given that the first U.S.-Colombian Free Trade Commission meeting is coming up? 

Answer. As a result of a USTR notice in the Federal Register, a number of U.S. 

stakeholders proposed products for tariff acceleration under Article 2.3 of the U.S.- 

Colombia Trade Promotion Agreement, including certain tariff lines for heavy 

trucks. Based on responses received, we have identified for Colombia products for 

possible tariff acceleration and are encouraging Colombia to inform us about any 

products for which Colombia wishes to seek tariff acceleration in order to develop 

a balanced package. Once a balanced package of products is jointly agreed upon, 

both sides would need to carry out their respective domestic procedures before the 

new tariff staging would enter into force. In the case of the United States, the domestic process follows statutory requirements and includes, among other things, advice from the ITC and advisory committees, a period of consultation and layover, 

and publication in a Presidential Proclamation. Engagement with Colombia on this 

issue slowed during Colombia’s election season in 2014; however, we are working 

with Colombia to move this process forward as soon as possible. 

Question. The Colombian heavy duty truck market is very important for America’s 

manufacturers. As recently as 2011, the Colombian commercial truck market neared 

12,000 units annually and American brands captured market share exceeding 90%. 

The sales of those trucks, valued at nearly $1 billion, support thousands of manufacturing jobs across the United States and in Maryland. Those jobs, however, are 

threatened by the adoption of a restrictive series of decrees regarding the scrapping 

and registration of commercial vehicles. These regulations appear to violate both the 

spirit and letter of Colombia’s obligations under the bilateral Trade Promotion 

Agreement, the World Trade Organization, and the free market principles of the Organization for Economic Cooperation and Development, to which Colombia aspires 

to join. You have since assured us that USTR would ‘‘continue to press them until 

they have rescinded the measures that caused this problem and have restored market access for U.S. truck exports that existed prior to implementation of this measure.’’ 

What recent steps has USTR taken to restore American truck exports to Colombia? 

Answer. We have been pressing the Government of Colombia to address this 

issue. The United States has sought to address this issue in multiple fora and at 

multiple levels, including in the negotiations on Colombia’s membership in the 

OECD. Both USTR and other U.S. Government agencies have voiced strong concerns on this issue with senior Colombian officials. Colombia took some steps to improve the situation of the existing inventory of trucks in Colombia and has recently 

taken some additional actions intended to facilitate compliance with the scrappage 

program. We are continuing to press for a comprehensive solution that will restore 

market access for U.S. exports of trucks as soon as possible. 

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QUESTIONS SUBMITTED BY HON. SHERROD BROWN

Question. In your prepared testimony, you identified securing Trade Promotion 

Authority as one of USTR’s top priorities for 2015. Trade Promotion Authority has 

typically included negotiating objectives for the Administration to follow during negotiations of trade agreements. Absent existing fast track authority, please identify 

what negotiating objectives USTR has been using during the Trans-Pacific Partnership talks to guide your negotiations. In addition, please identify the negotiating objectives from the 2002 Trade Act that you do not expect to meet in the Trans-Pacific 

Partnership. 

Answer. TPP negotiations are informed by the expired 2002 Trade Promotion Authority, the bipartisan ‘‘May 10 agreement’’, and well over 1,600 Congressional consultations with Members of Congress and their staffs. We also regularly engage with 

the advisory committees established pursuant to the Trade Act of 1974. Further, 

USTR solicits views from the public and interested stakeholders—including civil society, non-governmental organizations, labor unions, concerned citizens, businesses, 

and academia. As negotiations proceed, we will continue to rely on these broadbased consultations to guide our negotiations. 

Question. Have you consulted with any TPP partners on what their parliamentary 

procedures are for examination, ratification, passage, and implementation of trade 

agreements? If so, please provide an analysis of those procedures. 

Answer. We are consulting with other TPP Parties on their procedures for examining, approving, ratifying and implementing trade agreements. Procedures vary 

widely across the TPP countries depending on the form of government and other factors. Some governments simply require the approval of their Cabinet in order to ratify a trade agreement and bring it into force. Others require implementing legislation to be approved and authorization for ratification be provided. 

Question. What impact will TPP have on collective bargaining rights of U.S. workers? Does USTR estimate union membership in the U.S. will increase or decrease 

as a result of the agreement? 

Answer. The United States will be taking on the same labor obligations as other 

TPP Parties, including with respect to the fundamental labor rights that encompass 

the right to collective bargaining. United States law and practice is in compliance 

with those obligations and we would not expect any changes to U.S. labor law to 

be required to implement TPP. U.S. workers’ collective bargaining rights would not 

be affected by TPP. 

Question. In your testimony, you stated that 95 percent of the world’s consumers 

and 80 percent of the world’s purchasing power reside outside of the U.S. But in 

many TPP countries, the average consumer’s purchasing power is much lower than 

in the U.S. For example, the GDP per capita in Malaysia is $9,700 per person. The 

GDP per capita in Vietnam, where the minimum monthly salary was recently raised 

to between $12 USD and $19 USD, is even less. Given these low wages, what specific non-agricultural, American-made goods does USTR expect consumers in Malaysia and Vietnam to purchase? And in what specific U.S. sectors does USTR expect 

to see export-related jobs created as a result? 

Answer. The United States already exports many products to emerging markets 

and developing economies. Nearly 47 percent of total U.S. goods exports were purchased by these countries in 2014. Malaysia is our 24th largest goods export market 

in 2014, with $13.1 billion in goods exports (93 percent manufactured products) in 

2014, up 21 percent over the past 10 years. Vietnam is our 44th largest goods export 

market, with $5.7 billion in goods exports (69 percent manufactured products), up 

418 percent over the past 10 years. The OECD has projected that Asia’s middle 

class will grow to 3.2 million by 2030, more than 8 times the projected size of the 

U.S. market, making it paramount that the United States have access to these markets. 

Currently Malaysia and Vietnam have much higher tariffs than the United 

States. In some sectors, such as autos, their tariffs run as high as 30 percent and 

80 percent, respectively. TPP will level the playing field for U.S. exporters and provide them opportunities in many sectors. For example, in Vietnam, U.S. switches, 

relays, and fuses face tariffs of up to 20 percent. In Malaysia, U.S. polymers of 

ethylene face tariffs of up to 20 percent. Increases in U.S. exports will support additional jobs in these sectors. Every billion dollars of U.S. exports supported between 

an estimated 5,400 and 5,900 jobs. In 2013, an estimated 11.3 million jobs were supported by exports. 

77 

Question. The Administration, at the most recent Asia-Pacific Economic Cooperation (APEC) summit, agreed to a study paving the way for the Free Trade Area of 

the Asia Pacific (FTAAP). In various comments, you and other officials have indicated that the TPP is a vehicle for stemming China’s influence in the region. As 

the Administration has now agreed to a process leading to the FTAAP, why won’t 

that broader agreement, which will include China, undermine U.S. interests and undermine the value you claim the TPP will have? 

Answer. The FTAAP is not a trade negotiation, it’s an aspiration for a free trade 

area in the Asia-Pacific region supported by APEC Leaders for a number of years. 

In 2010, APEC noted that TPP and other ongoing regional negotiations are the appropriate paths toward an FTAAP. At the November 2014 APEC meetings, APEC 

economies agreed to conduct an analytical study related to the realization of the 

FTAAP. This study would address such issues as potential benefits of an FTAAP, 

measures affecting trade between APEC economies, existing FTAs among APEC 

economies, and previous APEC analyses. 

Question. Has USTR received from ITC any economic analysis (informal or formal) of TPP’s potential impact on the U.S. economic generally and/or on any specific 

sectors, employment, foreign direct investment, and wages? Has the USTR asked for 

or received any economic analysis (informal or formal) of TPP’s potential impact 

from any other federal entities? If so, please provide descriptions of the analysis. 

Have these analyses been shared with cleared advisors? 

Answer. The ITC conducts analysis regarding U.S. trade negotiations, including 

with regard to potential U.S. product sensitivities. The ITC’s work will culminate 

in a report, ahead of congressional consideration of TPP, based on a detailed analysis of the outcome of the negotiations. This report typically includes discussion of 

the impact of the trade agreement on trade and investment, including on merchandise and services imports and exports and related macroeconomic analysis. The 

ITC’s report will be informed by its own economic analysis of producer and consumer effects as well as a detailed literature review, public comments solicited 

through the Federal Register, and hearing testimony. The views of cleared advisors 

typically serve as an input into the ITC’s process of writing the report. 

Question. If TPP is implemented, what percentage of federal procurement dollars 

do you believe will be spent on goods manufactured in TPP countries? Conversely, 

what approximate amount of procurement dollars from TPP countries should U.S. 

companies expect to gain because of TPP that they don’t currently have access to? 

Answer. Our approach to government procurement in TPP is consistent with the 

Trade Agreements Act of 1979. It allows our trading partners to compete for a defined pool of U.S. Federal government procurement opportunities in exchange for 

their making comparable commitments to open their government procurement to 

U.S. suppliers. 8 of our 11 TPP partners already have access to this pool of U.S. 

Federal government procurement opportunities. TPP will not change that. It is difficult to predict how successful the exporters of the three additional partners will 

be in competing for the same pool of U.S. federal procurement already open to over 

50 other countries. U.S. exporters are globally competitive and can be expected to 

see expanded opportunities as a result of new market access and transparency of 

government procurement with our trading partners. 

Question. In Mexico, protection contracts and labor boards routinely prevent workers from exercising their fundamental rights. What changes, both statutory and 

enforcement-related, is USTR asking Mexico to implement before the TPP agreement takes effect? Is USTR considering delaying implementation of TPP for Mexico 

to ensure sustained, institutional protection of Mexican workers’ fundamental rights 

is achieved? 

Answer. TPP will provide an important tool for ensuring protection of labor rights 

in Mexico and the other TPP parties. Officials from USTR and the Department of 

Labor have engaged closely with Mexico to discuss issues related to the rights of 

worker rights in that country. We will continue to do so as TPP negotiations proceed. 

Question. What specific source(s) of data has USTR used to shape your TPP rule 

of origin proposal for autos? Has this data been shared and reviewed with all stakeholders, including manufacturers and employees, in the supply chain? 

Answer. We have taken a wide variety of information sources into account when 

developing our rules of origin proposal for automotive products, including academic 

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ences from workers, traders, and producers with the rules of origin in previous 

FTAs. We have had extensive consultation with a wide range of stakeholders and 

Congress on this issue. 

Question. As you know, I am concerned about the impact of investor-state dispute 

settlement on public health policies. You have said that the TPP investment provisions will include protections for public health policies. Will these protections prohibit investors from bringing an investor-state case challenging U.S. public health 

policies and government health programs? 

Answer. The United States would not negotiate away its right to regulate in the 

public interest, including in the critical area of public health. The TPP investment 

rules have been carefully crafted though many years of close stakeholder consultation and a public comment process. They are specifically designed to protect legitimate, non-discriminatory public interest measures from challenge and to prevent 

some of the abuses of the investor-state dispute settlement (ISDS) process that have 

occurred under agreements negotiated by other countries that are less clear, more 

expansive, and have few (or none) of the extensive safeguards being proposed in 

TPP. These safeguards include clearer definitions of key legal rules (e.g., incorporation of key U.S. Supreme Court criteria on expropriation) and stronger procedural 

safeguards, such as more expansive provisions on transparency and public participation in ISDS proceedings and rules on expedited review and dismissal of claims. The 

rules are designed to protect legitimate, non-discriminatory public interest measures 

from any successful challenge and to provide a disincentive for non-meritorious 

claims. Even in cases where a private party has a legitimate claim that its rights 

are being violated and it is entitled to compensation, a government cannot be compelled to change a law or regulation under the TPP investment rules. 

Question. Earlier this month the European Commission publicly released the texts 

of the EU’s proposals for the legal text of the TTIP. Will USTR commit to publicly 

releasing the text of U.S. proposals for the legal text of TTIP? If so, when will they 

be released? If not, why not? 

Answer. We are committed to maximizing transparency, consistent with negotiating the best possible agreement for U.S. interests. Though the United States and 

the EU have very different government structures and processes, we share the view 

that our trade agreements are made better with public input and vigorous debate. 

The U.S. made public all of our negotiating objectives before we started the negotiations—a step the EU only took late last year—and, more recently, we published a 

detailed, chapter-by-chapter summary of those objectives. We have paused in the 

middle of every T–TIP round so that U.S. and EU negotiators can hear from the 

public. We provide detailed public read-outs of every negotiating round. We give 

every T–TIP negotiating proposal, before it is tabled, to Congress, and every Member can review our proposals. We also make our proposals available to nearly 600 

outside experts who serve on our congressionally-mandated trade policy advisory 

committees, including representatives of small business, labor unions, environmental organizations, consumer groups, and academia. Together with the EU, consistent with our respective systems, are continuing to look at additional avenues for 

making sure that legislators, stakeholders, and the public are able to help shape our 

negotiating objectives and understand what it is that we are—and are not—negotiating in T–TIP. 

Question. In Ohio, the Jones Act supports 10,300 jobs and wages of $547 million 

annually. Preserving the Jones Act is critical to preserving these jobs and the $1.8 

billion annual economic impact they bring to my state. Can I get your assurance 

that the Jones Act will be excluded from both the TPP and the TTIP agreements? 

Answer. Our TPP and T–TIP counterparts understand our longstanding sensitivity about domestic cabotage and other activities covered by the Jones Act statutes, and they know that those laws and related measures are exempted from the 

WTO Agreement and all of our previous FTAs. Having consulted with Congress as 

well as industry and labor groups, we do not foresee a change in this position. 

QUESTIONS SUBMITTED BY HON. ROBERT P. CASEY, JR. 

Question. In December 2010, the U.S. International Trade Commission estimated 

that the U.S.-Korea Free Trade Agreement would increase American goods exports 

to Korea by $10 billion, supporting 70,000 American jobs. Last March marked the 

second anniversary of that agreement, and International Trade Commission data 

showed that U.S. exports to Korea fell by $3.1 billion and imports from Korea inVerDate Mar 15 2010 20:42 Jan 27, 2016 Jkt 000000 PO 00000 Frm 00082 Fmt 6601 Sfmt 6621 R:\DOCS\98343.000 TIMD
79 

creased $5.6 billion during the first two years of the agreement, driving up the U.S. 

trade deficit with Korea by a total of $8.7 billion, or 60 percent. According to the 

Economic Policy Institute, this growing trade deficit cost nearly 60,000 U.S. jobs. 

How can we be confident that future trade agreements do not have a similar impact? 

Answer. A full review of the trade statistics, in particular those for the past year, 

presents a different picture. Despite headwinds resulting from the slowdown in the 

Korean economy over the first two years that the agreement was in force, U.S. goods 

and services exports combined were up 4.1 percent between full year 2011 (pre-FTA) 

and 2013, and were up 7.0 percent between the first three quarters of 2014 and the 

same period in 2013 (latest figures available). In comparison, U.S. goods and services exports to the world were up 2.9 percent for 2014. 

The initial decline in goods exports was comprised of a fall in corn exports (due 

to a drought in the U.S.) and coal exports (due to slower economic growth in Korea). 

Both have now rebounded. While U.S. exports (goods and services) increased 2.4 

percent during Korea’s slowdown, Korea’s imports of products from its non-FTA 

partners (China, Japan, and India) have decreased (by 4 percent, 12 percent, and 

20 percent, respectively), underscoring the contribution of KORUS to maintaining 

and increasing U.S. market share. 

Year-on-year goods exports to Korea for 2014 were up 6.8 percent compared to 2013. At $44.5 billion, these were record export levels. Likewise, U.S. agricultural 

exports were up 31.2 percent to $6.9 billion in 2014, making Korea our fifth-largest 

market for agricultural exports. U.S. agricultural exports to Korea grew nearly four 

times faster than U.S. agricultural export growth to the world. Similarly, U.S. services exports to Korea experienced robust growth since the entry into force of the 

agreement, and were up 25.4 percent to an estimated $20.9 billion in 2013 as compared to 2011. This rate was more than twice as fast as U.S. services export growth 

to the world (9.5 percent). 

On the import side, much of the growth in U.S. goods imports from Korea was 

due to increased imports of intermediate products (such as semiconductors, electrical equipment, and plastic materials), which means many of them supported U.S. 

production. For 2013, 51 percent of total imports were intermediate products, as 

compared to 48 percent in 2011. 

The study you cite is based on the false premise that both exports and imports 

have the same effect on jobs on a one for one basis (in effect saying that the trade 

deficit cost jobs). There is not a direct relationship between trade deficits and unemployment; in fact unemployment has often been low when trade deficits have been 

large. Conversely, the U.S. ran trade balances and surpluses when unemployment 

peaked at 25 percent during the Great Depression. Exports are made by U.S. labor, 

a U.S. work effort and job component that can be measured. But the relationship 

of imports to domestic jobs is more complex. While some imports displace U.S. production, others have no effect. American businesses large and small use imports to 

create or support U.S. jobs, such as the case with Korea, where the intermediate 

products were imported as inputs to build sophisticated manufactured goods, make 

processed foods, and create other job-supporting American goods. 

Question. Confronting currency manipulation is critical and will be a key issue in 

the upcoming trade debate. Thus far, I am greatly concerned by the Administration’s response. The Peterson Institute recently estimated that upwards of 5 million 

U.S. jobs have been lost due to currency manipulation—a staggering figure. Despite 

the fact that 230 Members of Congress and 60 Senators have called for disciplines 

to be included in TPP, the Administration has by all accounts remained silent on 

the issue during negotiations. 

What are your plans for addressing currency manipulation in TPP? 

Answer. Addressing currency misalignments is a top priority for President Obama 

and this Administration. The Administration, led by the Treasury Department, 

which is responsible for currency issues, has worked hard to promote a level global 

playing field by moving major economies to market-determined exchange rate systems with transparent and flexible exchange rates that reflect underlying economic 

fundamentals. 

We have leveraged our engagement in the most important multilateral fora—the 

G–7, the G–20, the International Monetary Fund (IMF), and the World Trade Organization—as well as bilaterally, including, in particular, with China through the 

Strategic and Economic Dialogue (S&ED) and other fora. 

80 

With regard to addressing exchange rates in our trade initiatives, we will continue to engage with Congress and our domestic stakeholders on how best to achieve 

our policy objectives in this area. 

Question. Strong and aggressive enforcement of our trade laws is critical, particularly to vital Pennsylvania industries such as steel. Over the last several years, we 

have seen a large surge in imports of steel products. In response, the industry has 

filed a number of trade remedy cases. I appreciate the Administration’s focus on enforcement but I think we can all agree that the recourse is often too little, too late. 

As such, I believe we should be looking for ways to strengthen enforcement. The 

President alluded to the need for this type of enforcement in his State of the Union 

speech earlier this week when asking Congress to grant him Trade Promotion Authority (TPA). 

What are your plans in this regard, and in particular, as it relates to getting Congress to pass TPA and to your ongoing negotiations on the TPP and TTIP? 

Answer. From the outset, this Administration has put a major emphasis on trade 

enforcement, standing up for American trade rights abroad, so that American workers and businesses can compete on a level playing field. The Obama Administration 

has launched 19 WTO complaints since 2009, and we’ve won every one decided so 

far. We have announced four important victories in the past year alone on foreign 

barriers affecting billions of dollars of U.S. exports, including on China’s unjustified 

duties on U.S. cars and SUVs and on China’s export quotas and duties on key steel 

inputs. And on February 11, the Administration launched a new WTO case on prohibited export subsidies that the Chinese are providing to a variety of industrial sectors, including textiles, apparel and footwear, advanced materials and metals, light 

industry, specialty chemicals, medical products, hardware and building materials, 

and agriculture. 

Question. As you have acknowledged, the rise of state-owned-enterprises (SOEs) 

represents a growing threat to fair trade and the ability of American companies to 

compete globally. In Pennsylvania, I have seen firsthand how these distortions impact the global steel markets and other global industries. 

Given the prevalence of SOEs throughout the global economy, especially in China 

and Asia, the establishment of new disciplines to address this anti-competitive behavior is critical. What can you tell us about USTR’s efforts to address SOEs in the 

TPP and the China BIT? 

Answer. New rules on SOEs are one of the key innovations in TPP. Based on extensive consultation with stakeholders and Congress, we have developed a set of 

rules that focus on the activities of commercial SOEs and seek to ensure that governments do not provide the companies they own with unfair advantages. For example, we are pursuing strong rules on subsidies to SOEs that cause harm to our companies and workers, including subsidies given to SOEs operating in the U.S. domestic market. We are also negotiating rules that ensure that SOEs make commercial 

purchases and sales on the basis of commercial considerations and do not discriminate against U.S. goods and services. We are also seeking strong new transparency 

obligations related to SOEs so we have a better understanding of how commercial 

SOEs are affecting trade and investment between TPP countries. These new rules 

go significantly beyond the obligations in the WTO and our previous FTAs. Because 

this is a new and very complicated area, we have been careful to craft the rules that 

strike the right balance between strong enforceable rules on commercial SOEs and 

preserving space to supply public services through government corporations, when 

necessary. 

With China, we are pursuing a high standard BIT that would require major economic reforms and would play a significant role in addressing key concerns of U.S. 

and other foreign investors, including the need to level the playing field and ensure 

that domestic companies, whether privately or state-owned, do not benefit from unfair advantages. We are analyzing all opportunities to use the BIT to achieve these 

goals, including assessing valuable stakeholder input on SOEs. 

Question. Under the U.S.-Colombia Trade Promotion Agreement, the tariff facing 

U.S. truck exports draws down over a ten year period. Until that tariff is eliminated 

American made products are at a severe disadvantage. This includes Mack Trucks 

that are exported from Pennsylvania. 

I understand that USTR is attempting to accelerate the elimination of this harmful tariff but no progress has been made. What is the earliest possible time do you 

81 

think we will be able to eliminate the tariff so that Mack can participate fully in 

the Colombian market? 

Answer. As a result of a USTR notice in the Federal Register, a number of U.S. 

stakeholders proposed products for tariff acceleration under Article 2.3 of the U.S.- 

Colombia Trade Promotion Agreement, including certain tariff lines for heavy 

trucks. Based on responses received, we have identified for Colombia products for 

possible tariff acceleration and are encouraging Colombia to inform us about any 

products for which Colombia wishes to seek tariff acceleration in order to develop 

a balanced package. Once a balanced package of products is jointly agreed upon, 

both sides would need to carry out their respective domestic procedures before the 

new tariff staging would enter into force. In the case of the United States, the domestic process follows statutory requirements and includes, among other things, advice from the ITC and advisory committees, a period of consultation and layover, 

and publication in a Presidential Proclamation. Engagement with Colombia on this 

issue slowed during Colombia’s election season in 2014; however, we are working 

with Colombia to move this process forward as soon as possible. 

Question. In response to regulations, the Colombian heavy duty truck market has 

contracted by 70 percent from its high a few years ago, despite the recent U.S.- 

Colombia Trade Promotion Agreement. In a market where 90 percent of new trucks 

are imported that translates to thousands of lost American truck sales and the loss 

of more than $500 million in exports. 

How is USTR addressing this issue? What are your future plans to ensure that 

Colombia reverses this policy? 

Answer. We have been pressing the Government of Colombia to address this 

issue. The United States has sought to address this issue in multiple fora and at 

multiple levels, including in the negotiations on Colombia’s membership in the 

OECD. Both USTR and other U.S. Government agencies have voiced strong concerns on this issue with senior Colombian officials. Colombia took some steps to improve the situation of the existing inventory of trucks in Colombia and has recently 

taken some additional actions intended to facilitate compliance with the scrappage 

program. We are continuing to press for a comprehensive solution that will restore 

market access for U.S. exports of trucks as soon as possible. 

Question. The biopharma industry is a major employer in Pennsylvania—directly 

employing over 44,000 jobs and supporting another 168,000 jobs. As such, one area 

of concern is that we reach 12 years of data protection for biologics within TPP. 

I know USTR has been pushing for provisions that reflect U.S. law for biologics— 

how do you intend to finalize the agreement in this area? 

Answer. Biologic drugs offer great potential for new treatments and cures that 

will benefit all of humankind, and this sector also is one in which U.S. companies 

are leading global innovators and competitors. As is our traditional practice, the 

U.S. approach to trade negotiations has been to base U.S. proposals on existing U.S. 

law, where the current standard is 12 years. In the TPP negotiations, views vary 

on the best term of data protection for biologics, and standards also vary across the 

TPP region. Some TPP countries currently have no data protection for biologic 

drugs, while some have five years and others have eight. We have been engaging 

intensively with TPP counterparts to try to resolve our differences on this issue. 

Question. In recent years, there has been an increase in economic espionage and 

cyber-attacks designed to steal trade secrets from U.S. companies. Last May, military hackers apparently linked to the Chinese government infiltrated the computers 

of several companies headquartered in Pennsylvania. I am deeply concerned about 

the threat of this type of economic espionage. 

Recognizing recent legislative action to strengthen cybersecurity defenses, particularly in last year’s National Defense Authorization Act, from your perspective at 

USTR what other steps can Congress take to ensure our trade secrets are adequately protected from foreign cyber attacks? 

Answer. On February 20, 2013, the U.S. Intellectual Property Enforcement Coordinator (IPEC) issued the Administration Strategy on Mitigating the Theft of U.S. 

Trade Secrets. The Strategy highlights efforts to combat the theft of trade secrets 

that could be used by foreign governments or companies to gain an unfair economic 

advantage by harming U.S. innovation and creativity, including: (1) focusing diplomatic efforts to protect trade secrets overseas, which include sustained and coordinated engagement with trading partners, the use of trade policy tools (including 

through the use of the Special 301 Report), cooperation, and training, among others; 

82 

(2) promoting voluntary best practices by private industry to protect trade secrets, 

including information security, physical security, and human resources policies; (3) 

enhancing domestic law enforcement operations, especially through the activities of 

the Department of Justice, Federal Bureau of Investigations, Department of Defense, and the National IPR Coordination Center; (4) improving domestic legislation 

to protect against trade secret theft, as exemplified by the Theft of Trade Secrets 

Clarification Act of 2012, which clarified provisions in the Economic Espionage Act 

with respect to the theft of trade secret source codes, and the Foreign and Economic 

Espionage Penalty Enhancement Act of 2012, which increased criminal penalties for 

economic espionage; and (5) conducting public awareness campaigns and stakeholder outreach to encourage all stakeholders to be aware of the dangers of trade 

secret theft. 

Consistent with the trade policy elements of this strategy, in the TPP negotiations 

we are supporting new trade secret provisions that will go farther than any previous 

agreement in requiring Parties to make available to rights holders remedies consistent with those provided for in U.S. law. Specifically, this includes criminal procedures and penalties against the theft of trade secrets, including by cyber means. 

These enhancements in the international legal framework relating to trade secrets 

will provide an important platform for our global efforts to fight trade secret theft. 

QUESTION SUBMITTED BY HON. MARK R. WARNER

Question. USTR and the International Trade Commission (ITC) work hand in 

hand to ensure U.S. trade policy protects American intellectual property, while promoting U.S. competitiveness and innovation. One key to that protection is the authority under Section 337 to ensure foreign companies aren’t unfairly importing 

products that infringe on U.S. products. Over the last decade, many U.S. interests 

have become concerned that the use of Section 337 is increasingly being used by 

patent assertion entities (PAEs) that don’t make or sell anything to file abusive 

complaints at the ITC. The ITC announced a pilot project last year that would help 

limit abuse at the ITC by PAEs. It’s my understanding the pilot project has been 

used only once. Given USTR’s unique role in helping to provide policy guidance to 

the ITC, can you provide an update regarding the effectiveness of ITC’s pilot project 

in curbing abuse by PAEs under the domestic industry standard? 

Answer. The ITC is an independent, quasi-judicial federal agency with broad investigative responsibilities on matters of trade. In addition to other statutory responsibilities, the ITC conducts investigations under Section 337 of the Tariff Act 

of 1930 involving imported articles that allegedly infringe intellectual property 

rights or other unfair acts or unfair methods of competition in the importation of 

articles into the United States. Although USTR has authority, delegated from the 

President, to review certain ITC section 337 determinations for policy reasons, 

USTR’s delegated review authority does not extend to matters of ITC procedure. For 

that reason, and because the referenced pilot project was developed at the initiative 

of the ITC, USTR defers to the ITC for an assessment of that effort. 

PREPARED STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM UTAH, 

CHAIRMAN, COMMITTEE ON FINANCE

WASHINGTON—U.S. Senator Orrin Hatch (R–Utah), Chairman of the Senate Finance Committee, today delivered the following opening statement at a committee 

hearing on President Obama’s 2015 Trade Agenda: 

The committee will come to order. 

Good morning. It’s a pleasure to welcome everyone to today’s hearing on our nation’s trade agenda. 

Thank you, Ambassador Froman, for being here today. I have to say that the 

trade agenda is looking up since the last time you testified. 

Things seem to be improving with our ongoing trade negotiations. For example, 

while significant gaps remain, the administration seems to be inching ever closer 

toward a conclusion of a Trans-Pacific Partnership agreement. 

Morale at the Office of the United States Trade Representative, after a long period of decline, is beginning to rise. 

83 

Of course, there is still a lot to be done. And, renewal of Trade Promotion Authority, or TPA, is at the top of my list. But, even in that regard, things seem to be 

looking up. 

Compared with this time last year, the administration is much more engaged at 

all levels in making the case for renewal of TPA. President Obama’s strong call for 

TPA in the State of the Union was welcome, though, in my opinion, it was long 

overdue. I hope that he’ll follow his latest call to action with a real concerted effort 

to help us get TPA through Congress. 

Here in the Finance Committee, we’re doing all we can to help in this effort. 

Although the bill I introduced last year with Chairmen Camp and Baucus received broad support, I am currently working with Senator Wyden to see if there 

is a way to address some additional issues he has raised. We’re working with Chairman Ryan as well. 

While there may be some improvements we can make to the bill, I want to make 

one thing clear: The time for TPA is now. 

TPA is how Congress tells the administration and our negotiating partners what 

a trade agreement must contain to be successfully enacted into law. And, TPA empowers our negotiators to get the best deal possible for American workers. 

To succeed in getting TPA renewed, we will need an all-out effort by the administration to make the case for why TPA is so vital to our nation’s ability to fairly engage in international trade and to enhance the health of our economy. 

Simply put, trade means jobs. 

Today 95 percent of the world’s consumers live outside the United States. These 

potential customers account for 92 percent of global economic growth and 80 percent 

of the world’s purchasing power. To maintain a healthy economy, we need the opportunity to sell American products in those markets. 

Right now, the United States is engaged in some of the most ambitious trade negotiations in our nation’s history. The first, which I already mentioned, is the TransPacific Partnership, or TPP. 

Renewal of TPA is key to the success of this agreement. Without TPA, the administration will not be able bring back the high-standard agreement Congress needs 

to ensure its enactment. 

Let me be clear here: It would be a grave mistake for the administration to close 

TPP before Congress enacts TPA. Doing so may lead to doubt as to whether the U.S. 

could have gotten a better agreement, ultimately eroding support for TPP and jeopardizing its prospects for passage in Congress. 

There are also some key outstanding issues that need to be resolved in TPP. As 

I have stated in the past, my support for TPA by no means ensures that I will support just any version of TPP that happens to be submitted to Congress for approval. 

For me, the agreement must achieve a very high standard for the protection of 

intellectual property, including twelve years of data protection for biologics, and 

strong copyright and trademark protections. The intellectual property provisions of 

TPP must also effectively address the theft of trade secrets and ensure effective implementation and enforcement of IP obligations. Provisions to enhance digital trade 

and address state-owned enterprises are also critical, as is real market access for 

U.S. exports. 

There are other major negotiations that are ongoing, and I am confident that renewal of TPA would help will help bring those to successful conclusions as well. 

Most notably, there is the Trans-Atlantic Trade and Investment Partnership, or 

TTIP. TTIP must be a comprehensive agreement, and include provisions on financial services regulation and strong investor-state dispute settlement mechanisms. 

The agreement must also achieve a high level of IP protection and effectively address the systemic misuse of geographical indications to create market barriers. 

I am also hopeful the administration will soon be able to conclude negotiations 

to update the Information Technology Agreement. And I expect we will see progress 

in advancing the negotiation of a Trade and Investment Services Agreement and an 

Environmental Goods Agreement. 

84 

Ambassador Froman, all of this represents a very ambitious agenda for your office 

and for the administration as a whole. But, if I haven’t been clear up to now, let 

me restate: TPA must be considered an essential element for all of these endeavors. 

I believe Congressional renewal of TPA will unleash new energy in our international trade agenda, helping to propel our economy to greater growth and prosperity. History shows that trade agreements concluded with TPA in place create 

new economic opportunities and higher-paying American jobs. 

This year we truly are at the precipice of opportunity. The only question is whether both parties in Congress and the Administration can work together to put in 

place the necessary tools to seize this opportunity. 

I certainly think we can, and I will do everything in my power as Chairman of 

this committee to ensure our mutual success. 

Ambassador Froman, I look forward your testimony today and to working with 

you to advance a strong, pro-growth trade agenda. 

I’d now like to turn it over to Senator Wyden for his opening remarks. 

PREPARED STATEMENT OF HON. RON WYDEN, 

A U.S. SENATOR FROM OREGON

Thank you, Chairman Hatch, and thank you, Ambassador Froman, for being here 

today. My bottom line on how the U.S. can improve its trade policy is this: 

Today’s global economy moves at a million miles an hour, so clinging to yesterday’s outdated trade policies is a loser for the millions of middle-class American 

workers counting on political leadership to help create more high-skill, high-wage, 

middle-class jobs. 

Trade agreements need to bulldoze barriers and open new markets to exports 

made by America’s middle class—the things we grow or raise, build or forge. Done 

right, trade agreements can help grow the paychecks of middle-class families. That 

will help take our economic recovery from a walk to a sprint. 

According to a report by the Commerce Department’s International Trade Administration, many export-driven jobs—from precision welding to engineering design— 

offer higher pay and more generous benefits than jobs that aren’t tied to exports. 

Workers who design and build products like machinery, electrical gear or transportation equipment get into the winners’ circle when the goods they make are exported. The goal of trade agreements should be to take the fruits of American labor 

and ship them to markets around the world. 

With that said, it’s easy to understand why many American workers are frustrated when they haven’t gotten a meaningful raise in decades—or worse, they’ve 

lost jobs and fallen out of the middle class. When discouraged Americans argue that 

they’ve been hurt by trade, their voices should not be ignored. They must be heard. 

Those who favor a trade agenda that takes on the challenges of a hyper-competitive 

global economy have a responsibility to make the case that it will work for America’s middle class. 

I bring that up because the President said during the State of the Union address 

that, ‘‘. . . past trade deals haven’t always lived up to the hype.’’ 

So, Ambassador Froman, I’d like you to outline today how the administration 

plans to change that with fresh trade policies that will lift wages, help create middle-class jobs, and expand the winner’s circle. 

I hope to discuss what safeguards will be in place to ensure that any workers impacted by trade have access to retraining, health coverage, and other sources of support that connect them with new opportunities. And perhaps most importantly, I 

hope to hear how the administration will make the case to America’s workers that 

these modern policies will deliver for them. 

To keep my remarks brief, there are a few specific issue I’ll address. 

The first is tough enforcement. There has never been a greater need for the U.S. 

to back its workers and businesses by strongly enforcing our trade laws and agreements. And in the face of unfair schemes by foreign governments and companies 

that undercut American jobs and exports, trade enforcement works. 

85 

Just ask any one of the hundreds of Oregonians who work at SolarWorld, a solarpanel manufacturer in my home state. When Chinese companies made an end-run 

around our trade laws that threatened SolarWorld and its employees, SolarWorld 

fought back and won. That victory preserved 900 good Oregon jobs. And American 

trade enforcers have to keep at it, because China and other governments won’t stop 

trying to get around the rules anytime soon. 

With 21st century trade agreements, tough enforcement also needs to hold foreign 

governments accountable for commitments to uphold strong labor rights and environmental protections. Those are bedrock elements of trade agreements, and they 

are not to be ignored or pushed to the periphery. 

The second issue to address is technology. Just as containers changed trade in the 

20th century, the Internet is changing trade in the 21st, enabling more efficient 

ways to exchange goods and services internationally. Three decades ago, an entrepreneur with big dreams in a place like Mt. Vernon, Oregon—a small town of 500— 

didn’t have the Internet as a means to access global consumers. Today, that entrepreneur does. And that access could be direct or through Internet platforms, which 

could include eBay, Amazon, and Etsy. 

The nation’s trade policies must take advantage of economic areas where there 

is clearly ‘‘Advantage USA.’’ That means promoting and protecting a free and open 

Internet—keeping open what is, in effect, the shipping lane of the 21st century. 

The third issue to address today is transparency. The American people have made 

it very clear that they will not accept secretly-written agreements that don’t see the 

light of day until the very last minute. That was too often the way things worked 

in the past, but that’s not good enough anymore. Nor is it enough to respond to important questions with the same inadequate refrain: that Americans will benefit 

from trade deals. People have the right to know what’s at stake in negotiations before they wrap up. Our trade policies are stronger when the American people are 

part of the debate—and when their elected representatives in Congress are able to 

conduct effective oversight. 

Furthermore, transparency is also critical for a trade promotion authority bill. 

Once a bill is ready, it must be available to the public. And there must be a fair 

and open process for its review and consideration. I will work with Chairman Hatch 

to develop a process along these lines. 

No matter where members of this committee stand, I know everyone here is ready 

to have a serious debate on how to make trade policy work best. My focus will be 

on finding new opportunities to sell red, white and blue American goods overseas, 

helping businesses create jobs, and growing the paychecks for middle-class families. 

I’m eager to find ways for this committee to work on a bipartisan basis with the 

administration to accomplish those goals. 

(87) 

COMMUNICATIONS

Advanced Medical Technology Association 

(AdvaMed) 

SENATE FINANCE COMMITTEE HEARING 

U.S. Trade Policy Agenda 2015 

January 27, 2015 

STATEMENT FOR THE RECORD 

Introduction 

The Advanced Medical Technology Association (AdvaMed) appreciates the opportunity to provide comments on the U.S. trade policy agenda for 2015 to the Senate 

Finance Committee. AdvaMed represents approximately 300 of the world’s leading 

medical technology innovators and manufacturers of medical devices, diagnostic 

products and medical information systems. AdvaMed members range from the 

smallest to the largest medical technology innovators and companies. AdvaMed is 

dedicated to the advancement of medical science, the improvement of patient care, 

and in particular to the contribution that high quality health care technology can 

make toward achieving those goals. 

The medical technology industry is one of the few remaining manufacturing sectors 

of the U.S. economy with a positive net balance of trade (over $6.3 billion in 2013), 

and the people who work in the U.S. medical technology industry depend on trade 

to ensure security, growth, and new opportunities. In fact, medical technology industry salaries are nearly 30% higher than the average U.S. salary because the industry employs so many highly skilled workers in the areas of research and development, manufacturing, sales and management. Nearly two million American jobs depend on the success of the medical technology industry—roughly 350,000 directly 

and 1.6 million indirectly. 

Medical technology accounts for 3 percent of U.S. Gross Domestic Product. The 

United States exports over $42 billion worth of medical devices annually. AdvaMed 

members supply medical technology to almost every country in the world. Opening 

markets and ensuring a level playing field are essential to the future growth of the 

U.S. medical technology industry. 

Our industry supports the Administration’s current trade agenda and recognizes the 

Finance Committee’s work to help push major agreements forward. We appreciate 

the committee’s work with USTR on the negotiations on the Trans-Atlantic Trade 

and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP) and 

other elements of the Administration’s trade agenda. We look forward to continuing 

to work with the Congress to secure support for strong, comprehensive free trade 

agreements. 

Trade Promotion Authority 

AdvaMed members support free trade and believe Trade Promotion Authority (TPA) 

is critical to guide and strengthen United States Trade Representative’s objectives 

in trade negotiations. AdvaMed supports the early adoption of trade promotion authority outlining key negotiating objectives for U.S. free trade agreements. TPA 

should include procedures for Congress to consider as it addresses trade legislation. 

88 

This will help ensure trade agreements are implemented in a fixed time period and 

without amendments. 

TPP 

The negotiations on a Trans-Pacific Partnership (TPP) Agreement provide a critical 

opportunity to deepen the U.S. commercial relationship with the vital Asia Pacific 

region. While the United States already has FTAs with several of the TPP countries, 

the negotiations with this broader bloc provide an important demonstration of U.S. 

trade policy and can expand and enhance the economic benefits in these agreements. This is also an opportunity to demonstrate the U.S. commitment to strong 

FTA provisions. 

AdvaMed strongly supports the inclusion of provisions in the TPP that would establish transparency and procedural fairness in the process by which national health 

care authorities establish reimbursement for medical devices. Such provisions would 

provide for a fair, predictable process that would limit disputes and enhance confidence in decision-making processes, thus contributing to good governance. 

AdvaMed believes that in order to fulfill its promise as a high-level, 21st century 

trade agreement, the TPP agreement should include specific provisions to ensure 

full access to safe, effective, and high quality medical devices in order to advance 

public health and patient access. It is important for the TPP agreement to address 

non-tariff barriers affecting the medical device industry, especially non-transparent 

or discriminatory regulatory procedures. AdvaMed supports the inclusion in the TPP 

agreement of provisions that will ensure that members grant efficient regulatory approvals, while ensuring product safety. 

TTIP 

AdvaMed supports the negotiation of a comprehensive free trade agreement (FTA) 

between the United States and the European Union (EU), under the framework of 

the TTIP. We would like to see provisions addressing issues affecting our industry 

in U.S.–EU bilateral trade and in trade with third countries. 

Although the U.S. and EU use different approaches to determine the safety and efficacy and/or performance, as appropriate of medical technology, studies have demonstrated that each system delivers similar results in terms of these basic objectives. AdvaMed supports cooperation between the regulatory agencies on both sides 

of the Atlantic as a way to promote understanding and reduce unnecessary regulatory burdens. Rather than attempting comprehensive ‘‘convergence’’ of these two 

systems, such as a mutual recognition agreement (MRA), we recommend focusing 

on specific areas of ‘‘convergence.’’ We have provided USTR an explanation of these 

issues. 

We also believe that there should be improved transparency in the regulatory process in the EU. Stakeholders should be provided regulatory proposals while there is 

still a possibility of making meaningful changes—which is usually before the proposals are sent from the European Commission to the Parliament and Council. The 

Commission should be required to recognize such contributions—much in the way 

U.S. agencies operate under the Administrative Procedures Act. This process would 

improve the regulatory process. 

AdvaMed also recommends that TTIP include a regular dialogue between the U.S. 

Food and Drug Administration (FDA) and DG Internal Market, Industry, Entrepreneurship and SMEs (GROW), involving USTR and U.S. Department of Commerce, 

to exchange information on regulatory measures being considered by either party 

that could impact trade and determine areas for additional ‘‘convergence.’’ In advance of these meetings, industry would be consulted to provide their views on regulators’ proposals. This dialogue could be held under provisions similar to Korea-U.S. 

FTA, but strengthened to ensure that future measures be explicitly discussed and 

industry has the opportunity to comment on non-confidential proposals and has access to the results of such meetings. 

In addition to regulatory cooperation, we urge both governments to address the following issues in the context of a comprehensive Free Trade Agreement. We have 

provided USTR our views on the eliminating border tariffs, improving Customs procedures, enhancing the single market in the EU for medical technology, reducing 

late payments to our members, and including provisions on transparency and procedural fairness in Member States’ reimbursement systems. 

Our industry faces an array of issues outside the U.S. and EU. Our member companies source many of their products sold globally from the U.S. and/or the EU. Therefore, governments in both the U.S. and EU should be interested in ensuring that 

89 

medical technology companies are treated fairly by third country governments. We 

ask that the TTIP include provisions that encourage the relevant agencies to work 

on behalf of our medical technology firms. We have provided USTR with a list of 

specific areas for cooperation on third country issues. 

Conclusion 

Trade liberalization through the conclusion of TTIP and TPP would enhance economic growth and improve the quality of life for millions of patients in Europe, Asia, 

Latin America, and the U.S. The adoption of trade promotion authority that guides 

and strengthens USTR’s negotiating objectives is critical for the early conclusion of 

these agreements. We hope the Administration and Congress will work together to 

accomplish these very important objectives. 

American Apparel & Footwear Association (AAFA) 

we wear® jobs 

Statement by Juanita D. Duggan 

President and CEO 

American Apparel & Footwear Association 

Before the Senate Finance Committee 

On The 

2015 U.S. Trade Policy Agenda 

January 27, 2015 

On behalf of the members of the American Apparel & Footwear Association (AAFA), 

and the four million U.S. workers our industry employs, we welcome this hearing 

and the opportunity to secure quick action on a number of pending trade measures. 

Our members make and sell clothes and shoes around the world and in the United 

States. In order to reach our customers and do business, our products and inputs 

need to be able to cross those borders easily and seamlessly. 

Earlier this month, we submitted a letter to House Ways & Means Committee 

Chairman Paul Ryan (R–WI) and Senate Finance Committee Chairman Orrin Hatch 

(R–UT), urging immediate enactment of legislation to renew expired and expiring 

trade programs. The letter is attached for reference. 

A robust trade agenda eliminates barriers that separate our members from their 

customers and from their suppliers. When we knock down these barriers, we create 

jobs, reduce costs, and generate consumer opportunities. 

Below are some key statistics that highlight the importance of free and open trade 

for the U.S. apparel and footwear industry: 

• 98 percent of U.S. footwear is made offshore; 

• 97 percent of U.S. apparel is made offshore; and 

• 95 percent of the people on the planet who wear clothes and shoes live offshore. 

In 2015, we urge Congress to take immediate action on a number of pending measures, including: 

• Renewal and update of the Generalized System of Preferences (GSP) program; 

• Renewal of the African Growth and Opportunity Act (AGOA); 

• Renewal of the Nicaraguan Tariff Preference Level (TPL) program; 

• Renewal of Trade Promotion Authority (TPA) to pave the way for conclusion of 

trade agreements being negotiated with trading partners in Europe and the Pacific Rim; and 

• Renewal and restart of the expired Miscellaneous Tariff Bill (MTB) process. 

Early, bipartisan action on these measures will support trade-based U.S. jobs, benefit U.S. consumers, and signal immediate re-engagement to our trading partners. 

90 

We thank you for the opportunity to submit our comments, and look forward to 

working with the Committee toward quick Congressional approval of these critical 

programs. 

American Apparel & Footwear Association (AAFA) 

1601 North Kent Street Suite 1200 

Arlington, VA 22209 

(703) 524–1864 

(800) 520–2262 

(703) 522–6741 fax 

www.wewear.org 

ACLI 

Financial Security . . . for Life 

Statement for the Record 

Senate Finance Committee 

Hearing titled ‘‘President Obama’s Trade Policy Agenda’’ 

January 27, 2015 

The American Council of Life Insurers (ACLI) is pleased to submit this statement 

for the hearing record expressing support of the life insurance industry for a robust 

U.S. international trade agenda. 

The American Council of Life Insurers (ACLI) is a Washington, D.C.-based trade association with approximately 300 member companies operating in the United States 

and abroad. ACLI advocates in federal, state, and international forums for public 

policy that supports the industry marketplace and the 75 million American families 

that rely on life insurers’ products for financial and retirement security. ACLI members offer life insurance, annuities, retirement plans, long-term care and disability 

income insurance, and reinsurance, representing more than 90 percent of industry 

assets and premiums. Our public website can be accessed at www.acli.com. 

ACLI is a strong supporter of international trade liberalization, open markets and 

regional global efforts to remove unnecessary barriers for the efficient provision of 

insurance, reinsurance, and retirement security products. We thank the Chairman 

and Ranking Member of the Senate Finance Committee for holding this important 

hearing, and we support the Administration’s robust trade agenda, which includes 

the Trans-Pacific Partnership (TPP), the Trade in Services Agreement (TISA) and 

the Trans-Atlantic Trade and Investment Partnership (TTIP) initiatives. 

ACLI also supports passage of a modernized Trade Promotion Authority (TPA) for 

purposes of providing Congressional, and thus stakeholder, input into the negotiating process and to support conclusion and Congressional consideration of the 

aforementioned trade initiatives. TPA is critical to a seriously dedicated and effective trade agenda. 

Trade issues presently of concern to the insurance industry include: 

• Foreign equity caps—A threshold issue is the need for elimination of unjustifiable and anticompetitive foreign equity caps, which are particularly prevalent 

in Asia (China, India, Malaysia, Myanmar, Philippines, Thailand, Indonesia, 

etc.) and truly alter and restrict ACLI’s member companies’ ability to operate 

effectively and holistically overseas. We are optimistic that the cap will be 

raised in India from 26% to 49% as an incremental but important improvement. 

• Limitations on the conduct of cross border reinsurance—reinsurance is a global 

risk transfer mechanism designed to diversify risk, reduce risk concentrations 

in local markets and provide additional capacity and coverage to local markets 

often against the occurrence of low frequency high intensity events. Therefore, 

the changes in Brazil and Argentina in 2012, India in 2013 and now Indonesia 

not only place constraints on reinsurers’ business operations, but also risk pushing up prices, limiting capacity for local consumers and increasing local risk 

concentrations, and global fragmentation and stagnation. 

• Restrictions on cross border data flows (forced localization)—ACLI believes that 

requirements that all data be maintained in a given jurisdiction should be proVerDate Mar 15 2010 20:42 Jan 27, 2016 Jkt 000000 PO 00000 Frm 00094 Fmt 6601 Sfmt 6621 R:\DOCS\98343.000 TIMD
91 

hibited. Foreign companies doing business in a foreign country should be permitted to transfer electronic information out of that country for processing offshore. Companies should be free to manage and maintain data from headquarters, through affiliates, through regional centers, and through third party 

vendors as long as the data protection requirements of the local jurisdiction are 

satisfied. Forced domestication of data processing in Korea is already the subject of dispute with several of its trade partners, and proposals in other countries would put many global companies in a conflict of laws predicament between their home country supervisor’s requirement for comprehensive group 

risk management and reporting. 

• Reversals of Private Account Pensions—ACLI supports the maintenance and expansion of the World Bank model of individually funded defined contribution 

pensions, managed by the private sector. We believe now more than ever that 

the twin pressures of increased longevity and lower fertility rates will only increase funding gaps for national governments in both developed and developing 

markets. While still relatively new in some markets (India 2013), these systems 

have substantially reduced underfunding of government liabilities and created 

deep and sustained markets for long term investment instruments. 

• Other issues of strong interest include provisions supporting regulatory predictability and transparency, provisions addressing unfair competition from StateOwned Enterprises and clearly articulated and transparent investment protections. 

We appreciate the Administration’s dedicated work on the TPP, TISA and TTIP initiatives, as well as on issues of implementation and enforcement of a bilateral nature—such as the cross border data flows issues currently under review in KORUS, 

and stopping the implementation of mandatory reinsurance cessions to a new state 

owned reinsurer in Indonesia. We look forward to Congressional passage of TPA as 

soon as is practicable. ACLI believes that such efforts will result in an open, strong 

and sustainable global marketplace. 

The insurance industry is not only a provider of financial security by indemnifying 

risks faced by individuals and business—such as sickness, loss of life, liability, and 

property damage, to name a few, but also one of the world’s largest institutional 

investors. A strong global marketplace with clear, transparent and dependable trade 

rules is critical to the health of our industry and to global security. 

We appreciate the opportunity to submit this statement for the record. If you have 

any questions, please contact Maurice Perkins, Senior Vice President—Federal Relations (202.624.2137, mauriceperkins@acli.com) or Dianne Sullivan, Vice President— 

Trade (202.624.2106, diannesullivan@acli.com). 

The Honorable James K. Glassman 

American Enterprise Institute 

1150 17th St NW 

Washington DC 20036 

jglassman@aei.org 

Senate Committee on Finance 

Attn. Editorial and Document Section 

219 Dirksen Senate Office Building 

Washington, DC 20510 

February 9, 2015 

Dear Members of the Committee: 

As the Senate Committee on Finance examines key issues within President Obama’s 

2015 trade policy agenda, I would like to share the attached op-ed that I wrote for 

Roll Call recently. The piece outlines the importance of resolving the problem of 

Sovereign Patent Funds (SPFs) via the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP)—trade agreements that 

present historic opportunities to open up new markets and strengthen economic ties 

with important trading partners. 

Already established in France, Korea, and China, SPFs are an increasingly important—and troubling—trade policy issue. SPFs are government-controlled entities 

92 

that operate with the full authority and resources of national and local governments 

and distort markets by propping up home enterprises by threatening or pursuing 

intellectual property (IP) infringement litigation against foreign industrial rivals. 

Examples of these offenders include Intellectual Discovery (Korea), France Brevets 

(France), and the Chinese Government’s Ruichuan IPR Funds, which was established in the spring of 2014. 

As my op-ed argues, the United States must be a leader in preventing foreign governments from channeling their financial and diplomatic clout into SPFs, thus risking harm to free and fair trade, innovation, and the well-being of consumers both 

here and abroad. SPFs threaten this mission by degrading established trade relationships through de facto subsidization of private home companies and through 

threatened or realized retribution against competitive foreign companies. In this environment, U.S. businesses face an unnecessary threat, especially since the U.S. 

Government has prudently chosen not to go down the path of creating an SPF of 

its own. 

For this reason, Congress must ensure that both TIIP and TPP prevent SPFs from 

becoming viable instruments of 21st Century international trade policy. In addition, 

the G–20, with Congressional support, should urge the World Trade Organization 

(WTO) to prevent member nations from hosting SPFs, on the grounds that these 

funds’ existence and operations undermine the global economic growth and stability 

that the G–20 advocates. SPFs also violate the spirit, and perhaps the letter, of the 

Agreement on Subsidies and Countervailing Measures, which prevents members of 

the WTO from using government power to secure advantages against foreign competitors. 

The Senate Committee on Finance is committed to supporting free trade, fair competition and innovation. SPFs are on the rise and should be addressed as part of 

the Committee’s agenda to prevent more serious problems from arising in the future. 

Thank you for your work on this important issue and for considering my views. 

Sincerely, 

Ambassador James K. Glassman 

Visiting Fellow, American Enterprise Institute 

Member, Investment Advisory Committee, Securities and Exchange Commission 

Former U.S. Under Secretary of State for Public Diplomacy and Public Affairs 

The views in this letter are my own and do not represent those of any organization 

with which I am affiliated. 

Will Patent Reform Tackle Government Trolls?—Commentary 

Roll Call, James K. Glassman, November 30, 2015 

With the election victory by the Republicans, Congress at last seems ready to tackle 

two issues on which the parties’ differences are narrow: trade and intellectual property. 

There’s already a broad consensus that the U.S. must do more to open markets in 

Europe and Asia and that our patent system is badly broken. 

These two issues are linked. The goal of reform for each is economic growth, driven 

in large measure by technological innovation, America’s comparative advantage. But 

Europeans and Asians are well aware of the U.S. edge, and they are working hard 

to blunt it. One effective means affects both trade and IP policy. It’s the sovereign 

patent fund, or SPF. 

SPFs have become tools to deter foreign competition in countries where such practices exist, such as China, Japan, Korea and France. They are, in effect, government-sponsored patent trolls. Like private-sector trolls, or patent-assertion entities, 

they exist not to produce anything themselves but to own patents, license them and 

threaten or file litigation against what they consider to be infringers. 

Certainly, there’s a good case to be made for private patent-assertion firms, such 

as Intellectual Ventures, founded in 2000 by Nathan Myhrvold. He argues persuasively that ‘‘our goal is to grow a more efficient invention economy that will energize 

technological progress, potentially changing the world for the better.’’ 

93 

But SPFs are different. They are owned, or co-owned, by governments, and the unabashed goal of these funds is to protect and promote home-grown industries, not 

improve the global economy. ‘‘Some SPFs, like France Brevets, even admit to being 

retaliatory or discriminatory instruments against foreign actors regardless of whether the original claim is legitimate or not,’’ concludes a recent report by the European 

Centre for International Political Economy. 

France Brevets is a Ö100 million SPF owned jointly by the French government and 

Caisse des Depots, a private firm ‘‘under Parliament’s supervision and guarantee.’’ 

It’s been aggressive in defending national interests, filing lawsuits last year against 

HTC America and LG Electronics. As a state-owned enterprise, SPFs can marshal 

government resources—including not just money but regulatory power, or the threat 

of it—against foreign firms. 

Such behavior appears to be a violation of the spirit, and perhaps the letter, of the 

Agreement on Subsidies and Countervailing Measures, which prevents members of 

the World Trade Organization from using government power to secure advantages 

against foreign competitors. By marshaling state authority against innovators, they 

deter economic growth. 

France Brevets, however, pales in comparison to China. Local and federal authorities are establishing patent pools ‘‘to defend domestic companies,’’ the ECIPE report 

states. SPFs are becoming an important element of China’s announced strategy of 

promoting ‘‘indigenous innovation.’’ The ECIPE authors worry that SPFs ‘‘legitimize 

similar behavior by bigger economies like China that are actively pursuing industrial policy through . . . the establishment of their own SPFs.’’ 

Japan, an innovator in industrial policy if not necessarily in technology, established 

the Innovation Network of Japan in 2009 as a public-private partnership to promote 

home-grown industries. In July, the Network set up its own pool with plans to acquire and defend 5,000 patents to start. 

These SPFs—still growing in Asia and Europe—are exercises in mercantilism in nations where growth and innovation is slowing. IP rights are valuable assets, and 

with the weight of government behind them, they can be mobilized into battle 

against foreign competition. 

In the long run, protectionism is futile. Only innovation itself can bring economic 

rewards. But SPFs can do enormous damage, igniting retaliation, raising the costs 

of innovation and reducing the value that flows to consumers from new technology. 

The ECIPE study says it’s a ‘‘lose-lose scenario.’’ 

Patent reform in the United States must address the SPF phenomenon, placing restrictions on the ability of funds sponsored by foreign governments to litigate unfairly against U.S. firms. Also, the Transatlantic Trade and Investment Partnership 

and the Trans-Pacific Partnership, both under negotiation, must prevent SPFs from 

becoming protectionist instruments with the power to corrupt the free-trade objectives of those agreements. And last, the G–20 should assert its opposition to the 

very concept of SPFs with a consensus declaration that they should be outlawed by 

the WTO. The G–20’s goal is to promote global economic growth and stability. SPFs 

do the opposite. 

Ambassador James K. Glassman, a visiting fellow at the American Enterprise Institute, served as undersecretary of State for public diplomacy and public affairs from 

2008 through 2009. From 1987 to 1993, Glassman was part owner and editor of Roll 

Call. 

94 

President Obama’s 2015 Trade Policy Agenda 

United States Senate Committee on Finance 

Tuesday, January 27, 2015 

Statement for the record on behalf of: 

Coalition for GSP 

1001 Connecticut Ave, NW Suite 1110 

Washington, DC 20036 

202–347–1085 

The Coalition for GSP welcomes the opportunity to submit the following statement 

for the ‘‘President Obama’s 2015 Trade Policy Agenda’’ hearing record. We are particularly happy to echo the testimony of U.S. Trade Representative Michael Froman, 

who stated ‘‘the Administration urges Congress to expeditiously renew authorization 

of the GSP program.’’ Like Ambassador Froman, the Coalition for GSP ‘‘stands 

ready to work with you to that end.’’ 

The Coalition for GSP is a group of American companies and trade associations organized to educate policy makers and others about the important benefits to American companies, workers, and consumers of the Generalized System of Preferences 

(GSP) program. Its members range from small, family-owned businesses to Fortune 

500 corporations and operate in all 50 states, the District of Columbia, and Puerto 

Rico. 

Implemented in 1976, the Generalized System of Preferences (GSP) is a special 

trade program that eliminates U.S. import duties on certain products from about 

125 developing countries. Over time, American companies have come to rely on the 

GSP program to lower costs for inputs needed to produce goods in the United States 

and finished products for American families. Lower costs spur demand and allow 

companies to create good-paying American jobs. 

However, GSP expired on July 31, 2013 and Congress has not yet passed legislation 

to renew it. As a result, American companies have paid nearly $2 million a day— 

and more than $1 billion to date—in higher taxes while awaiting congressional reauthorization of the GSP program. The mounting costs and uncertainty surrounding 

when GSP might be renewed have had a chilling effect on companies’ ability to grow 

and compete in the competitive global marketplace. 

American companies are impacted in a number of ways—sales fall if companies try 

to raise prices to compensate for the higher taxes, while margins are squeezed if 

they do not. Some companies with locked-in, long-term contacts actually lost money 

on every sale because of the imposition of new import taxes. All aspects of GSP importers’ operations feel the effects of this negative business environment. 

The Coalition for GSP surveyed hundreds of U.S. GSP program users in 2014 and 

found that : 

• 44% of companies have delayed planned hires. For example, Kona Bicycle 

in Washington has been unable to hire new R&D and product development personnel, while Varaluz in Nevada and McGuire Manufacturing in Connecticut 

cannot afford to replace workers that have left voluntarily because of higher 

costs resulting from GSP expiration. 

• 40% of companies have delayed or canceled job-creating investments. 

B&C Technologies bought a facility to begin manufacturing in Florida by April 

2015, but it cannot afford the necessary building upgrades to create those American manufacturing jobs as planned because of higher costs imposed by GSP expiration. 

• 22% of companies have cut employee wages and benefits. The cost of import duties has cut into the monies available to Stackhouse Athletic in Oregon 

to pay for health care, forcing the company to cut health care benefits for its 

nine workers. 

95 

• 13% of companies have laid off workers. Matrix Metals laid off 75 workers 

at facilities in Iowa and Texas, while Vispak LLC in Minnesota is going out of 

business completely because higher production costs resulting from GSP expiration have made the companies uncompetitive. 

The full report, which includes many other company-specific examples, can be downloaded at http://bit.ly/GSP1Year. 

Congress can stop this bleeding, and quickly, by passing legislation that provides 

for an immediate, retroactive GSP reauthorization. Renewal has bipartisan support 

in both the House and the Senate. Renewing the GSP program is ‘‘low-hanging 

fruit’’ for the 2015 trade agenda. It should be a priority because it would have an 

immediate positive impact on U.S. jobs and competitiveness. 

More than 660 American companies and associations have joined the Coalition for 

GSP’s call for Congress to do just that. The ever-growing list of organizations can 

be viewed at http://bit.ly/GSPsupporters. Nearly three dozen of them have provided brief statements (below, grouped by state) for this submission on the negative 

job impacts of GSP expiration and/or the potential jobs benefits of a retroactive renewal. 

If you have further questions about the impacts of GSP expiration on American 

companies, or would like to speak with any of the companies that provided statements below, please contact Daniel Anthony at the Coalition for GSP at 

Anthony@tradepartnership.com or 202–347–1085. 

The Coalition for GSP looks forward to working with the Finance Committee leadership on a bipartisan basis to pass an immediate, retroactive GSP renewal. 

Zack Stenger, Owner of Blackbeam LLC in San Francisco, California: The 

GSP renewal would allow us to hire three sales and office-related employees for our 

growing small business. 

Bruce Marlin, Purchasing Manager at Circa Corporation in San Francisco, 

California: As a rare, surviving U.S. manufacturer of leather goods, it is essential 

to us that GSP be renewed. Our competitors manufacture primarily in China and 

India, and we need as level a playing field as possible to remain viable as a U.S. 

domestic manufacturer. 

Shaun Shroff, Vice President of Dura Brake Co. in Santa Clara, California: 

We would be able to reduce dependence on production in China and would be able 

to increase business on the East Coast. We would be able to hire two sales people 

on the East Coast as pricing would be competitive. 

William Rebich, Owner of Pegasus Imports in Santa Rosa, California: Failure to new GSP has resulted in us being unable to hire new a new shipping and 

receiving person and has created mounting debt with declining sales. It is creating 

a condition where business expansion is almost impossible. 

Peggy Altfater, Owner of Peggy V Designs in Petaluma, California: My business is a sole proprietorship. My sales have declined because I have needed to raise 

my prices on my product that no longer has GSP status. My job is in dire straits 

at this time because of price increases so I am asking you to please renew the GSP. 

Jeffrey Tunstall, Vice President at Port Plastics in Chino Hills, California: 

Our company imports a substantial amount of materials from qualified GSP countries. Our total sales were down 7 percent in 2014 while the economy grew an estimated 2.4 percent. We believe the downturn in our business is solely due to the 

higher costs of our products as a result of the GSP program not being renewed. This 

downturn in our business has resulted in our being forced to reduce a number of 

employees. 

Jeni Tjoeng, Import Manager at Shamrock Manufacturing Co. in Chino, 

California: With the delayed renewal of GSP, we have seen the reduction of our 

sales in the past year because we have come uncompetitive. Instead of expanding 

our business, we are struggling to stay afloat. 

William Dull, President of Triad Magnetics in Perris, California: Much of our 

industry produces in China. [With a GSP renewal], we could easily double our business—hire more workers and have the financial strength to invest in higher technology manufacturing here in California. 

Fred Cohen, Owner of Omicron Granite & Supplies in Pompano Beach, 

Florida: The failure to renew the GSP has cost my company over $100,000 per year 

96 

in additional taxes, which has kept me from hiring at least two more workers. 

Please renew the GSP and make it retroactive. 

Peter Allen, President of Royal Tropics, Inc. in McCall, Idaho: The GSP expiration and the uncertain return has caused my small company a hardship in the 

sense that the extra funds we have paid in duties has caused us to hold back on 

some planned expansion of our business. With the needed expansion we would be 

able to hire additional employees as well as fund some additional equipment. The 

GSP program is very important for small business in the U.S. 

Brendan Naulty, Senior Vice President at Ajinomoto North America Inc in 

Itasca, Illinois: The impact of non-renewal of GSP impact for 2014 on Ajinomoto 

North America has been $690,678. This has put this business segment into a red 

figure for 2014. Therefore we could not expand our workforce or reinvest profits into 

other businesses. We would greatly welcome retroactive renewal, which would enable us to initiate capital projects that have been postponed due to availability of 

funds and uncertainty about the stability of this business segment. 

Kelly Weinberger, Owner at WorldFinds Fair Trade in Westmont, Illinois: 

Our fair trade organization has been badly hurt by the non-renewal of GSP. A retroactive renewal would help create jobs in our U.S. office, as well as to provide more 

work to our low-income women artisan groups in the developing world. 

Jim Angers, Partner at K2 Coolers LLC in New Iberia, Louisiana: We paid 

$79,000 in duties in 2014. We need to hire an additional warehouse worker and the 

duties are impacting our margins to the point of causing us to delay hiring. 

Damian Jones, Designer & Founder at Aid Through Trade in Annapolis, 

Maryland: Our 22 year old fair trade company has depended on GSP since our inception. The current lapse and uncertainty makes it hard for me to have the confidence I need to invest and hire. Retroactive GSP renewal would give me cash and 

confidence to hire and invest. 

Lisa Johnson, Vice President at COLE–TUVE, Inc. in White Marsh, Maryland: We sorely need renewal of the GSP so that our company has the chance to 

get back on track. Among other penalizing set-backs (such as limiting labor), we 

have not been able to raise our prices to account for this increase as we could not 

do that and stay competitive. Our capital is just about gone, and getting the GSP 

retroactively approved will allow us to reinvest resources back in to the business, 

to get beyond playing catch up and grow along with the prospects of a growing manufacturing sector. 

Richard Harris, President of Accessories Unlimited in North Harwich, Massachusetts: Since the cancellation of GSP we have had our fixed margins reduced 

between 5 and 6 percent. We cannot raise our prices as they are set by our suppliers. We can cut corners where we can. We need employees on a full time basis, 

but have had to hire them on a part time basis and not hire the type of personnel 

we need to improve our business. 

Steve Hill, Vice President at Polysource in Pleasant Hill, Missouri: The most 

damaging result of nonrenewal is the impact it has on U.S. manufacturers of global 

consumer goods. GSP allows U.S. manufacturers to take advantage of certain raw 

materials throughout the world that allows them to sell worldwide resulting in jobs 

and tax revenue. The impact on Polysource has limited our ability to compete and 

hire. We could easily justify the inability to hire for two new professional positions 

with full benefits if we had not experienced a loss of over $500k in the last 18 

months. 

Robert J. Murray, Operations Manager at General Carbon Corporation in 

Paterson, New Jersey: The lack of renewal of the GSP has caused General Carbon 

to limit its search for new hires. If the GSP was renewed and the duties refunded 

we would be in a much better position concerning new hires and improving the overall future of General Carbon. It may also lead us to make capital improvements to 

our facilities that we have been delaying to make pending the GSP renewal. 

Gert van Manen, President of iTi Tropicals Inc. in Lawrenceville, New Jersey: We have paid $800,000 in duties since GSP expired and we are not charging 

our customers for this for various reasons, mainly we believe that it will be reinstated retroactively as it always has been. If this is not the case it will have serious 

consequences for our company. We are a small business with 25 people on payroll 

in business for 26 years. 

97 

Janis P. Rich-Gutierrez, Compliance Officer at Kalustyan Corporation in 

Union, New Jersey: We import materials from various countries around the world 

and have approximately 80 hard-working employees that further finish the product 

here. We value our employees and wish to keep them employed. However, due to 

GSP cancelation and the uncertainty of it being reinstated retroactively, we can purchase finished product for less money overall. 

Joseph Kay, CEO of Biltmore Corporation in Manhasset, New York: We have 

lost business to foreign companies, for being unable to manufacture goods in the 

U.S. 

Benny Nabavian, President of EORC in Farmingdale, New York: We are a 

very small company and the GSP expiration is really hurting our cash flow and income. Every penny counts in our business, especially in the current economic conditions. It is a question of survival for us. 

Gabriel Khezrie, President of Fremada Gold Inc. in New York, New York: 

Due to the softness of the jewelry business in general, there has been tremendous 

pushback by our customers. They will not accept the additional price increases to 

accommodate the 5.71 percent tariffs that were never part of our pricing equation. 

This has led to less billings at our company. Accordingly we have had to let some 

staff go. 

Donna O’Sullivan, U.S. Sales and Customer Service Manager at Janice 

Girardi Designs in Stone Ridge, New York: The non-renewal of the GSP has 

cost our company over $90,000. Unfortunately, we’re not able to raise our prices to 

compensate for the duties we’re now paying because it’s already challenging to stay 

competitive in this economy. We’ve had to lay off a few people because of this and 

it’s vital for us to have the GSP renewed. 

Benjamin Justman, Royal Chain in New York, New York: Restoration of GSP 

will have a huge positive effect on our company. We will be able to reinstate some 

of the business lost to competition. Some customers have stuck with us based on 

our promise that we will refund the duty paid if GSP is renewed retroactively. 

Going forward, we will be able to rehire personnel that were laid off, as well as expand our business. 

Nenad Milinkovic, Vice President at Vail International Corp. in New York, 

New York: Lack of GSP Renewal has precluded our company from hiring additional 

personnel, and we are now at a point facing layoffs for some of our workforce. We 

have been trying to hang in there in anticipation of the renewal, but this prolonged 

expiration has now placed a very serious financial strain on our business. 

Scott Ferguson, President of CCS USA, Inc. in Hickory, North Carolina: To 

date, the expiration of GSP has cost my company over $125,000. It has cost jobs, 

investment and has crippled us competitively with lost business. Please retroactively renew this critical trade program! 

Fred Starr, President of Thompson Traders in Greensboro, North Carolina: 

Thompson Traders is a start-up company, and after seven years of trial and tribulation, made it to a break-even in 2013. Then the GSP was allowed to expire, and 

due to our financial position and our inability to pass this charge onto our customers, we had to slow down growth, including hiring. We would be a different company today without this totally unanticipated tariff. 

We’ve reduced our payroll by eight people, a 40 percent reduction and will not be 

adding people, until we have a better government environment, including the renewing of GSP. The renewal of GSP will allow us to grow, creating new job opportunities. Moreover, since we share profits with our employees, each job will become 

a better paying job whether salaried or hourly. 

Most important, the return of our tariff payments, paid out since August 2013, will 

help Thompson Traders enter new domestic and foreign markets and build a much 

larger company, including domestic manufacturing investment—more jobs and 

better-paying jobs. 

Greg H. Kirkland, President of Kirkland Associates, Ltd. in McMinnville, 

Oregon: In 2014 our small import company paid over $50,000 in import duty 

charges on products imported from India. We currently desperately need to hire two 

additional employees. However, we simply can’t afford to do that as the company 

profits will not support two new employees and continued import duty charges. If 

we were to see GSP passed, especially retroactively, we would immediately move toVerDate Mar 15 2010 20:42 Jan 27, 2016 Jkt 000000 PO 00000 Frm 00101 Fmt 6601 Sfmt 6621 R:\DOCS\98343.000 TIMD
98 

ward the new employee additions. I know we are not a big deal to Washington, D.C. 

but this move would really help our company now and in the future. 

Burak Cezik, Account Manager at Kervan USA LLC in Bethlehem, Pennsylvania: We ended up with a net loss in fiscal year 2014 due to GSP expiration. Accordingly, we are working on ways to cut jobs and holding off on our strategy of 

hiring regional sales managers. We would definitely hire new positions in the case 

of retroactive GSP renewal. 

Amy Campbell, Founder of Brilliant Imports in Austin, Texas: Brilliant Imports has experienced, what is significant to a budding business, cash outflow due 

to GSP expiration . . . for a company that is less than three years old, this has been 

a hard blow to handle. In addition, there is extreme uncertainty on GSP renewal 

going forward therefore I’m keeping ‘‘predictable’’ cash outflows as tight as possible. 

As the Founder and Owner, I’ve let go of my PR firm, my Virtual Assistant (VA) 

as well as cut back on advertising (these are a few examples). There is no projection 

to hire any help going forward. Retroactive GSP renewal would be a nice boost to 

keep a relatively new business like Brilliant Imports afloat as well as lead to a hire 

of a VA and placement of Brilliant Imports in a fulfillment center . . . both of these 

are detrimental to my company’s success. 

Cathy Korndorffer, Chief Operating Officer at Chantal Cookware Corp in 

Houston, Texas: We are a small, privately owned company in the housewares industry. We struggle every year to compete on a global scale with huge conglomerates and every penny that our product cost increases counts. We have not laid 

anyone off because of GSP non-renewal, but we cannot pass this along to our retailers. What happens? Our employees do not get raises. There is no money going into 

their 401K plan. There is no Christmas bonus. There is a reduction in our medical 

insurance contribution from Chantal. Is it painful? YES! 

Wajih Rekik, President of CHO America in Baytown, Texas: Importing olive 

oil from Tunisia and bringing a Tunisian olive oil to the U.S. consumer is a big challenge that was supported by the GSP advantage. Since GSP expiration, we froze hiring, gave up a plan to expand into a new warehouse. A retroactive renewal will be 

vital to us and will be translated into expansion of warehouse and at least three 

new hires. 

Allan Zadik, Owner of FAZ Marketing in Houston, Texas: I had to close the 

import business as my selling price became uncompetitive. I did have to let go of 

two people as there was no way to keep sales up. I’m currently not importing products where GSP has affected my business. 

Abe Shaheen, Owner of Shaheen Import Export Co. in Virginia Beach, Virginia: The GSP expiration and uncertainty about renewal has resulted in laying off 

three of workers at our company, and not being able to hire new employees. Retroactive GSP renewal would lead to more jobs at our company, and will enable us to 

expand our business. 

Daniel Hamilton, President of Vortex Optics in Middleton, Wisconsin: If 

GSP is renewed with tariffs refunded, we could purchase new equipment needed for 

our U.S. manufacturing plans, move forward on building plans for expansion, and 

hire additional employees. All of the money would go right back into the local economy. 

INTERNATIONAL WOOD PRODUCTS 

ASSOCIATION (IWPA) 

February 4, 2015 

The Honorable Orrin G. Hatch 

Chairman 

Committee on Finance 

United States Senate 

Washington, DC 20510 

The Honorable Ron Wyden 

Ranking Member 

Committee on Finance 

United States Senate 

Washington, DC 20510 

99 

Dear Chairman Hatch and Ranking Member Wyden: 

Thank you for this opportunity to submit a statement for the record of the Senate 

Finance Committee’s January 27th hearing on President Obama’s 2015 Trade 

Policy Agenda. 

IWPA is the leading international trade association for the North American imported wood products industry, representing 200 companies and trade organizations 

engaged in the import of hardwoods and softwoods from sustainably managed forests in more than 30 nations across the globe. Association members consist of three 

key groups involved in the import process: U.S. importers and consuming industries, 

offshore manufacturers and the service providers that facilitate trade. The vast majority of these companies are small- to medium-sized family-owned businesses. 

We are hopeful that the Committee will move forward at the earliest possible date 

with retroactive renewal of the Generalize System of Preferences (GSP) trade program. As you know, GSP was enacted in 1974 in order to eliminate import taxes 

on certain products from approximately 130 developing countries. The current GSP 

expiration, now in its 19th month, is the longest in GSP’s 40-year history. Since 

GSP expired on July 31, 2013, American companies like our members have paid 

more than $1 billion in higher taxes. 

The program’s ongoing lapse is having a severe impact on these U.S. businesses. To 

compensate for higher taxes, some have been forced to lay off workers, delay new 

hires, cut worker benefits, and cancel job-creating investments while awaiting congressional action. Retroactive renewal of GSP will allow for the refund of hundreds 

of millions of dollars in taxes paid by companies throughout the United States. Instead of struggling to stay in business, these companies could hire new workers, increase benefits for existing employees, and invest in future growth. 

We look forward to continued opportunities to work with Senate Finance Committee 

Members and staff to renew GSP at the earliest opportunity. Please have your staff 

contact Joe O’Donnell, IWPA’s Manager of Government Public Affairs, by e-mail at 

joe@iwpawood.org or by phone at (703) 820–6696 if you have any questions or need 

additional information. 

Sincerely, 

Cindy L. Squires, Esq. 

Executive Director 

4214 KING STREET • ALEXANDRIA, VA 22302 • TEL: 703–820–6696 • FAX : 703–820–8550 

• info@iwpawood.org • www.iwpawood.org 

Statement for the Record 

National Association of Manufacturers 

733 10th Street, NW, Suite 700 

Washington, DC 20001 

Senate Committee on Finance 

on ‘‘President Obama’s 2015 Trade Agenda’’ 

January 27, 2015 

The National Association of Manufacturers (NAM) is pleased to provide the following statement to the Senate Committee on Finance on ‘‘President Obama’s 2015 

Trade Agenda.’’ 

The NAM is the largest manufacturing association in the United States, representing more than 14,000 manufacturers small and large in every industrial sector and in all 50 states. Manufacturing employs nearly 12 million women and men 

across the country, contributing more than $2.08 trillion to the U.S. economy in 

2013 alone. 

Manufacturers in the United States increasingly participate and compete in a 

global economy that has become highly challenging, with slower-than-hoped-for 

growth in many parts of the world and increased competition from overseas. Not 

only do 95 percent of the world’s consumers live outside our borders but world trade 

in manufactured goods has expanded to more than $11 trillion, of which U.S. manuVerDate Mar 15 2010 20:42 Jan 27, 2016 Jkt 000000 PO 00000 Frm 00103 Fmt 6601 Sfmt 6621 R:\DOCS\98343.000 TIMD
100 

factured goods exports only represent 9 percent. As well, economic activities overseas, from infrastructure and foreign government procurement to resource production and distribution, are providing fresh new opportunities for our manufacturers 

to invest and engage in growth-producing activities around the world that support 

a strong U.S. manufacturing base. 

The NAM has long championed a robust trade and investment policy to grow 

manufacturing in the United States. At its core, a robust and pro-manufacturing 

U.S. trade policy should seek to open markets and level the playing field overseas, 

improve the competitiveness of manufacturers in the United States and ensure the 

strong enforcement of the rules of the trading system at home and by our trading 

partners. 

Opening Markets Overseas Requires Trade Promotion Authority and 

Strong New Agreements 

Trade and investment agreements play an outsized role in providing businesses 

of all sizes across all 50 states better access to the global economy. By setting the 

rules of the global trading system, multilateral, plurilateral and bilateral agreements level the playing field and enable manufacturers in the United States to compete more successfully. 

Most of the world’s countries have agreed to a basic set of trade rules as part of 

several agreements under the auspices of the World Trade Organization (WTO). 

Efforts to strengthen and expand these rules for all WTO members and eliminate 

tariffs and other barriers in the ‘‘Doha’’ negotiations have unfortunately stalled as 

a few major countries have refused to pursue an ambitious agenda moving forward. 

The NAM is very pleased to see the WTO Trade Facilitation Agreement (TFA) 

move forward and is urging conclusion of an expansion of the Information Technology Agreement (ITA). The TFA is the first multilateral trade agreement to be 

concluded in the history of the WTO, and it has the potential to reduce significantly 

the barriers that countries—particularly developing countries—face in moving goods 

by increasing port efficiency, improving customs and regulatory processes, and upgrading infrastructure to increase trade exports. Now that the WTO agreement is 

on its way to ratification, countries will have to begin the work of assessing and 

implementing the commitments to realize the full benefit of the TFA. The United 

States is currently the largest single-country provider of trade-related assistance, 

and the U.S. Trade Representative has already committed to working with other donors and with WTO Members to help developing countries fully implement the TFA. 

The financial and technical assistance provided by the United States and others 

must be provided in a coordinated, strategic and efficient way to countries that are 

committed to implementation. We encourage Congress to work with USTR and 

other agencies to ensure that funds and other forms of assistance are being delivered in the most effective way. 

An expanded ITA, which is expected to eliminate tariffs on about 200 additional technology products—or roughly $1 trillion in global sales each year—would create 

an estimated 60,000 new American jobs, enhancing innovation in the United States 

and increasing global GDP by roughly $190 billion. Manufacturers have strongly 

supported this expansion given the benefits of this tariff-cutting agreement not just 

to producers of new high-tech equipment, but to all manufacturers that, as consumers, will be able to benefit from lower costs and greater innovation. U.S. leadership on the ITA expansion has been critical and we continue to urge action by 

America’s trading partners to agree to a broad ITA expansion package. 

Manufacturers also strongly support the negotiation of a broad Environmental 

Goods Agreement (EGA) as soon as possible. Global tariffs on environmental products are as high as 35 percent in some nations; eliminating these tariffs would have 

a substantial and positive impact on manufacturers who are working to develop new 

and improved goods aimed at solving environmental challenges. Achieving an EGA 

will unlock significant opportunities for manufacturers to decrease the cost of these 

products to consumers inside and outside the United States, drive innovation, and 

expand sales and manufacturing jobs. Negotiations are taking place this week on 

this important negotiation on which manufacturers are seeking quick action. 

The WTO is also seeking move forward on a long stalled global liberalization 

trade negotiations that began in Doha, Qatar, in November 2001. Manufacturers 

continue to seek an ambitious outcome that will open new markets, not lock in longstanding barriers to trade in manufactured goods. 

In addition to the WTO, the United States has negotiated free trade agreements 

on a bilateral or plurilateral basis. These agreements—referred to as either free 

101 

1 U.S. Department of Commerce, International Trade Administration, TradeStats Express, 

accessed at http://tse.export.gov/TSE/TSEhome.aspx. 2 NAM, U.S. Manufacturing Statistics—Manufacturing and Trade Data by State, 

accessed at http://www.nam.org/Statistics-And-Data/State-Manufacturing-Data/Manufacturing-by-State.aspx. 3 It is sometimes argued that hundreds of trade agreements have been negotiated without 

TPA. Those agreements are not the type that open markets overseas or include binding and 

state-of-the-art dispute settlement. For example, Trade and Investment Framework Agreements 

provide a useful opportunity for the United States to engage in economic discussions with foreign governments but do not obligate either country to open its market or address barriers. 4Of all U.S. market-opening FTAs, only the U.S.-Jordan FTA was implemented without TPA. 

Notably, the Jordan FTA is much less comprehensive and less developed than our other FTAs, 

and most prominently lacks the state-of-the-art time-limited dispute settlement provisions that 

are found in the North American Free Trade Agreement and all subsequent FTAs. 5 U.S. Department of Commerce, International Trade Administration, TradeStats Express, 

accessed at http://tse.export.gov/TSE/TSEhome.aspx. 6 NAM, U.S. Manufacturing Statistics—Manufacturing and Trade Data by State, 

accessed at http://www.nam.org/Statistics-And-Data/State-Manufacturing-Data/Manufacturing-by-State.aspx. 7 Id. 

8 NAM, Statement for the Record for Senate Finance Committee Hearing on ‘‘Advancing Congress’s Trade Agenda, the Role of Trade Negotiating Authority,’’ (Jan. 16, 

2014, accessed at http://www.nam.org/Issues/Trade/Trade-Promotion-Authority/NAM-Statement-Supporting-the-Bipartisan-Congressional-Trade-Priorities-Act/). 

trade agreements (FTAs) or trade promotion agreements—eliminate barriers more 

comprehensively than the WTO agreements and set in place stronger and clearer 

rules to improve the competitiveness of manufacturers in the United States, including rules on the protection of intellectual property and investment and ensuring 

greater transparency and fair competition. 

The United States’ experience under our FTAs demonstrates that where manufacturers from the United States can compete on a level playing field abroad, they can 

boost sales and grow their share of foreign markets. America’s 20 existing free trade 

agreement partners account for less than 10 percent of the global economy but purchase nearly half of all U.S. manufactured goods exports.1 For many states, including Ohio and Texas, that figure is closer to 60 percent.2 The United States enjoys 

a nearly $60 billion manufacturing trade surplus with its trade agreement partners, 

compared with a $508 billion deficit with other countries. 

Renewing and Modernizing Trade Promotion Authority is Essential to a 

Robust U.S. Trade Policy 

To negotiate the type of comprehensive, high-standard and market-opening trade 

agreements that have driven export growth and jobs across the country, trade promotion authority (TPA) is essential.3 TPA legislation has been in place and was utilized during the negotiation and implementation of the Uruguay Round Agreements 

creating the WTO and for 13 FTAs negotiated since 1974.4

Since TPA was put in place most recently in 2002, U.S. manufactured goods exports more than doubled from $623 billion to $1.38 trillion.5 Those exports support 

millions of American jobs, including, for example, 212,000 in Michigan, 189,000 in 

Pennsylvania, 185,000 in New York and 107,000 in New Jersey.6 In Oregon, Delaware and Maryland, manufacturing accounts for more than 80 percent of all state 

exports. Full state fact sheets are available at the NAM’s website.7

Manufacturers welcomed the Bipartisan Congressional Trade Priorities Act of 

2014, introduced at the beginning of last year by Senate Finance Committee Chairman Max Baucus (D–MT) and Ranking Member Orrin Hatch (R–UT) in the Senate 

and by House Ways & Means Committee Chairman Dave Camp (R–MI) in the 

House.8 This legislation sets forth the much-needed Executive-Congressional framework to ensure that both branches of government work to achieve the strongest possible outcomes in our trade agreements. This legislation also provided important updates to the traditional TPA framework, including with respect to priority negotiating issues. 

Action on TPA is vital to ensure that U.S. negotiators can bring home the strongest possible outcomes in both the ongoing Trans-Pacific Partnership (TPP) and 

Transatlantic Trade and Investment Partnership (T–TIP) talks that will set in place 

new and stronger rules to level the global playing field and to engage in major new 

negotiations. Such legislation is also need for the EGA, the Trade in Services Agreement talks and future negotiations. 

102 

Time is of the essence. Other major economies are already negotiating dozens of 

agreements without the United States that could put manufacturers and workers 

in the United States at a significant competitive disadvantage. If Congress does not 

move expeditiously to pass TPA and ensure the United States continues to lead in 

striking trade deals that drive manufacturing growth and job creation, we will be 

forced to sit on the sidelines while other countries negotiate deals that exclude us. 

Failure to move forward would deal a damaging blow to a recovering U.S. manufacturing sector facing significant competitive challenges. The United States is one 

of the most open economies in the world. According to the World Trade Organization, America has the lowest applied tariff of any G–20 country. But the World Economic Forum found that U.S. exporters face far higher tariffs abroad than their 

competitors in major markets like China, Russia, India and Brazil. Without TPA, 

the United States is unarmed in ability to eliminate those duties and other impediments to open and fair competition. 

The Bipartisan Congressional Trade Priorities Act of 2014 provides a very strong 

model to move forward on TPA as soon as possible. Not only does this legislation 

set forth clear and ambitious goals to eliminate tariffs and open overseas markets 

to U.S. goods, services and investment, it also establishes powerful new trade negotiating objectives that address existing and emerging commercial challenges to manufacturing growth and exports in markets around the world. 

For the first time in a TPA bill, the Bipartisan Congressional Trade Priorities Act 

confronts the serious and growing problem of forced localization barriers to trade. 

It seeks to eliminate trade distortions and unfair competition from state-owned enterprises and to promote regulatory transparency, procedural fairness and rule-making based on risk assessments and sound scientific evidence. It includes critical new 

provisions addressing cyber theft and protecting trade secrets and confidential business information. 

The legislation would foster manufacturing growth and innovation here in the 

United States. It includes highly important negotiating objectives to establish more 

open and fair trade in goods, improved transparency and protections and enforcement for intellectual property, and provisions that will ensure that U.S. property 

overseas is treated fairly and in accordance with core U.S. due process principles. 

Just as importantly, the legislation would restore the vital partnership between 

Congress and the President that facilitates the negotiation and approval of trade 

agreements. It enhances congressional oversight over trade negotiations and, for the 

first time, explicitly confirms and provides that any Member of Congress can access 

negotiating text, submit views and attend trade agreement negotiating rounds. Separate House and Senate advisory groups would oversee ongoing trade talks, including through regular, scheduled meetings. 

At the same time, the Bipartisan Congressional Trade Priorities Act provides the 

appropriate structure to empower U.S. negotiators to bring back the strongest possible trade agreements to open markets and level the playing field. Without this authority, our trading partners have little incentive to make tough decisions or put 

their best offer on the table. 

From the NAM’s perspective, this legislation provided the type of framework 

needed to secure new, market-opening trade agreements. The NAM looks for new 

TPA legislation to be introduced shortly in the 114th Congress and urges Congress 

and the Administration to move forward on strong TPA legislation as quickly as 

possible. 

Strong, High-Standard and Market Opening Outcomes Are Required in 

Ongoing Negotiations 

The ongoing TPP and T–TIP negotiations hold enormous potential to expand U.S. 

exports and international sales and to promote jobs and economic growth if they are 

concluded successfully. Taken together, these agreements would open markets with 

nearly one billion consumers covering nearly two-thirds of global GDP and 65 percent of world trade. 

Yet, not just any agreement will suffice. The outcomes obtained in both the TPP 

and the T–TIP must be bold and concrete, particularly on market access, intellectual 

property and investment rules, the new 21st century issues and the agreement’s 

overall enforceability. Weak and insufficient outcomes in these areas will put at risk 

broad-based manufacturing support for ultimate agreements which are made even 

more important given the number of countries at the negotiating table. 

In particular, the NAM has identified the following issues as critical: 

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• Market access: New and concrete market access, especially in the major countries with which the United States does not already have free trade agreements—Japan, Malaysia, Vietnam and each of the EU member states. Each of 

these markets poses substantial, but different, challenges to manufacturers, 

from deeply embedded non-tariff barriers to tariffs and beyond. As we have seen 

with the implementation difficulties in the Korea-United States Free Trade 

Agreement (KORUS FTA), strong and detailed market-opening commitments 

matter deeply, particularly in countries that have resisted more open competition and trade liberalization. It is, therefore, critical that manufacturers across 

our most vital industry sectors see outcomes on core market access issues and 

related disciplines that will ensure fairness and effective and substantial new 

market access. Even with the EU, where tariffs are relatively low, the elimination of tariffs would result in over $10 billion in duty savings, and an even 

modest alignment of U.S. and EU regulatory standards and nontariff barriers 

could increase combined GDP by an estimated $106 billion. 

• Strong and High-Standard Rules. The core rules of our modern free trade 

agreements must actually achieve the ‘‘model of ambition’’ that the TPP leaders 

promised in 2011. In particular, intellectual property protections, from patents 

and copyrights to trademarks and trade secrets, must be state-of-the-art, fully 

enforceable and applicable to all products. Manufacturers strongly oppose any 

outcome that would provide lengthy or indeterminate transition periods for 

some countries on some types of intellectual property, whether or not based on 

development or other indicators. Strong protections consistent with U.S. law for 

duration of protection, as well as rigorous enforcement provisions for intellectual property are a vital jobs and manufacturing issue. 

Similarly, the outcomes on investment market access, protections and enforceability must also provide full protection to American investments in the TPP 

and T–TIP markets, including access to the neutral investor-state dispute settlement procedures that are contained in thousands of agreements worldwide. 

All products and sectors must be accorded the same basic neutral enforceability 

guarantees as should breaches of major investment contracts in infrastructure, 

natural resources and other domains that help drive U.S. exports into foreign 

markets. Moving backwards on these rules as some countries have proposed will 

undermine investment which is the biggest driver of U.S. exports and commerce 

overseas. 

• New Rules on Digital Trade and Fair Competition. New trade agreements must 

also reflect the globally connected economy, where digital trade and the use of 

cloud computing is increasingly critical to manufacturers, particularly small 

companies, as a means to access overseas markets. Strong trade agreement 

commitments that ensure the ability to move data across borders and that prohibit domestic localization requirements for information technology infrastructure are sought by industries across the manufacturing spectrum. As well, fair 

competition in overseas markets, including with respect to state-owned enterprises, is important to ensure manufacturers can compete successfully in the 

global market. Allowing strong standards in each of these areas to be riddled 

with exceptions will not advance America’s pro-manufacturing agenda. 

• Enforceability. Final agreements must also be fully enforceable and comprehensive. The value of our trade agreements in helping to grow manufacturers’ opportunities and competitiveness overseas is dependent on the fact that they are 

binding and enforceable. 

Strong and ambitious outcomes on market access, intellectual property, investment, cross-border data, fair competition and full enforcement are vital components 

of successful outcomes not only in the TPP and T–TIP negotiations but also other 

negotiations on which the United States may and should embark. 

Improving Manufacturers’ Global Competitiveness Requires New and 

Improved Trade Legislation and Policies 

Manufacturers in the United States face stiff competition from competitors around 

the world both in global markets and here in the United States. To improve opportunities for our manufacturers, it will be important for Congress to pass and the 

President to sign key trade legislation, including the following legislation in this 

Committee’s jurisdiction: 

• Miscellaneous Tariff Bill (MTB). The MTB is a pro-competitive piece of legislation that allows manufacturers in the U.S. to import certain manufacturing 

inputs and other products duty free when those products are not produced or 

104 

9Office of the United States Trade Representative, Snapshot of WTO Cases Involving the 

United States (May 22, 2014), accessed at 

http://www.ustr.gov/sites/default/files/Snapshot%20May.pdf. 

10 Id.; World Trade Organization, Chronological List of Dispute Cases, accessed at http:// 

www.wto.org/english/tratop_e/dispu_e/dispu_status_e.htm As USTR’s snapshot explains, the 

United States has filed 103 requests for consultation. 11 USTR, USTR Helps Win Case Against China, Helps Manufacturers Compete (March 

2014), accessed athttp://www.ustr.gov/about-us/press-office/press-releases/2014/March/USwins-victory-in-rare-earths-dispute-with-China. 12 USTR, WTO Appellate Body Affirms U.S. Victory in Trade Enforcement Dispute 

Against Argentina’s Import Licensing Restrictions (January 2015), accessed at http:// 

www.ustr.gov/about-us/press-office/press-releases/2015/January/WTO-US-Victory-Trade-Enforcement-Dispute%20Against-Argentina-Import-Licensing. 

available in the United States. This decades old program has been critical to 

support and grow manufacturing jobs in the United States by cutting costs and 

strengthening our manufacturers’ competitiveness in the global economy. The 

MTB expired over two years ago, resulting in a major $748 million tax on manufacturing in the United States. Manufacturers are urging Congress to move 

forward quickly on MTB legislation that will ensure a predictable, transparent 

and timely process. 

• Customs reauthorization. Customs reauthorization legislation is needed to 

cut red tape and expedite legitimate trade at our borders, while strengthening 

and requiring time-limited enforcement activities to prevent transshipment and 

illegitimate trade. 

• Preference legislation. The NAM has long supported well-crafted preference 

legislation, such as the Generalized System of Preferences (GSP) that expired 

on July 31, 2013. Such legislation helps developing countries expand their economic growth opportunities, while also helping manufacturers reduce costs on 

important inputs. 

Movement on this legislation is an important part of a robust trade policy that 

will advance our manufacturers’ global competitiveness. 

Enforcement of Trade Agreements and Trade Rules Is Also Critical 

Enforcement of trade rules, both domestic and those contained in international 

agreements, is also an important feature of a robust trade strategy. 

Trade Agreement Enforcement Ensures that America Gets the Bargain it 

Negotiated 

For our trade and investment agreements to be successful, it is vital to ensure 

effective enforcement of the commitments contained in those agreements by our 

trading partners and the United States to create a more level playing field. 

On the international side, the United States has worked actively through successive administrations to address market access barriers and other unfair treatment 

of U.S. exports and products. Before agreements first enter into force, the Office of 

the United States Trade Representative (USTR) works vigorously to ensure the full 

implementation of commitments. In most cases, commitments are implemented 

fully. In cases where they are not, USTR works through the consultation and ultimately the dispute settlement provisions provided in trade agreements to ensure 

full implementation. Indeed, since the WTO was established nearly two decades ago 

in 1995, the United States has brought and successfully resolved 70 of the 74 cases 

that have been concluded.9 Notably, the United States has brought more than 20 

percent of the over 480 requests for consultation made overall in the WTO.10 These 

cases have an important impact on growing manufacturing in the United States. 

For example, in March the United States won a very important WTO case that addresses manufacturers’ concerns over China’s export restrictions on rare earths that 

impeded access to such inputs.11 Most recently, the WTO Appellate Body sided with 

the United States in its complaint over Argentina’s onerous and discriminatory import licensing regime.12 The United States has pursued cases with regard to actions 

by many of our major trading partners, from the European Union, Canada and Mexico to Brazil and India. Without the underlying agreements, such strong dispute settlement outcomes that open markets and ensure fair treatment would not be possible. 

Sustained attention is needed to address other governments’ failure to implement 

their trade and investment commitments fully, including where appropriate through 

the use of WTO and FTA dispute settlement mechanisms. Whether it is a newer 

agreement, such as the Korea-U.S. Free Trade Agreement or one that has been in 

105 

force for decades, the United States should not hesitate to ensure that all trade 

agreement obligations are enforcement. 

Upholding the United States’ International Obligations at Home 

Similarly, the United States should uphold its obligations under international 

agreements and honor remedies imposed when U.S. actions are found to be out of 

compliance with those obligations. Just as we expect our trading partners to meet 

the letter of their international obligations, so should the United States. 

Most recently, the WTO has found again that the U.S. Country-of-Origin Labeling 

(COOL) regulations for meat products is discriminatory and therefore out of compliance with the United States’ WTO obligations. The NAM believes it is critical that 

the United States bring this law into compliance with its international commitments as soon as possible to avoid the trade retaliation that may be imposed on exports to our two largest markets (Canada and Mexico), which would cause serious 

economic harm to many manufacturers in the United States. To prevent such negative impacts on manufacturers in the United States, the NAM is calling upon Congress to ensure that the Administration has the authority to act quickly to suspend 

indefinitely the COOL regulations in regard to meat products if the WTO rules 

against those regulations. 

Enforcement through Investor-State Dispute Settlement (ISDS) 

With regard to the enforcement of trade and investment agreements, the NAM 

also strongly supports the continued inclusion and use as appropriate of ISDS contained in U.S. FTAs and investment treaties. ISDS is a vital enforcement tool that 

allows individual investors (whether business or non-profit) to seek enforcement of 

basic principles—such as non-discrimination, compensation for expropriatory action 

(i.e., takings) and fair treatment—before a neutral arbitration panel. ISDS is in essence an enforcement mechanism and those seeking a more level playing field for 

manufacturers in the global economy should support the inclusion of this mechanism in existing and future agreements, including the TPP and T–TIP agreements, 

as well as bilateral investment treaties (BITs), such as currently being negotiated 

with China. Such provisions should be broadly available both for the core investment rules of the underlying agreements, but also with respect to contracts and 

other investment agreements signed by investors with the foreign government. Proposals to eliminate or modify these core enforcement rules should be rejected as 

such outcomes undermine rather than strengthen a strong enforcement agenda. 

Full and Timely Enforcement of Domestic Trade Rules Is Essential 

Domestically, the NAM continues to be a strong supporter of the full and fair enforcement of our trade remedy laws that help manufacturers address governmentsubsidized and other unfair competition. These rules too are an essential part of a 

robust pro-growth and pro-manufacturing trade policy. U.S. trade remedy laws have 

long been part of the U.S. legal system and are internationally respected mechanisms, authorized by the WTO. 

It is vital that both the Department of Commerce and U.S. International Trade 

Commission exercise their authority to counteract unfair practices overseas. Full, 

effective, timely and consistent enforcement by the U.S. government of these globally recognized rules is essential to ensure manufacturers get a fair shake in the 

global economy. 

Enforcement of U.S. trade rules must occur during the investigatory and review 

stages, but these trade rules must also be enforced fully at our border. Too often, 

we hear stories of manufacturers that have spent significant time and money to utilize the trade remedy rules only to find importers that are evading these orders. 

When manufacturers request that Customs and Border Protection (CBP) investigate 

these cases of evasion, years often pass with no resolution. The Senate Trade Facilitation and Trade Enforcement Act of 2013 (S. 662) includes an important fix to this 

problem, and manufacturers continue to urge Congress to move this legislation forward. In particular, the provisions in Title III of S. 662 would help strengthen 

CBP’s authority to enforce antidumping and countervailing duty orders and to investigate effectively alleged evasion of those orders in a time-limited manner. 

Other Key Trade Issues 

The global competitiveness of manufacturers and other industries in the United 

States to expand exports and promote growth and jobs also requires movement on 

other key issues, which are outside this Committee’s jurisdiction. In particular, the 

NAM is strongly supportive of: 

106 

13 National Association of Manufacturers, The Export Credit Dimension (July 2014), 

accessed at http://www.nam.org/uploadedFiles/NAM/Site_Content/Issues/Global%20Export% 

20Credit%20Dimension%20Web.pdf. 

• The long-term reauthorization of the Export-Import (Ex-Im) Bank. The Ex-Im 

Bank is a vital tool to help grow U.S. exports and increase American jobs. As 

the official export credit agency of the United States, Ex-Im Bank assists in financing U.S. exports from thousands of American companies and bolsters our 

global competitiveness. In fact, nearly 90 percent of Export-Import Bank’s 

transactions directly support U.S. small business. While Congress passed a 

short-term extension of Ex-Im’s charter to June 2015, this short-term reauthorization is insufficient to provide U.S. exporters and their customers the certainty they need to operate effectively in the global economy where just nine 

of our major trading partners are providing more than 18 times the level of ExIm financing to our competitors overseas.13 Manufacturers are, therefore, urging action on a long-term reauthorization of the Ex-Im Bank as soon as possible. 

• Continued reform of our export control system. In 2009, the Administration embarked on a major export control reform agenda to address longstanding features of that system that undermine the competitiveness of U.S. manufacturers 

operating in the global economy. The NAM strongly supports the objectives of 

the President’s Export Control Reform Initiative: to focus federal resources on 

the threats that matter most, to bring transparency and coherence to these regulations, and to enhance the competitiveness of manufacturing and technology 

sectors in the United States. While the Administration is making great strides 

in reconciling the separate control lists, the NAM urges continued efforts to 

prioritize key policy reforms that would further streamline licensing and system 

administration, such as establishing an effective program license framework, 

deploying a truly connected information technology system across licensing 

agencies, instituting periodic reviews of current license exceptions, renewing the 

attempt to create an efficient intra-company transfer license for trusted companies and simplifying encryption controls. Accelerating implementation of multilateral regime changes and addressing the barriers to civil nuclear exports 

would also benefit U.S. security and competitiveness. 

Conclusion 

In manufacturing communities across America, the gains from trade can and should be increased. The United States achieved a record level of $1.38 trillion in 

manufactured exports last year, but we can do better so that America can expand 

manufacturing and jobs here at home. To improve the global competitiveness of 

manufacturers in the United States and grow our manufacturing economy, the NAM 

urges prompt action on TPA and on new market-opening trade and investment 

agreements to level the playing field globally, action on key legislation and policy 

reforms that will advance our global competitiveness and the full enforcement of our 

trade agreements and existing domestic trade rules. 

National Cotton Council of America 

1521 New Hampshire Avenue, N.W. 

Washington, DC 20036 

(202) 745–7805 • FAX (202) 483–4040 

www.cotton.org 

PRODUCERS • GINNERS • WAREHOUSEMEN • MERCHANTS • COTTONSEED

COOPERATIVES • MANUFACTURERS

U.S. Senate 

Finance Committee 

Hearing on U.S. Trade Policy Agenda 

January 27, 2015 

National Cotton Council of America 

Statement for the Record 

Thank you Chairman Hatch, for the opportunity to share the concerns and priorities 

of the National Cotton Council of America (NCC) within the U.S. trade agenda. This 

hearing occurs during a crucial moment for the cotton industry, where we face twin 

107 

threats on the international front from Chinese cotton policy and Turkey’s unfounded antidumping investigation of U.S. cotton. Impacts of these trade actions 

will be felt throughout the chain of production and distribution. A loss of markets 

in China and Turkey means a loss of thousands of American job’s and economic productivity. 

The NCC membership includes producers, ginners, cottonseed processors and 

merchandizers, merchants, cooperatives, warehousers and textile manufacturers, in 

seventeen states, stretching from California to Virginia. Farms and businesses directly involved in the production, distribution and processing of cotton employ almost 200,000 workers and produce direct business revenue of more than $27 billion. 

Turkey 

Turkey is a major export market for U.S. cotton, in recent years ranking as the 2nd 

or 3rd largest export customer with exports valued at $850 million. By erecting 

damaging trade barriers that reduce U.S. exports, U.S. cotton farmers will suffer 

due to lower prices. An adverse finding by Turkey would compound the already critical price situation facing U.S. cotton farmers, which is being driven by distortive 

agricultural policies administered by the Chinese government, discussed in detail 

below. For these reasons, the NCC and its member companies were surprised and 

concerned when the Turkish government self-initiated an anti-dumping investigation of U.S. cotton on October 18, 2014. 

The case appears to have been filed as political retaliation against the United States 

on matters unrelated to U.S. cotton exports. Shortly after the U.S. imposed antidumping and countervailing duties on Turkish steel during the fall of 2014, Turkey’s Minister of Economy publicly warned they would retaliate against the U.S. by 

imposing three obstacles against U.S. exports for every one imposed on Turkish exports. The Turkish authority then self-initiated the anti-dumping investigation of 

U.S. cotton despite no Turkish cotton producers being on record alleging any kind 

of injury due to U.S. cotton imports. Although it is within Turkey’s rights under the 

WTO to self-initiate, they must present ‘‘special circumstances’’ justifying the investigation. Turkey’s initial report does not provide a description of such circumstances, 

and in fact is heavily redacted. It is entirely unclear as to what data they relied 

upon or where the data originated from to present a threshold case for conducting 

an investigation. 

Turkey’s self-initiation filing included a number of other ‘‘red flags’’ that are worrisome, such as blatantly disregarding actual U.S. data and ignoring lower import 

prices and increasing market shares from other countries. Turkey also ignores price 

data from the U.S. cotton market based on an erroneous claim that U.S. price subsidies cause U.S. market prices to be an unreliable indicator of market conditions. 

The U.S. cotton futures market is widely used by international cotton traders and 

international textile mills for price discovery and risk management. 

Contacts in Turkey have said that the Turkish government is considering a ‘‘provisional’’ antidumping duty, even though they have not yet finished processing the initial industry questionnaires. Again, this raises WTO concerns: the WTO only permits a provisional duty upon a preliminary determination, which must rest on an 

assessment of adequate evidence of dumping and injury—but Turkey’s fact-finding 

effort is still at a very early stage. 

The U.S. cotton industry will show that the antidumping investigation has no merit. 

The NCC has been accepted as an ‘‘interested party’’ to the investigation and has 

already submitted a preliminary injury analysis in efforts to forestall a provisional 

duty. A detailed injury argument will be submitted to the Turkish authority in coming weeks. U.S. companies have responded in good faith to the Turkish government’s detailed questionnaires, and will continue to cooperate by providing additional information and even hosting site visits, if requested. We are confident that 

the data will clearly demonstrate that no dumping is occurring, if analyzed in an 

objective manner. When comparing like qualities of cotton, cotton offered to Turkish 

mills is priced in the same manner as cotton offered to U.S. mills or mills in other 

countries. 

We appreciate the efforts of the office of the U.S. Trade Representative, the Department of Commerce, the Department of Agriculture, and the Department of State. 

To date, all of these agencies have met with the NCC and its member companies 

and provided helpful guidance to the industry’s efforts. The State Department delivered a demarche to the Turkish government and USDA submitted comments for the 

record, both documents emphasizing the importance of transparency and following 

the WTO process for antidumping investigations, and the mutual importance of the 

108 

Turkey-U.S. trading relationship. We encourage the U.S. government to remain 

firmly engaged and to discourage the continuation of this retaliatory investigation. 

Members of Congress have also provided valuable support to the industry by raising 

the profile of this investigation through letters to the Administration and the Turkish Ambassador. 

We value the vibrant and growing economic ties between Turkey and the United 

States, but it can only continue to develop and flourish in accordance with the existing WTO rules governing international trade. USTR is key to impressing this message upon the Turkish government. 

China 

As the world’s largest cotton producer (27 percent of global production in 2013) and 

also the largest processor of raw cotton (32 percent of global mill use), China’s cotton policy has an enormous influence on the global cotton markets. China has been 

U.S. cotton’s largest export market, with approximately 35 percent of total U.S. production delivered to its mills. However, recent changes to China’s cotton policy are 

likely to disrupt this relationship. 

Over the past four years, China has significantly increased its domestic support levels well above its WTO commitments. In 2011, China began a stockpiling reserve 

program through government purchases of domestic cotton at rates well above global prices. These support prices translated to product-specific support worth between 

19–31 percent of the value of China’s production, while China’s WTO commitments 

only allow product-specific support at no more than 8.5 percent of the value of production. China now holds an estimated 63 million bales in stocks with more than 

50 million bales sitting in government-owned reserves. In contrast, all other countries hold just 39 million bales, combined. Under WTO rules, China is required to 

provide notification of domestic support levels but has not done so since the 2008 

crop. 

China controls imports of raw cotton through policies that are restrictive, opaque 

and unpredictable. China’s WTO minimum TRQ requirement is set at 4.1 million 

bales, but it supplements imports variously throughout the year. The process for determining additional quota is unknown and non-transparent. China’s imports under 

the additional quota are also generally subject to a variable level duty ranging between 5 percent and 40 percent. 

China recently revised its cotton support programs and will drastically reduce its 

imports of U.S. cotton. The support price for the largest cotton-producing province 

is set at a level more than twice the world price of cotton. Other provinces benefit 

from market support offered by the existing import policies, as well as a direct subsidy of $0.15 per pound. Together, these programs translate to product-specific support worth at least 25 percent of China’s value of production; and as much as 44 

percent if calculated at current market conditions. Moreover, the allocation of the 

import TRQ and import licensing scheme for 2014—as well as the disposition of the 

50 million bale government reserve—remains uncertain. 

The NCC strongly encourages the Administration to challenge China’s cotton policies in all avenues offered within the WTO. Its current policies raise serious concerns regarding China’s WTO obligations under the GATT, the Agreement on Agriculture, the Subsidies Agreement, and China’s WTO Accession Protocol. It is important to our industry that the U.S. government utilize all available legal tools to enforce against countries that unfairly support their domestic products to the serious 

detriment of U.S. farmers. 

Trans-Pacific Partnership 

As the Administration continues the ongoing negotiations in an effort to conclude 

to the Trans-Pacific Partnership (TPP) agreement, the U.S. cotton industry is unified behind the inclusion of a yarn forward rule of origin in TPP or any other international trade agreement. A yarn forward rule of origin requires that any product 

made with yarn produced in a country that is a party to the trade agreement may 

receive the benefits accorded to partner countries under that agreement. Failure to 

maintain a yarn forward rule of origin will damage the entire hemispheric textile 

trade that has been built under NAFTA and CAFTA–DR, which both contain the 

yarn forward rule of origin. The inclusion of Vietnam in the current TPP negotiations underscores the importance of a yarn forward rule of origin as a means to protect against textile products produced outside the partner countries from gaining 

preferential access to the U.S. market, thus resulting in severely negative impacts 

to the U.S. textile manufacturing sector. 

109 

Mr. Chairman, thank you again for holding this timely and important hearing, and 

for accepting our comments for the record. China and Turkey remain the two most 

important international markets for U.S. cotton, and it is vital to the U.S. cotton 

industry that those markets remain open and competitive. Although we appreciate 

the U.S. government’s efforts to maintain strong trading relationships with Turkey 

and China, more work is needed. And we urge that the remaining negotiations on 

the TPP agreement ensure that there is a strong yarn forward rule of origin in place 

for textile products produced in the countries that are part of the TPP agreement. 

We would be pleased to provide any additional information or answer any questions 

regarding the information provided here. Reece Langley with NCC can be contacted 

at rlangley@cotton.org or 202–745–7805. 

OUTDOOR INDUSTRY ASSOCIATION 

February 9, 2015 

The Honorable Orrin Hatch 

Chairman 

Committee on Finance 

U.S. Senate 

Washington, D.C. 20515 

The Honorable Ron Wyden 

Ranking Member 

Committee on Finance 

U.S. Senate 

Washington, D.C. 20515 

Dear Mr. Chairman and Senator Wyden: 

On behalf of the 1,400 members of Outdoor Industry Association, I am pleased to 

submit a statement for the record for the January 27, 2015 U.S. Senate Committee 

on Finance hearing ‘‘President Obama’s 2015 Trade Policy Agenda’’ with United 

States Trade Representative Michael Froman. 

The outdoor industry is recognized as a critical sector of our nation’s economy, generating $646 billion annually in U.S. consumer spending and directly supporting 6.1 

million American jobs. Our members produces some of the most innovative products 

reaching all corners of the globe and enriching people’s lives by supporting healthy 

and active lifestyles. 

OIA’s Trade Program represents the diversity of our membership, including outdoor 

companies whose products are conceived, designed, and produced in America and 

those companies that utilize global value chains to bring their products to retail 

markets. From some of the largest companies in the world, to small, family-owned 

businesses, we work to ensure that U.S. federal trade policy fosters and promotes 

a stable and predictable environment for all outdoor industry businesses, while 

seeking to lower costs for outdoor businesses and their customers. 

International trade benefits U.S. importers and domestic manufactures alike, creates new jobs, lower consumer prices and open new markets to U.S. exports. For 

its part, OIA pursues a ‘‘balanced trade policy’’ meaning that we only seek tariff 

eliminations on outdoor products that have no commercially viable domestic production, while for those products that are made in America, we promote federal policies 

that support U.S. manufacturers and help them transition to competition in a global 

economy. 

As such, the Trans-Pacific Partnership (TPP) negotiations present a tremendous opportunity for the outdoor industry. Outdoor products sourced from abroad are 

among the most highly taxed when entering the United States despite the fact that 

they face no domestic competition: the average bound tariff rate on imported goods 

is less than 3 percent, but duties on outdoor products average 14 percent or higher, 

with some as high as 40 percent. We understand the challenges in negotiating an 

agreement that balances the needs of U.S. manufactures and brands that conduct 

the research, development and innovation at home, but must manufacture their 

products abroad. 

In that regard, we have offered USTR specific suggestions on how that can be accomplished in key areas as apparel and footwear. A ‘‘one-sized fits all approach’’ for 

110 

apparel and footwear will lead to agreement that appeals to the lowest common denominator, resulting in tremendous lost opportunity for American workers and 

American innovation. 

The duty savings from eliminating these disproportionally high tariffs on outdoor 

apparel and footwear produced in the TPP region will help lower costs for consumers, fuel innovation, and create job s across the U.S. 

Like the administration, OIA must balance the interests of importers and retailers 

who source apparel and footwear from abroad and domestic manufacturers. Our proposal on outdoor apparel and footwear in the TPP will help the administration 

bridge the gap among this diverse group of stakeholders and conclude a commercially meaningful, 21st century trade agreement. With the appropriate definition of 

products, rules of origin and market access terms can be designed in a manner that 

does not diminish the transitions needed for U.S. made products. 

We understand the administration is committed to a ‘‘yarn forward’’ rule of origin 

at the core of its proposal on textiles and apparel, and we support that. Accordingly 

we have appreciated the opportunity to work with the administration on the Short 

Supply List of textiles and fabrics. Outdoor apparel products are highly innovative, 

incorporating multiple complex, highly technical fabrics. In fact, the outdoor industry is on the cutting edge of developing new fabrics not yet on the market. From 

a rules of origin perspective, we believe the Short Supply List goes a long way towards accommodating the innovation of the outdoor industry. 

We believe the next logical, and non-controversial step would be to support the immediate elimination of duties on performance apparel products that use the Short 

Supply List. These products are not import sensitive and domestic textile producers 

have not opposed tariff elimination on them because there is no commercially meaningful domestic production. At minimum, we urge the administration to support 

classification breakouts for performance apparel as identified previously in legislation introduced by Senator Ron Wyden (D–OR). 

At the same time, OIA has identified products that should receive a yarn-forward 

rule, and for which there is ample production in the U.S. 

Like outdoor apparel, outdoor footwear is innovative and complex. Yet, these products often fall within the same tariff codes as import sensitive footwear. The outdoor 

industry is deeply concerned that a ‘‘one-size fits all’’ approach will be taken for 8- 

digit classifications of the Harmonized Tariff Schedule (HTS) that, due to outdated 

classification system, lumps together import sensitive footwear with non-import sensitive performance footwear. This is a particular concern for hiking shoes and boots, 

a critical segment of the outdoor footwear market. Our members have put a lot of 

time, energy, and investment towards developing new, innovative footwear products 

that attract new outdoor enthusiasts by providing protection against inclement 

weather. 

The outdoor industry has identified certain performance footwear products that are 

not import sensitive to domestic manufacturers and should receive a tariff-shift rule 

of origin and immediate duty phase-outs. Congress has enacted most of these breakouts in the past through the miscellaneous tariff bills (MTBs) process after a thorough vetting by the administration. Failure to differentiate these products would be 

a tremendous lost opportunity, and in fact harmful to the outdoor footwear industry, 

U.S. consumers and the U.S. economy more broadly. 

For those footwear products on the import sensitive list, OIA proposes a strict rule 

of origin (NAFTA rule) and maximum duty phase-outs. 

As with other stakeholders, the outdoor industry will conduct a comprehensive review of a final TPP agreement to determine the benefits to outdoor companies and 

consumers. 

In addition, any TPP agreement should also include tough, enforceable provisions 

on the environment and labor rights. Outdoor recreation companies are at the forefront of developing sustainable supply chains that protect the environment and ensure fair labor practices. The TPP represents a significant opportunity to advance 

those standards throughout the Asia-Pacific region. The final TPP agreement must: 

• require all parties to adopt and maintain internationally recognized core labor 

standards and the provisions of multilateral environmental agreements (MEAs); 

and 

• these provisions should be subject to the same dispute settlement procedures 

as other enforceable obligations. 

111 

In order to conclude the TPP negotiations and other trade agreements, OJA understands that the administration must have Trade Promotion Authority (TPA). 

OIA supports the principle of TPA because it puts the administration in the best 

position to secure trade agreements that could have substantial benefits for the outdoor industry by eliminating tariffs and non-tariff barriers and expanding access to 

global markets. Our trading partners are unlikely to make their best offer if they 

think Congress will alter the final agreement. 

The outdoor industry also supports including additional outstanding trade items in 

a TPA package including: 

• The US OUTDOOR Act: Soon be re-introduced in the House and Senate, the 

US OUTDOOR Act will create specific definitions and separate classifications 

within the U.S. Harmonized Tariff Schedule (HTS) for ‘‘recreational performance outerwear’’ and eliminate duties on those products. The Senate bill also 

includes the Sustainable Textile and Apparel Research (STAR) Fund that will 

support the research and development of sustainable textile and apparel supply 

chains. Recreational performance outerwear is highly technical and specialized 

apparel and should no longer be classified under the same HTS codes as ready 

made, mass market apparel. According to a 2007 study by the International 

Trade Commission (ITC), there is no commercially viable domestic production 

of recreational performance outerwear. Eliminating duties on recreational performance outerwear will help lower prices, fuel innovation, and create jobs in 

the outdoor industry. It should be included in any trade package. 

• MTBs: The outdoor industry strongly supports the renewal of the miscellaneous 

tariff bill (MTB) process. MTBs have suspended duties on certain imported 

products that are proven to have no competition from U.S. manufacturers. To 

date, twenty MTBs related to the outdoor industry have resulted in savings of 

more than $30 million for outdoor companies, leading to more jobs, more innovation, and lower retail prices for outdoor enthusiasts. Failure to renew the 

most recent MTB and the tariff suspensions have forced outdoor companies to 

absorb cost increases as much as 40 percent, stifling economic growth and preventing more Americans from getting outdoors. The outdoor industry strongly 

urges Congress to provide for a clear and predictable MTB process in any trade 

package. 

• GSP Update Act: The outdoor industry supports the renewal of the Generalized 

System of Preferences program and urges Congress to include the GSP Update 

Act in that initiative. This non-controversial piece of legislation simply allows 

for backpacks and travel goods, no longer made in the U.S., to be considered 

eligible for inclusion in that program. 

Finally, we look forward to a TPA bill that includes strong consultation provisions 

and tough negotiating objectives on labor and the environment. 

As leaders in the field of sustainable business practices and social responsibility, 

OIA supports such provisions as they could give the administration sufficient leverage to secure enforceable labor and environmental provisions in our trade agreements and ensure our trading partners match international standards. 

OIA greatly appreciates the opportunity to summit a statement for this hearing and 

we look forward to working with Congress and the administration to support passage of TPA and TPP that will allow outdoor companies to lower costs for consumers, get more people outdoors, fuel innovation, and create more U.S. jobs. 

Sincerely, 

Richard W. Harper, Jr. 

Policy Advisor 

Outdoor Industry Association (OIA) 

4909 Pearl East Circle, Suite 300 

Boulder, Colorado 80301 

303.444.3353 • www.outdoorindustry.org 

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PRESIDENT OBAMA’S 2015 TRADE POLICY AGENDA 

HEARING TESTIMONY 

BEFORE THE FINANCE COMMITTEE 

OF THE 

UNITED STATE SENATE 

JANUARY 27, 2015 

BY THE 

ROCKY MOUNTAIN DISTRICT EXPORT COUNCIL 

Mr. Chairman. 

Thank you for the opportunity to submit this testimony on President Obama’s 2015 

Trade Policy Agenda and Trade Promotion Authority (TPA). 

I am Louis X. (Kip) Cheroutes, Legislative Chairman of the Rocky Mountain District 

Export Council (RMDEC), 2648 Bellaire Street, Denver, Colorado. I submit this testimony of strong support on behalf of the RMDEC. 

The RMDEC, one of 16 nationwide, is a volunteer trade advisory and advocacy body 

of the U.S. Department of Commerce. The members are small, medium and large 

exporters in Colorado and Wyoming. 

Colorado and Wyoming have much to gain with passage of TPA and the subsequent 

Trans Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (T–TIP). This testimony gives nine specific reasons to support TPA. 

1. Wyoming’s export economy, 63,000 jobs strong, is largely agricultural and mineral, being the point of origin in the global supply chain. Products go to Canada, 

Brazil, Australia, Indonesia, Chile, Mexico, Japan and elsewhere. How do TPA 

and TPP help? Soda ash is a good example. Wyoming’s main export is sodium 

carbonate, which is used to make glass, detergents and cosmetics. The market 

for these personal products is very hot in Vietnam because of the rising middle 

class but a tariff exists for Wyoming, not Chinese, soda ash. TPA and TPP will 

secure and likely increase Wyoming’s future market access by eliminating the Vietnamese tariff on soda ash. 

2. Colorado shares the same nature-based export economy. Agriculture and livestock 

are good examples. Japan enforces 1,400 separate tariff categories on U.S. beef. 

U.S. trade negotiators are currently negotiating that number down as part of TPA 

and TPP. A more fair and manageable tariff structure will likely give better market access to the 15,000 meat packers in northern Colorado. 

3. Colorado’s economy goes further. Colorado’s 2013 manufactured exports totaled 

$8.5 billion. Products went to Canada, Mexico, China, Japan and Germany in 

that order. 5,580 companies, 89 percent of which are small and medium enterprises, made those products. The likely growth of those companies is what’s at 

stake with passage of TPA. By congressional district, Denver-Aurora-Broomfield 

recorded $3.8 billion in exports, Greeley, $1.2 billion, Colorado Springs $1.1 billion, Boulder $947 million, Fort Collins-Loveland $813 million, Pueblo $142 million and Grand Junction $121 million. 

4. Colorado’s space industry leads the export way. A future TPA safeguards intellectual property for a greater range of space components approved last year for export. Computer, electronics, food and machinery follow in trade sales. 

5. Colorado’s export economy goes even further. Revenue from services, not sold 

products, is not well tallied but is likely high. Global engineering and consulting 

firms that headquarter in Colorado have a stake in TPA to ensure that their own 

intellectual data is protected. TPA will guide TPP negotiators to make that a 

high priority. 

6. Many of these engineering firms abide by the same environmental and labor values adopted by TPA. They see TPA as good business sense and a way to get the 

edge on others. 

7. Wyoming and Colorado share a unique export market that TPA will foster. This 

creative economy, from western art to outdoor recreational equipment and clothing is vibrant. Big sky, the Wild West and winter sports have great consumer 

appeal in Asia. These jobs are safeguarded and likely augmented with TPA and 

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TPP emphasis on tariff reductions, trademark and other intellectual property protections. 

8. The region’s supply chain economy for exports, not just the manufacturing itself, 

should also benefit from TPA. Getting Colorado and Wyoming exports to port depends on local miners, truckers, railway workers, overnight delivery drivers, 

warehouse builders and workers, space machinists and engineers. Their jobs depend on TPA to keep the supply chain fed. 

9. Finally, the country has been without a fundamental trade law for too long. Export risk is higher without one due to an uncertain or onerous foreign regulatory 

terrain. Enacting a TPA based on strong values is a necessary and proper role 

of government. It’s time to finish the job. Common sense suggests once enacted, 

the risk is reduced and the odds improve for regional job creation among entrepreneurs, SMEs and large companies. 

Thank you for the opportunity to submit this testimony. 

TELECOMMUNICATIONS INDUSTRY ASSOCIATION (TIA) 

ADVANCING GLOBAL COMMUNICATIONS

1320 N. Courthouse Rd., Suite 200 

Arlington, VA 22201 USA 

www.tiaonline.org 

Tel: +1.703.907.7700 

Fax: +1.703.907.7727 

January 27, 2015 

The Honorable Orrin G. Hatch 

Committee on Finance 

219 Dirksen Senate Office Building 

Washington, DC 20510 

The Honorable Ron Wyden 

Committee on Finance 

219 Dirksen Senate Office Building 

Washington, DC 20510 

Dear Chairman Hatch and Ranking Member Wyden: 

The Telecommunications Industry Association (TIA), the leading trade association 

for global manufacturers, vendors, and suppliers of information and communications 

technology (ICT), wishes to thank you for holding a hearing on ‘‘President Obama’s 

2015 Trade Policy Agenda.’’ With an ambitious trade policy agenda that includes the 

potential conclusion of the Trans-Pacific Partnership (TPP), TIA strongly supports 

the bipartisan renewal of Trade Promotion Authority (TPA) this year. Trade agreements like the TPP are critical to the telecommunications sector because they promote trade liberalizing, market-based, and technology neutral approaches in international markets, which facilitates U.S. exports and investment. 

Global investment is increasing in both wireless and fixed broadband networks. This 

global trend includes the launch of long term evolution (LTE) 4G wireless networks, 

continued growth in smartphone penetration, and fiber deployments to enhance 

fixed broadband infrastructure. Each of these developments stems from a single underlying driver—the need for greater capacity to accommodate growing global data 

transmission demands. Driven by this need, the global telecommunications market 

for equipment and related services was valued at $5.4 trillion in 2014—with about 

75 percent of the total marketplace located outside of the United States. 

The bipartisan renewal of TPA is essential to increasing the nation’s level of exports 

overall and to the growth of the U.S. ICT industry in particular. In addition, renewal of TPA presents the opportunity to address 21st century trade negotiating objectives related to digital trade and cross-border data flows, as well as the proliferation of localization barriers to trade. Moreover, experience shows that the effects of 

prior trade agreements on telecommunications equipment exports are both demonstrable and dramatic. According to TIA’s 2014–2017 ICT Market Review and Forecast, although countries having trade agreements with the United States currently 

represent only 13 percent of the overseas economy, they account for 38.6 percent of 

U.S. exports in telecommunications equipment in 2013. 

114 

Updated TPA legislation will further strengthen the partnership between Congress 

and the Administration through enhanced Congressional oversight, transparency, 

and consultations, which will ultimately result in stronger trade agreements for the 

benefit of the economy and job creation. With active negotiations to conclude the 

TPP as well as to advance the Transatlantic Trade and Investment Partnership and 

Trade in Services Agreement, TPA renewal will send a strong signal to other negotiating parties on the priority the United States places on high-standard trade agreements that enhance trade liberalization and market access for U.S. industry. 

We appreciate the attention of the Committee on Finance on the Administration’s 

2015 Trade Policy Agenda because trade is critical to job creation and the expansion 

of the U.S. economy. In addition to the bipartisan renewal of TPA, we would also 

underscore that the United States must ensure that other countries live up to their 

obligations under the World Trade Organization or other agreements, and in particular, refrain from implementing localization barriers to trade, including requirements for the local storage or processing of data. 

Thank you again for your work on these important issues related to the global 

competiveness of the U.S. ICT industry, and we look forward to working with you 

to ensure that TPA is enacted in 2015. For more information, please contact 

Danielle Coffey at 703–907–7734 or by email at DCoffey@tiaonline.org. 

Regards, 

Scott Belcher 

Chief Executive Officer 

Telecommunications Industry Association 

Statement 

of the 

U.S. Chamber 

of Commerce 

ON: The U.S. Trade Policy Agenda in 2015 

TO: U.S. House of Representatives Committee on Ways and Means 

U.S. Senate Committee on Finance 

DATE: January 27, 2015 

1615 H Street NW • Washington, DC • 20062 

The Chamber’s mission is to advance human progress through an economic, 

political and social system based on individual freedom, 

incentive, initiative, opportunity and responsibility. 

On the occasion of the annual hearings of the House Committee on Ways and 

Means and Senate Committee on Finance on the U.S. trade policy agenda, the U.S. 

Chamber of Commerce is pleased to take this opportunity to offer its own views and 

those of its members on the top priorities for U.S. trade policy in 2015. The Chamber is the world’s largest business federation, representing the interests of more 

than three million businesses of all sizes, sectors, and regions, as well as state and 

local chambers and industry associations. 

In the Chamber’s view, reinvigorating economic growth and creating good jobs are 

the nation’s top priorities. Approximately 17.7 million Americans are unemployed, 

underemployed, or have given up looking for work. Participation in the workforce 

stands at 62.7%, the lowest since 1978, reflecting a significant level of discouragement. 

World trade must play a central role in reaching this job-creation goal. After all, 

outside our borders are markets that represent 80% of the world’s purchasing 

power, 92% of its economic growth, and 95% of its consumers. The resulting opporVerDate Mar 15 2010 20:42 Jan 27, 2016 Jkt 000000 PO 00000 Frm 00118 Fmt 6601 Sfmt 6621 R:\DOCS\98343.000 TIMD
115 

tunities are immense, and many Americans are already seizing them: One in four 

manufacturing jobs depends on exports, and one in three acres on American farms 

is planted for hungry consumers overseas. 

A Level Playing Field for Trade 

While the United States receives substantial benefits from trade, there is more 

than a grain of truth in the observation that the international playing field is unfairly tilted against American workers. The U.S. market is largely open to imports 

from around the world, but other countries continue to levy tariffs on U.S. exports 

that in some cases are quite high, and foreign governments have erected other kinds 

of barriers against U.S. goods and services. 

Americans rightly sense that this status quo is unfair to U.S. workers, farmers, 

and businesses. U.S. exporters face higher tariffs abroad than nearly all our trade 

competitors. The United States received a rank of 130th among 138 economies in 

terms of ‘‘tariffs faced’’ by its exports, according to the World Economic Forum’s 

Global Enabling Trade Report. That means U.S. exporters are often at a marked 

disadvantage to our competitors based in other countries. In addition, a thicket of 

non-tariff barriers adds to the burden exporters face. 

No one wants to go into a basketball game down by a dozen points from the tipoff—but that is exactly what American exporters do every day. These barriers are 

particularly burdensome for America’s small- and medium-sized companies, approximately 300,000 of which are exporters. The U.S. Chamber believes that American 

workers, farmers, and companies must be allowed to operate on a level playing field 

when it comes to trade. 

Benefits of U.S. Trade Agreements 

The good news is that America’s trade agreements do a great job creating a level 

playing field—and tremendous commercial gains are the proof in the pudding. According to data from the U.S. Department of Commerce, nearly half of U.S. exports 

go to countries with which the United States has free-trade agreements (FTAs) even 

though they represent about 10% of global GDP. By tearing down foreign barriers 

to U.S. products, these agreements have a proven ability to make big markets even 

out of small economies. 

The United States has entered into FTAs with 20 countries around the globe: 

Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, the Dominican Republic, 

El Salvador, Guatemala, Honduras, Israel, Jordan, Mexico, Morocco, Nicaragua, 

Oman, Panama, Peru, Singapore, and South Korea. 

To settle once and for all the debate over whether these FTAs have benefitted 

American workers and companies, the U.S. Chamber recently released a study entitled Opening Markets, Creating Jobs: Estimated U.S. Employment Effects of Trade 

with FTA Partners. The study examined U.S. FTAs implemented with a total of 14 

countries. It employed a widely used economic model known as the Global Trade 

Analysis Project (GTAP), which is also used by the numerous federal agencies, the 

U.S. International Trade Commission, and the World Trade Organization (WTO). 

The results of this comprehensive study are impressive: 17.7 million American 

jobs depend on trade with these 14 countries; of this total, 5.4 million U.S. jobs are 

supported by the increase in trade generated by the FTAs. No other budget neutral 

initiative undertaken by the U.S. government has generated jobs on a scale comparable to these FTAs, with the exception of the multilateral trade liberalization 

begun in 1947. 

The trade balance is a poor measure of the success of these agreements, but the 

trade deficit is often cited by trade skeptics as a principal reason why the United 

States should not negotiate additional FTAs. However, taken as a group, the United 

States ran a trade surplus with its FTA partner countries in 2012 and 2013, and 

this surplus has grown since then. In fact, the United States has recorded a trade 

surplus in manufactured goods with its FTA partner countries for each of the past 

five years, according to the U.S. Department of Commerce. This surplus reached $27 

billion in 2009 and had expanded to $61 billion by 2013. 

Broadly, trade has been a lifeline for the U.S. economy in recent years. Exports 

have risen by more than 50% over the past five years, and one-third of the American jobs created in this period are in industries that depend on trade. However, 

the picture is not all rosy. U.S. trade is up, but we are still falling behind our competition. The U.S. share of global exports fell from 18% in 2000 to 12% in 2010. 

What can we do about this? 

116 

Trade Promotion Authority 

First, Congress should approve legislation to renew Trade Promotion Authority 

(TPA). TPA is a vital tool to help Americans sell their goods and services to the 95% 

of the world’s customers living outside our borders. Without TPA, we simply cannot 

enter into new trade agreements. We are excited to see that Congress is preparing 

to consider legislation to renew TPA, which promises to spur economic growth and 

job creation at home. 

The case for TPA is simple. In today’s tough international markets, we need our 

trade negotiators to tear down the foreign tariffs and other barriers that too often 

shut out U.S. products. That is what trade agreements do. However, to secure new 

growth-creating trade pacts such as the agreements now under negotiation, Congress must first approve TPA. 

While the Constitution gives the president authority to negotiate with foreign governments, it gives Congress authority to regulate international trade. TPA allows 

the Congress to show leadership on trade policy by doing three important things: 

(1) It allows Congress to set negotiating objectives for new trade pacts; (2) it requires the executive branch to consult extensively with Congress during negotiations; and (3) it gives Congress the final say on any trade agreement in the form 

of an up-or-down vote. The result is a true partnership stretching the length of 

Pennsylvania Avenue. 

Without TPA, the United States is relegated to the sidelines as other nations negotiate trade agreements without us—putting American workers, farmers, and companies at a competitive disadvantage. According to the World Trade Organization 

(WTO), 398 bilateral or plurilateral FTAs are in force around the globe today, but, 

as noted, the United States is a party to just 14 such agreements covering 20 countries. 

If we fail to renew TPA, U.S. workers and companies will be left at a sharp disadvantage. To oppose TPA is to guarantee that foreign markets remain closed to 

U.S. exports. To reject TPA is to accept a playing field skewed against American 

workers and companies. 

Congress has granted every president from Franklin D. Roosevelt to George W. 

Bush the authority to negotiate market-opening trade agreements in consultation 

with Congress. However, TPA lapsed in 2007. That is unacceptable; every American 

president should have TPA. 

As noted, TPA is an opportunity to provide guidance to the administration on negotiating objectives for new trade agreements. Some of these are simple: Lowering 

tariffs on our goods when they enter foreign markets will allow us to be more competitive with local suppliers. 

The Trans-Pacific Partnership 

And how should TPA be used? The first priority is the Trans-Pacific Partnership 

(TPP). 

As U.S. companies scour the globe for consumers, the booming Asia-Pacific region 

stands out. Over the last two decades, the region’s middle class grew by 2 billion 

people, and their spending power is greater than ever. That number is expected to 

rise by another 1.2 billion by 2020. According to the International Monetary Fund, 

the world economy will grow by $21.6 trillion over the next five years, and nearly 

half of that growth will be in Asia. 

U.S. businesses and workers need better access to those lucrative markets if they 

are going to share in this dramatic growth. But U.S. companies are falling behind 

in the Asia-Pacific. While U.S. exports to the Asia-Pacific market steadily increased 

from 2000 to 2010, America’s share of the region’s imports declined by about 43%, 

according to the think tank Third Way. In fact, the growth in U.S. exports to Asia 

lagged overall U.S. export growth in that period. 

One reason U.S. companies have lost market share in the Asia-Pacific region is 

that many countries maintain steep barriers against U.S. exports. A typical Southeast Asian country imposes tariffs that are five times higher than the U.S. average 

while its duties on agricultural products soar into the triple digits. In addition, a 

web of nontariff and regulatory barriers block market access in many countries. 

Trade agreements are crafted to overcome these barriers. But what happens if 

other countries make trade deals among themselves and leave the United States on 

the outside, looking in? The number of trade accords between Asian countries 

117 

surged from three in 2000 to more than 50 in 2011. Some 80 more are in the pipeline. Meanwhile, the United States has just three trade agreements in Asia. 

This challenge is growing: 16 countries are negotiating a trade deal called the Regional Comprehensive Economic Partnership (RCEP). It includes Australia, China, 

India, Japan, Korea, and New Zealand as well as the 10 ASEAN countries—but not 

the United States. 

The Trans-Pacific Partnership (TPP) is America’s best chance to ensure the 

United States is not stuck on the outside—looking in—as Asia-Pacific nations pursue new trade accords among themselves. Its objective is to achieve a comprehensive, high-standard, and commercially meaningful trade and investment agreement 

with 11 other Asia-Pacific nations, including Australia, Brunei, Japan, Malaysia, 

New Zealand, Singapore, and Vietnam. It also includes Canada, Mexico, Peru, and 

Chile, thus offering a chance to integrate existing U.S. trade agreements in the 

Americas. 

The TPP must be a comprehensive agreement. In trade talks, whenever one party 

excludes a given commodity or sector from an agreement, others follow suit, limiting 

its reach. For the United States to achieve the goal of a true 21st century agreement—with state-of-the-art rules on digital trade, state-owned enterprises, investment, and other key areas—its negotiators must hold fast to the goal of a comprehensive accord. 

One U.S. priority is to ensure the TPP protects intellectual property (IP), which 

plays a vital role in driving economic growth, jobs, and competitiveness. According 

to the U.S. Department of Commerce, IP-intensive companies account for more than 

$5 trillion of U.S. GDP, drive 60% of U.S. exports, and support 40 million American 

jobs. To build on these strengths, the TPP must include robust IP protection and 

enforcement provisions that build on the U.S. Free Trade Agreement and provide 

12 years of data protection for biologics consistent with U.S. law. 

The TPP also needs to reflect how goods are produced in the 21st century using 

global value chains. Today, the goods we buy are usually labeled ‘‘Imported’’ or 

‘‘Made in the USA’’—with no middle ground. However, companies often rely on global value chains that span the Pacific to hone their competitiveness. 

The United States is a principal beneficiary of these supply chains. One recent 

study found that 70% of the final retail price of apparel assembled in Asia is created 

by American innovators, designers, and retailers. Making customs and border procedures more efficient and enacting other trade facilitation reforms will remove sand 

from the gears of global value chains and enhance U.S. competitiveness. 

Completing the TPP would pay huge dividends for the United States. The agreement would significantly improve U.S. companies’ access to the Asia-Pacific region, 

which is projected to import nearly $10 trillion worth of goods in 2020. A study by 

the Peterson Institute for International Economics estimates the trade agreement 

could boost U.S. exports by $124 billion by 2025, generating hundreds of thousands 

of American jobs. 

Working closely with the Office of the U.S. Trade Representative (USTR), the 

Chamber has led the business community’s advocacy for the inclusion of strong disciplines in the TPP trade agreement on intellectual property, due process in antitrust enforcement, state-owned enterprises, and regulatory coherence. Also, overcoming the tyranny of small differences between regulations in the United States 

and those in key markets would reduce costs for small and mid-sized companies, 

for which these expenses loom especially large. Companies would see an easier, less 

costly path to complying with standards and regulations in a meaningful way. 

The Transatlantic Trade and Investment Partnership 

As we consider new trade accords with our biggest commercial partners, Europe 

calls out for attention. Indeed, the European Union is by far America’s largest commercial partner. 

Together, the United States and the European Union account for nearly half of 

global economic output, with each producing approximately $17 trillion in GDP. 

Total U.S.–EU commerce—including trade in goods and services and sales by foreign affiliates—tops $6.5 trillion annually and employs 15 million Americans and 

Europeans. 

The U.S.–EU investment relationship is also without peer. Companies headquartered in EU Member States had invested nearly $1.7 trillion in the United 

States by the end of 2013 and directly employ more than 3.5 million Americans. 

118 

Similarly, U.S. firms have invested $2.4 trillion in the EU—a sum representing 

more than half of all U.S. investment abroad. It’s also nearly 40 times as much as 

U.S. companies have invested in China. Because of this unique investment-based relationship, approximately 40% of U.S.–EU trade is intra-industry and intra-firm, 

which means that removing barriers to this trade will substantially boost the competitiveness of our companies in global markets. 

The United States and the Member States of the EU share common values as 

strong democracies with an enduring commitment to civil liberties and the rule of 

law. We uphold similar social, labor, and environmental standards in our laws and 

regulations. 

For these reasons and more, the United States and the EU have launched negotiations for a comprehensive and ambitious Trans-Atlantic Trade and Investment 

Partnership (TTIP). The goal is to eliminate tariffs; open up services, investment, 

and procurement; and promote regulatory cooperation to ensure high levels of 

health, safety, and environmental protection while cutting unnecessary costs. 

The benefits could be immense. The sheer volume of transatlantic commerce is so 

large that eliminating today’s relatively modest trade barriers could bring big benefits. According to the London-based Centre for Economic Policy Research (CEPR), 

the TTIP would boost U.S. exports to the EU by $300 billion annually, add $125 

billion to U.S. GDP each year, and increase the purchasing power of the typical 

American family by nearly $900—with similar benefits for Europeans. 

One key goal in the negotiations is to tackle regulatory barriers to trade. Companies selling their products on both sides of the Atlantic incur high costs complying 

with both U.S. and European regulations, even when they are very similar. 

For example, U.S. automakers run crash tests to comply with U.S. safety regulations but must do so a second time to comply with EU standards—and vice versa. 

Mutual recognition of these regulations would save consumers up to 7% on each car 

or truck and enhance the global competitiveness of U.S. and European companies. 

TTIP is also an opportunity to raise global standards. With a combined GDP of 

more than $34 trillion, the sheer size of the transatlantic economy will incentivize 

other countries to look to standards set in the TTIP. Accordingly, the United States 

and the EU should establish a high bar in such areas as protecting intellectual 

property, cultivating the digital economy, and combating trade and investment protectionism. 

Refusing to pursue this agreement would exact a price as other countries enter 

into new trade pacts with the EU. Already, the EU has dozens of FTAs in force with 

such countries as Mexico, Central America, Colombia, South Africa, and South 

Korea. It has concluded negotiations for additional agreements with Canada, Singapore, Ukraine, and others. The EU is currently in negotiations with India, Japan, 

Malaysia, Thailand, Vietnam, and the Mercosur bloc. Without a trade agreement in 

place with the EU, U.S. workers and companies could be put at a disadvantage in 

the giant European marketplace. 

The Trade in Services Agreement 

While it has not made national headlines, the United States has joined with more 

than 50 other countries to launch negotiations for a high-standard trade agreement 

in services dubbed the Trade in Services Agreement (TISA). This exciting new accord has the potential to ignite economic growth and job creation in the United 

States and abroad. 

Services generate about 75% of U.S. economic output and 80% of U.S. private sector employment. The United States is by far the world’s largest exporter of services, 

which surpassed $682 billion in 2013. In addition, services sales by foreign affiliates 

of U.S. multinational corporations topped $1 trillion. Combined, total sales of U.S. 

services abroad reached approximately $1.7 trillion in 2013. The United States is 

home to large numbers of successful services firms in such sectors as audiovisual, 

banking, energy services, express delivery, information technology, insurance, and 

telecommunications. 

Many jobs in services pay well. For instance, approximately 18 million Americans 

are employed in business services such as software, architectural services, engineering and project management services, and insurance—all of which generate billions 

of dollars in exports. Wages in these sectors are 20% higher on average than those 

in manufacturing, which employs only two-thirds as many American workers. 

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Even so, the potential for service industries to engage in international trade is 

almost untapped. One in four U.S. factories exports, but just one in every 20 providers of business services does so. Just 3% of U.S. services output is exported, according to the Peterson Institute for International Economics. 

In this context, America’s FTAs have provided significant gains for U.S. service 

providers. These agreements have expanded access to foreign markets for cross-border sales of services and barred discrimination against service providers on the 

basis of their nationality. They have also opened up services sectors that had previously been closed to foreign investment and ushered in greater transparency in 

the regulations that set the rules of the road for services markets. 

The chief goals of the United States in TISA are to expand access to foreign markets for U.S. service industries and prohibit discrimination against American service 

providers in foreign markets. In addition, the TISA will put in place rules to prevent 

regulations from being used as disguised trade barriers that shut out U.S. services 

exports. 

The TISA also aims to safeguard cross-border data flows. In today’s global economy, companies often move data across borders to create new products, enhance 

productivity, deter fraud, protect consumers, and grow their business. This is particularly important for services, many of which were considered ‘‘non-tradeable’’ before the advent of the Internet. Recent studies estimate that within ten years products and services reliant on cross-border data flows will add over $1 trillion annually to the global economy, with the United States at the fore. To seize these benefits, the TISA should prohibit restrictions on legitimate cross-border information 

flows and bar local infrastructure mandates relating to data storage. 

Finally, the TISA should include rules to ensure that private companies are not 

put at a disadvantage when they compete with state-owned enterprises (SOEs) and 

other national champions. It should guard against anti-competitive behavior by 

SOEs. 

The payoff from the TISA could be huge. Eliminating barriers to trade in services 

could boost U.S. services exports by as much as $860 billion—up from 2013’s record 

$682 billion—to as much as $1.4 trillion, according to the Peterson Institute. Such 

a dramatic increase could create as many as three million American jobs. 

The TISA’s potential to drive economic growth and job creation in the United 

States and beyond is significant. The Chamber is committed to working closely with 

U.S. negotiators, foreign governments, and the Congress to press for a strong agreement. 

The World Trade Organization 

The U.S. Chamber remains firmly committed to the global rules-based trading 

system embodied by the World Trade Organization (WTO). In the view of Chamber 

members, the U.S. business community needs the WTO today as much as ever. Its 

rules inform national policy at home and abroad, and its dispute settlement system 

commands global respect. 

The multilateral trading system has benefitted the entire world. Eight successful 

multilateral negotiating rounds have helped increase world trade from $58 billion 

in 1948 to $22 trillion today. This is a 40-fold increase in real terms, and it has 

helped boost incomes in country after country. 

In recent years, the long impasse in the Doha Development Agenda negotiations 

led many to call into question the WTO’s role as a forum for market-opening trade 

negotiations. In this context, it is difficult to exaggerate the importance of the Trade 

Facilitation Agreement (TFA), the first multilateral trade agreement since the organization’s creation in 1995. On November 27, 2014, the WTO General Council 

unanimously approved a protocol to implement the TFA, and the WTO’s 160 Member States are now in the process of ratifying it. 

The TFA is a cost-cutting, competition-enhancing, anti-corruption agreement that 

will streamline the passage of goods across borders by cutting red tape and bureaucracy and establishing common approaches to clearing goods through customs. The 

Peterson Institute for International Economics has estimated it could boost the 

world economy by as much as $1 trillion and generate as many as 21 million jobs 

globally. 

The meeting in Geneva followed the November 13 announcement by U.S. and Indian trade officials that they had overcome obstacles preventing implementation of 

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the WTO Bali Package, which includes the TFA and understandings on food security and development. 

The Chamber applauded these developments. We have been pressing for a commercially meaningful TFA in business delegations to Geneva over the past two 

years, at the Bali Ministerial, and in meetings with foreign officials in Washington 

and other capitals, notably with Indian officials. 

Similarly, the Chamber welcomed the news on November 10 that the United 

States and China had reached agreement on expanding the array of goods covered 

by the WTO Information Technology Agreement (ITA). The ITA negotiations were 

suspended after China demanded that half of all the proposed tariff lines be dropped 

from consideration or subjected to extraordinarily long phase-outs. While continuing 

disagreements continue over a small number of products—notably between China 

and Korea—we are optimistic that these negotiations can be concluded expeditiously. 

In the original ITA, a group of 29 countries agreed to tariff-free trade for specific 

IT products; today, 70 countries are members, and they account for 97% of world 

trade in IT products, which has reached about $4 trillion annually (or nearly onefifth of global merchandise trade). Today’s negotiations would eliminate duties from 

additional tariff lines, including for technology products that simply didn’t exist in 

1996. 

The Office of the U.S. Trade Representative reports that more than 200 tariff 

lines will be reduced to zero under an expanded ITA: ‘‘Medical equipment, GPS devices, video game consoles, computer software and next generation semiconductors 

are among the high-tech products that will see tariff elimination.’’ The expanded 

ITA would eliminate tariffs on approximately $1 trillion worth of tech goods, a sum 

greater than global trade in automobiles and three times greater than trade in 

clothing, the WTO has observed. 

However, the deal is not yet final. The U.S.-China understanding was presented 

to the other 52 economies involved in the ITA negotiations in December, but the 

parties were unable to come to a conclusion despite coming very close. However, negotiators are optimistic that a final deal between China and Korea involving one 

or two products could allow the agreement to be wrapped up. 

The Chamber has worked over the past two years to build support for an ambitious expansion of the ITA. Chamber delegations traveled to Geneva to meet with 

negotiators from dozens of countries and have also done so in missions to foreign 

capitals, especially Beijing. 

Separately, the United States and 13 other WTO Members, including China and 

the 28 Member States of the European Union, last year launched a new initiative 

to eliminate tariffs on environmental goods. These countries account for 86% of global trade in environmental goods. The initiative aims to build on the APEC Leaders’ 

commitment to reduce tariffs on the APEC List of 54 Environmental Goods to make 

these technologies cheaper and more accessible. 

The Chamber welcomed the initiative. Eliminating barriers to trade in environmental goods such as solar panels, gas and wind turbines, and products to control 

air pollution and treat wastewater is both pro-environment and pro-growth. 

Total global trade in environmental goods approaches $1 trillion annually, but 

some countries currently apply tariffs to these goods as high as 35%, discouraging 

their use. The countries taking part in this initiative have begun to reach out to 

other countries to encourage them to join in. 

Other Trade Priorities Before Congress 

In addition, Congress should move quickly to renew the Generalized System of 

Preferences (GSP), which expired on July 31, 2013. Since 1976, GSP has promoted 

economic growth in more than 120 developing countries by providing duty-free access to the U.S. market for thousands of selected products. In 2012, U.S. imports 

under GSP reached $20 billion. 

GSP helps keep U.S. manufacturers and their suppliers competitive. Approximately three-quarters of U.S. imports using GSP are raw materials, parts and components, or machinery and equipment used by U.S. companies to manufacture goods 

in the United States for domestic consumption or for export. The products coming 

in under GSP generally do not compete with U.S.-made goods in any significant 

way. According to a 2006 U.S. Chamber of Commerce study, over 80,000 American 

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jobs are associated with moving GSP imports from the docks to farmers, manufacturers, and retail shelves. 

The Chamber is also pushing for reauthorization of the African Growth and 

Opportunity Act (AGOA), which will expire on September 30, 2015. Similar to 

GSP, AGOA benefits not only the economies of sub-Saharan Africa but U.S. companies and consumers here at home. 

Moving this bill sooner rather than later will avert disruption of trade flows and 

afford companies the certainty they need to make investments and sourcing decisions. Moreover, as the first and only economic policy platform that exists between 

the United States and sub-Saharan Africa, AGOA’s looming expiration weighs heavily on U.S. relations with the region and threatens to undermine the gains that African economies have made under this program. 

The Chamber encourages Congress to begin work now to extend AGOA beyond 

its scheduled expiration next year. In the past decade, AGOA’s multiple renewals 

have been limited to modest increments of time, which has limited the scope of its 

success. 

On an issue also of importance for the textile and apparel sector, the Chamber 

supports renewal of the recently expired Tariff Preference Level (TPL) granted 

to Nicaragua under the U.S.-Dominican Republic-Central America Free Trade 

Agreement (CAFTA–DR). The TPL allowed apparel made of certain cotton and manmade fiber to enter the U.S. duty free if it was assembled in Nicaragua, regardless 

of the origin of the fabrics. This measure supported thousands of jobs in the United 

States and Nicaragua. It should be renewed swiftly. 

Further, the Chamber strongly supports the Miscellaneous Tariff Bill (MTB), 

which provides relief from tariffs levied on imported materials or intermediate products that are essential to U.S. manufacturers but unavailable from domestic sources. 

Tens of thousands of American workers and hundreds of American companies depend on the MTB for relief from tariffs that serve only to raise costs for U.S. manufacturers and dull their competitive edge. The last MTB supported an estimated 

90,000 American jobs; the latest bill could benefit twice as many workers. 

In the view of some, the MTB’s duty suspensions are earmarks because they provide a ‘‘limited tariff benefit,’’ which is defined under House rules as benefiting 10 

or fewer entities. In fact, the MTB’s benefits are not limited: Duty suspensions are 

available to all importers of the product. The bill makes no appropriation of public 

funds; it merely suspends a tariff that serves only to undermine U.S. competitiveness. The MTB is a tax cut, not an earmark. 

Since the expiration of the last MTB on December 31, 2012, U.S. businesses both 

large and small have faced higher costs for imported inputs not available from domestic sources. The Chamber urges Congress to renew the MTB and lift the burden 

of these damaging tariffs. 

In addition, the Chamber strongly supports efforts to modernize our own borders 

and to facilitate trade and travel through customs reauthorization legislation. A 

bill to reauthorize U.S. Customs and Border Protection is long overdue as the dramatic spread in global supply chains has made trade facilitation more important to 

business competitiveness. 

Technological progress and falling transportation costs—coupled with companies’ 

need to access resources, labor, and markets—have pushed companies to source 

many raw materials, intermediate goods, and other inputs from locations around the 

world. Outdated customs procedures can raise costs for U.S. businesses that rely on 

global supply chains to access these inputs and to reach new consumer markets. 

Making improvements to customs procedures to ease cross-border friction will 

smooth the flow of trade and ensure the timely delivery of inputs and final products. 

These reforms could also help small- and medium-sized businesses access foreign 

markets. 

The Chamber is eager to advance legislation in the 114th Congress to promote 

trade facilitation, modernize customs processes, improve enforcement of customs 

and trade laws, advance cooperation among government agencies, enhance intellectual property rights enforcement, and set the global standard for border management. There is bipartisan support for this legislation, and we hope to see it move 

soon. 

Finally, the Chamber urges Congress to defuse the threat to billions of dollars’ 

worth of U.S. exports in the Country-of-Origin-Labeling (COOL) dispute. Over 

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the past few years, a series of WTO dispute settlement panels has ruled that the 

U.S. COOL rule on muscle cuts of meat violates obligations the United States has 

accepted as a member of the WTO. 

Canada and Mexico, which brought the dispute, are the two largest markets for 

U.S. exports. With this ruling in hand, the WTO is now on track to authorize our 

two North American neighbors to levy retaliatory tariffs against a broad array of 

U.S. agricultural and manufactured products. The Chamber shares the growing 

sense of concern in Congress that the threat of trade retaliation is real. In fact, retaliation may be just six months away. A list of products likely to be targeted by 

Canada and Mexico and the potential economic impact for each state may be found 

on an interactive map at www.COOLreform.com. The value of American exports 

subject to retaliation could top $2 billion. 

The Chamber and our allies in the broad-based COOL Reform coalition urge Congress to act swiftly to avert the threat of retaliation by bringing the United States 

into compliance with obligations the United States has undertaken as a member of 

the WTO. 

Conclusion 

To conclude, the United States cannot afford to sit on the sidelines while others 

set the rules of world trade. To create the jobs, growth, and prosperity our children 

need, we need to set the agenda. Otherwise, our workers and businesses will miss 

out on huge opportunities. 

We need a laser-like focus on access to foreign markets. We need to renew Trade 

Promotion Authority. Then, Congress and the administration should use this legislation to pursue new trade agreements to ensure that international commerce is fair. 

The trans-Pacific, trans-Atlantic, services, and WTO trade agreements now being 

negotiated represent a once in a lifetime opportunity to tear down the walls that 

have shut American goods and services out of foreign markets for so long. 

Finally, we need to ensure that all our trade agreements are fully enforced. Trade 

agreements are not worth the paper they are written on if they are not fully enforced. 

The bottom line is simple: Without a pro-active and determined trade agenda, 

American workers and businesses will miss out on huge opportunities. U.S. companies and the workers they employ will be shut out of foreign markets by unfair foreign trade barriers. Our standard of living and our standing in the world will suffer. 

The Chamber looks forward to working with Congress and the administration to 

advance a bold trade agenda to generate growth, opportunity, and jobs. 

UNITED STATES COUNCIL FOR 

INTERNATIONAL BUSINESS (USCIB) 

Washington Office 

1400 K Street, N.W., Suite 450 

Washington, D.C. 20005 

202.371.1316 tel 

202.371.8249 fax 

www.uscib.org 

Global Business Leadership as the U.S. Affiliate of: 

International Chamber of Commerce (ICC) 

International Organization of Employers (IOE) 

Business and Industry Advisory Committee (BIAC) to the OECD 

ATA Carnet System 

Senate Committee on Finance 

Attn. Editorial and Document Section 

Room SD–219 

Dirksen Senate Office Building 

Washington, DC 20510–6200 

February 10, 2015 

STATEMENT FOR THE RECORD 

RE: Full Committee Hearing on President Obama’s 2015 Trade Policy Agenda, 

January 27, 2015, 10:00am, Dirksen Senate Office Building, Room 215 

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The United States Council for International Business (USCIB) strongly supports 

an ambitious, proactive U.S. trade agenda to advance our national economy and promote American business at home and abroad. USCIB, as a trade association representing over 300 multinational corporations, associations and law firms, works 

with our members in policy areas spanning trade and investment, customs and 

trade facilitation, environmental issues, information and communications technology, intellectual property rights, product policy, agriculture, tax and much more. 

As the American affiliate of the International Chamber of Commerce (ICC), the 

Business and Industry Advisory Committee to the OECD (BIAC), and the International Organization of Employers (IOE), we advocate for open trade on behalf of 

U.S. business in the World Trade Organization (WTO) and other intergovernmental 

bodies. 

USCIB and its member companies are committed to strengthening a rules-based 

global trading and investment system through further opening of international 

markets, continuing trade and investment liberalization, and removing barriers 

American companies face around the world. To that end, the USCIB 2015 Trade and 

Investment Agenda along with the USCIB 2015 Customs and Trade Facilitation Priorities and Goals outline five areas for action by our members to advance these 

goals: 

• Press for an ambitious U.S. trade agenda that improves access to major economies and addresses emerging protectionist polices. 

• Promote global investment policies that open markets and level the playing 

field for U.S. companies. 

• Support efforts by the WTO to rebuild confidence and credibility through concrete action on specific negotiations. 

• Leverage USCIB international platforms to build global business support for addressing key trade and investment policy concerns. 

• Streamline trade at the borders by actively supporting Customs Reauthorization legislation and implementation of the WTO Trade Facilitation Agreement. 

USCIB and its members look forward to working with the Obama Administration, 

especially U.S. Trade Representative Ambassador Froman and his team; the Congress; business; other stakeholders, and governmental organizations to realize our 

mutual goals of growing the American economy and creating jobs. Specifically, 

USCIB looks forward to working with USTR and the Administration on completing 

the TransPacific Partnership (TPP), substantially advancing negotiations in the 

Transatlantic Trade and Investment Partnership (TTIP) with the European Union, 

concluding the Trade in International Services Agreement (TiSA), and working with 

growing trading partners such as China to conclude Bilateral Investment Treaties 

(BITs). We have been active in providing stakeholder input on these efforts, in policy recommendations, through letters and in meetings with negotiators. 

Most urgently, USCIB and our members believe that Trade Promotion Authority 

(TPA) legislation must be approved by Congress early in 2015. TPA is critical to 

moving forward on the trade agreements listed above with guidance on important 

negotiating objectives articulated by Congress. TPA would enhance America’s competitiveness in the global economy as well as strengthen our commercial and strategic relations around the world. USCIB has been advocating passage of this legislation and will continue to employ its resources to achieve this objective. Additionally, 

we believe the passage of customs reauthorization is critical to the facilitation of 

trade and ensuring a faster clearance of goods at the border. 

In addition to supporting a strong U.S. trade agenda, USCIB believes that multilateral approaches to trade can be the most effective means for opening global markets and leveling the playing field for U.S. companies. Directly and through our 

international affiliate organizations, USCIB supports a strong WTO. Successful ratification and implementation of the Trade Facilitation Agreement will provide a 

major boost to the work of the WTO and we are leading private sector engagement 

with the relevant government agencies to ensure a swift and positive outcome. We 

are also leading U.S. business efforts in support of completing the Environmental 

Goods Agreement this year in the WTO and we continue to support the conclusion 

of the Information Technology Agreement expansion. Success in these agreements 

along with progress on a post-Bali agenda would rebuild confidence in and the credibility of the WTO. 

Through U.S. trade negotiations, the work at the WTO, and other international 

venues, USCIB will seek to address a growing list of trade and investment barriers 

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that its members encounter globally such as: localization requirements, restrictions 

on the cross-border flow of data, regulatory impediments, unfair competition from 

state-owned enterprises, and customs-related challenges at the border. USCIB will 

leverage its unique relationships with the ICC, BIAC, and IOE to coordinate our efforts with business associations in other countries to address these issues with governments in other countries as a complement to our work with the U.S. government. 

More details on the priorities and workplan for USCIB are included in the full 

USCIB 2015 Trade and Investment Agenda and key sections of the USCIB 2015 

Customs and Trade Facilitation Priorities and Goals which we include as an attachment for the record. 

Sincerely, 

Robert J . Mulligan 

Senior Vice President, Policy and Government Affairs 

USCIB Global Trade and Investment Agenda 2015 

The United States Council for International Business (USCIB) is committed to 

strengthening a rules-based global trading and investment system through further 

opening up of international markets, continuing trade and investment liberalization, 

and removing barriers American companies face in doing business around the world. 

In 2015, our USCIB Trade and Investment Agenda will build on the work done in 

2014 to move many trade and investment initiatives important to USCIB member 

companies forward, as well as address emerging sets of practices that have the potential to and/or are increasingly creating trade friction. 

USCIB’s Trade and Investment Agenda will work hard to bring a number of trade 

initiatives, where the U.S. is an active participant, to successful closure while substantially advancing others, including: reaching bi-partisan agreement on Trade 

Promotion Authority (TPA) legislation, completing the Trans-Pacific Partnership 

(TPP) negotiations and getting Congressional approval, finalizing the agreement on 

expansion of the Information Technology Agreement (ITA), making significant 

progress on the Trans-Atlantic Trade and Investment Partnership (TTIP) and Trade 

in International Services Agreement (TiSA) negotiations, continuing to move the 

World Trade Organization (WTO) forward in positive ways such as implementation 

of the Trade Facilitation Agreement (TFA) concluded in Bali, and supporting efforts 

to continue to negotiate a high-standard U.S.-China Bilateral Investment Treaty 

(BIT). 

Through our work on these trade and investment negotiations and our engagement 

with a wide range of intergovernmental organizations, the USCIB Trade and Investment Agenda will target many emerging policies and regulatory practices that are 

having a growing impact on members’ business and global trade and investment 

flows. We will continue to educate policymakers on global value chains that are critical to business growth and advocate against policies that restrict the movement of 

goods, services, capital and people such as: localization barriers to trade, limitations 

on cross-border data flows, unfair support for state-owned or state-supported enterprises, customs and border impediments, mobility-related obstacles, inadequate antibribery enforcement, inadequate or eroding IP protection, and illicit trade. 

While we will actively engage U.S. policymakers on the USCIB Trade and Investment Agenda, our members see a growing need to also engage policymakers and 

business leaders in other countries on the issues they are confronting in global markets. USCIB will seek to more effectively leverage its unique network of relationships with business groups in other countries that are best placed to influence the 

policymakers in their countries. As the U.S. industry representative to the International Chamber of Commerce (ICC), the Business and Industry Advisory Committee to the OECD (BIAC), and the International Organization of Employers (IOE), 

we already work closely with the foreign business groups in these organizations but 

will look to expand the scope of our cooperation in addressing the key trade, investment and regulatory opportunities to better facilitate global growth and competitiveness. 

Growing trade and investment can generate much needed economic growth and job 

creation in the United States and around the world if policymakers take the steps 

needed to address barriers to trade and investment. The USCIB Trade and Investment Agenda sets out a framework for continuing to open markets in 2015. 

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1. Press for an Ambitious U.S. Trade Agenda that Improves Access to Major 

Economies and Addresses Emerging Protectionist Policies 

Short Term (6–12 months)— 

• TPP. As member of TPP Coalition Steering Committee, actively support coalition strategy to press for completion of comprehensive, high-standard TPP 

agreement and approval by Congress by the first half of 2015. 

• TPA. As member of TPA coalition steering committee, build bi-partisan Congressional support for approval of well-designed TPA early in 2015. 

• TTIP. As member of Business Coalition for Trans-Atlantic Trade (BCTT) steering committee, and co-chairs of several key issue work groups, play lead role 

in engaging U.S. and EU negotiators to advance an ambitious and comprehensive TTIP agreement including investment protection and regulatory cooperation commitments, including specific sectors, and to promote a more open environment for U.S. companies in Europe. 

• TiSA. Support a successful conclusion of the TiSA negotiations that sets high 

standards for opening services trade. 

• WTO. Support U.S. efforts to move forward in the WTO, implementing the 

Trade Facilitation Agreement, completing ITA expansion, and moving forward 

with the Environmental Goods Agreement (EGA) negotiations. (See agenda item 

3 on rebuilding WTO). 

• Press for the U.S. to address through trade negotiations and bilateral engagement trade areas of growing concern such as: localization barriers to trade, restrictions on cross-border data flows and other forms of digital protectionism, 

state-owned enterprises (competitive neutrality), global value chains, mobility/ 

temporary movement of talent, illicit trade, regulatory cooperation, food security 

and agriculture regulations, and advocate for IP language in trade agreements 

that establishes a robust and effective intellectual property framework to promote innovation and creativity. 

• Engage Congress in support of building capacity on trade—including updating 

engagement with Africa in an AGOA 2.0 discussion. 

Medium Term (1–3 years)— 

• Identify new trade initiatives to follow after completion of TPP and TTIP such 

as expansion of TPP around the Pacific Region and/or integration of existing 

Free Trade Agreements (FTAs) including contributing to the USTR’s co-chair 

role on the FTAAP working group. 

• Provide thought leadership on future U.S. trade strategy and anticipate changing policy issues resulting from rapid economic and technological changes. Address growing trend of government intervention in markets. 

• Provide thought leadership on the growing inter-play between regulation—coherence versus fragmentation and the need for sound science-based policy-making—and trade policy. 

2. Promote Global Investment Policies that Open Markets and Level the 

Playing Field for U.S. Companies 

Short Term— 

• Continue leadership role on state-owned enterprise issues in the TPP, TTIP, 

TiSA, and BIT negotiations and at the OECD. 

• Press for high-standard Investment chapters in TPP and TTIP, especially on investor-state dispute settlement; resist efforts to carve out important provisions 

or sectors. 

• Play lead role in working with U.S. government on China BIT. Encourage U.S. 

government to move forward on high-standard BIT negotiations with other key 

countries including India. 

• Build coalition to support maintenance of investor-state dispute mechanisms in 

investment agreements and ensure any discussions of a multilateral investment 

framework focus on including high-standard investment protections. 

• Strengthen relationships with business groups from other key countries that are 

our partners in international affiliate organizations and build global support on 

key investment issues. 

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Medium Term— 

• Encourage helpful and constructive ICC approach to addressing global investment issues including through thought leadership at the G–20/B–20. 

3. Urge WTO to Rebuild Confidence and Credibility Through Concrete Action on Specific Negotiations 

Short Term—advocate for WTO to restore effective role in liberalizing trade: 

• Ensure ratification and effective implementation of Trade Facilitation Agreement concluded in Bali at WTO ministerial. 

• Support efforts to conclude an agreement to expand product coverage in the ITA 

in 2015. 

• Lead coalition effort to advance negotiations in the WTO on an environmental 

goods agreement. 

• Engage our business group partners from other countries directly and through 

our international platforms (BIAC, IOE, ICC) to build consensus views on trade 

agenda in the WTO, post-Bali. 

Medium Term—work to rebuild consensus in support of multilateral trade negotiations and the WTO. 

• Propose improvements to operation of WTO, including the dispute resolution 

process and consultation with the private sector. 

• Develop paper on changing global economic environment and growing role of 

large emerging economies. Underscore the importance of a rules-based trading 

system. 

4. Leverage International Platforms to Build Global Business Support for 

Addressing Key Trade Policy Concerns 

Short Term—utilize ICC, BIAC and IOE where appropriate to raise global awareness on issues and build support of broad international business community. Work 

through our foreign business association partners to build local advocates. Engage 

OECD on useful work they could do in these areas. Utilize other platforms such as 

APEC and G–20/B–20, as appropriate for addressing issues such as: 

– Localization barriers to trade 

– Cross border data flows 

– Regulatory cooperation 

– Illicit trade 

– State-owned enterprises/Competitive neutrality 

– Global value chains 

– Mobility 

– Support robust and effective intellectual property framework to promote innovation and creativity 

– Anti Bribery/transparency 

– Supply chain transparency 

• Engage governments on potential negative impacts on economic growth/export 

generation from over-regulation and the benefits of regulatory coherence among 

countries. 

• Work with G–20/B–20 and other international organizations to support policies 

on infrastructure (including financing) that will improve trade and investment 

opportunities for members. 

• Implement strategy building on USCIB unique expertise, access and influence 

to intergovernmental organizations (IGOs) and the U.S. government in order to 

advance members’ interests, enhance business participation and influence in 

key IGOs, and shape policy at the international level. 

• Strengthen our relationships with business groups from other countries that are 

our partners in international affiliate organizations and build support on key 

trade, investment and regulatory issues. Organize meetings with these groups 

in Washington and in their home countries to build relations. Identify issues of 

common interest and pursue joint advocacy efforts. 

• Organize more meetings/lunches for members with foreign officials when they 

are in DC to provide opportunity to engage on the key trade policy concerns in 

that country and globally. 

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Medium Term— 

• Address growing concerns that some multilateral institutions are pursuing policies that will restrict international trade and investment rather than promote 

trade liberalization. 

• Assist the smallest businesses and individual entrepreneurs to engage in international trade by adopting trade policies aimed at improving access to the global marketplace such as removing red tape and simplifying customs clearance 

procedures. 

5. Leverage Coordinated USCIB Committee Work on Trade Policy Related 

and Regulatory Issues 

Short Term—work closely with other USCIB policy committees on issues that intersect with trade and investment policy: 

• Environment Committee—tariff reduction/elimination on environmental goods 

and services, IP erosion efforts in Climate Change talks, and unilateral environmental policies that become nontariff barriers to trade. 

• Customs Committee—trade facilitation and customs modernization. 

• ICT Committee—localization barriers to trade, cross border data flow and privacy. 

• Competition Committee—competitive neutrality. 

• IP Committee—support robust and effective intellectual property framework to 

promote innovation and creativity. 

• Labor Committee—ensure labor provisions in trade agreements are consistent 

with member positions in existing agreements. 

• Tax—ensure tax policy changes do not create barriers to trade and investment. 

• Country/regional committees—APEC, China, emerging markets, EU. 

Medium Term—identify cross-cutting issues that involve more than one committee 

and develop coordinated strategies to address these issues. 

6. Provide Thought Leadership and Improve Analysis on Trade and Investment Policy to Inform Global Policymaking Activity 

Short Term—continue to educate policymakers on member business models that utilize global value chains by leveraging USCIB study by Prof. Slaughter through 

briefings on Hill, meetings with policymakers, engagement with our international 

organizations, possible briefing in Brussels, webinars, and other venues. Utilize 

study throughout the year in pushing for policies that facilitate member company 

competitiveness and counter policies like localization barriers to trade. 

• Encourage affiliate organizations in other countries to work with local think 

tanks to write on impact of policies such as localization barriers to trade and 

restrictions on cross border data flows on global value chains and economic 

growth. 

• Raise USCIB’s public profile on trade and investment issues, including public 

speaking, media interviews, and well-prepared conferences. 

• Support work of OECD on Trade in Value Added research and policy analysis. 

• Build on successful OECD/USCIB trade and investment conference by establishing it as an annual event. 

• Support organization of first ICC/USCIB conference on customs and trade facilitation. 

• Support business visit to OECD organized by BIAC. 

• Support research connecting open government data with a more efficient trading system and economic growth. 

Medium Term—identify other issue areas for in-depth research and develop plan for 

producing one or more reports. Possible issues might include localization barriers 

to trade, challenges of state capitalism, cross border data flows, impact of sanctions 

on trade. Work with U.S. Council Foundation to expand study and research capabilities. 

USCIB 2015 Customs and Trade Facilitation Priorities and Goals 

The United States Council for International Business remains committed to pushing 

a robust trade and customs agenda in 2015. We will continue to urge for passage 

of Customs Reauthorization legislation in the U.S. Congress. We believe updating 

this legislation is critical to improving transparency and efficiency and to fostering 

a better relationship between trade facilitation, security and enforcement. There is 

also a growing need for mutual recognition globally and will continue to engage 

other countries to further push for an international single window initiative. 

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The USCIB Customs and Trade Facilitation Committee 2015 goals and priorities 

sets a framework for the year and presents a clear path forward for the committee 

towards the areas in which we can make the most impact. USCIB and our membership bring a unique view that enables us to actively engage U.S. policy makers. Our 

perspective allows us to actively engage and strengthen our international partnerships to advance global customs initiatives while supporting U.S. Customs and Border Protection. 

U.S. Congress: 

Customs Reauthorization: 

• Continue to work with U.S. Congress and business community to facilitate passage of a Customs Reauthorization Bill 

– USCIB continues to support CBP’s efforts to increase the current values for 

de minimis and informal entry shipments. This change would promote faster 

border clearance for low-value shipments and allow Customs to focus on urgent priorities like ensuring product safety and protecting intellectual property. This in turn would benefit small business by reducing the burden associated with importing low value goods and international retail returns. 

– Push for language in the legislation to mandate mutual recognition of customs in all countries. A single window initiative benefits everyone and it is 

important to ensure trusted traders benefit from achieving trusted status. 

Today, one still has to apply for EU AEO even if they are C–TPAT. By creating true mutual recognition across borders, this would allow C–TPAT to be 

used for multiple purposes and would cut down on red tape. 

– Continue to engage with policy makers to ensure that companies benefit from 

their participation in trusted trader programs. 

– Work with members of the business community to provide outreach and education to Capitol Hill members about the importance of legislation. 

– Finalize USCIB de minimis white paper and circulate to government officials, 

multilateral institutions such as the WTO, WCO and other groups of interest. 

WTO Trade Facilitation Agreement/Trade Facilitation: 

• Continue to monitor developments and pursue opportunities to support ratification of agreement and ratification of protocol of amendment regarding food security for the WTO ‘‘Bali’’ Agreement on Trade Facilitation. 

• Continue to play a leadership role in the USAID/USTR Alliance and the private 

sector business coalition. 

– Coordinate with members of the international business community to ensure 

there is one coordinated message for business. 

• Identify resource capabilities and regions/countries of interest for members involved in initiatives. 

• Continue to work with the ICC, WCO, WTO , USTR and CBP to coordinate 

donor effort on technical assistance and capacity building. 

• Coordinate with the OECD on creating helpful data, research and information 

on the benefits of implementing the agreement and how trade facilitation will 

help developing and least developing countries. 

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