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March 03, 2010

Live Blogging the Senate Finance Hearing on Kirk

Note: This is not a verbatim transcript. Not even close. It is an attempt to capture major areas of discussion of interest to EOT readers.

Will start momentarily...

Sen. Baucus "We must find new sources of demand, new buyers abroad." The president's export goal "is ambitious," and notes we've rarely doubled exports in five years before. I propose five steps:

  1. push export promotion efforts, 
  2. Push the three trade deals: "Panama is the center of global commerce," we must address the remaining obstacles to these trade deals, but realize the costs of delays
  3. We should pursue markets that matter most (KINDA IN CONFLICT WITH GOAL 2), that's why I've supported TPP.
  4. Enforce existing agreements. "We must also reserve the right to pick our response to adverse rulings."
  5. Partners cannot flaunt trade standards. The bipartisan improvements we've made should be carried through in later agreements.

Free trade is a means to an end... creating jobs for the American people.

++

Sen. Grassley: Kirk, you are someone who is passionate about trade. This hearing gets to review the 2010 trade agenda. I'm disappointed by gaps in detail: for example, trade agenda says "we will continue to engage" with Panama, Korea and Colombia. Our chairman wants to move forward on those. But the agenda doesn't say where we are on ths agenda, and what meeting are planned. It's been almost 3 years since the May 10 deal. This delay in implementing hurts U.S. credibility. It also creates confusion on our own trade initiatives. Obama has articulated forcefully benefits for TPP, but there is a disconnect on urgency on TPP, but not on 3 FTAs. There may well be political reasons for dismissing these deals, but that doesn't make it good policy. The world won't wait for us: Korea has negotiated other trade deals. This puts us at a disadvantage. We were left on the sidelines in the 1990s too, and I don't want to repeat that. Beyond another bureaucratic incarnation, the details for doubling exports are missing. Agencies have gotten six months to spend money on increasing exports. THis top-down spending mandate represents waste. Why are current spending levels insufficient?

The trade agenda does make the link between jobs and trade, which is commendable, as is TAA Initiatives. We're left waiting on what president plans to do on the three deals.

++

USTR Kirk: WRITTEN COMMENTS ARE HERE: http://finance.senate.gov/hearings/testimony/2010test/030310rktest.pdf

The president is focusing on building a sustainable foundation for future prosperity.

We've been listening, and we've been taking new initiatives, like challenging EU at the WTO on poultry.

We've leveled playing field by taking action against China.

We've protected American innovation by challenging China at WTO over intellectual property.

We've launched a new SME initiative.

You've urged us to focus on Asia, which we have through TPP.

Approval of the 3 pending agreements is also a priority for the adminstration. We're working diligently to resolve remaining issues, so we can work with you on this.

We're also working on development issues, and to improve our preference programs.

We will work hard to make sure that our trade agreements reflect American values.

It will require an ongoing dialogue with you and the public.

++

Grassley: I am concerned about the direction the administration is tamking on reviewing labor protections in the Model BIT. In my opinion, that's a mistake. The May 10 was a compromise deal for four specific agreements. Such a modification to the model would rrisk losing consensus support for the BIT program.

Kirk: Thanks for fashioning a reasonable compromise on May 10. We at USTR, along with State, have been conducting a review of our BIT policy. We've heard from stakeholders on all sides. We have not made a resolution on labor or other issues. After the review, I will share with you the results of the review.

Grassley: When was the last meeting with Colombia, to resolve delays? And also the issues with Korea.

Kirk: The good news is that we have had an ongoing dialogue with Colombia, Panama and Korea. Within the last 3 months, we've had a delegation down to COlombia. I want to make it plain: this adminstation believes that, properly negotiated, these agreemetns are a key component of our export agenda.

I've had 5 meetings this year with my Korean counterpart, and President Obama traveled to Korea as well.

Grassley: While unions in this country are delaying Colombia from a lobbying standpoint, but people in Peoria that want to sell tractors to Colombia face a disadvanrtage with European tractors in that market. Does the administration feel any worries about the erosion of our competitiveness?

Kirk: Absolutely. I would like to bring a sense of urgency to this job, which I bring as a mayor. It's important for me to talk to your district, but also Sen. Stabenow's district.

Labor hasn't caused the delay, labor does have a seat at the table. We don't want trade to become a conflict. We want to help you create jobs, but also get support for the trade agenda.

Baucus: We have a problem here. USTR's budget is frozen, while requesting additional money for export promotion at USDA and Commerce. What will effect be?

Kirk: We'll have to make some tough choices, but no one is making tougher choices than America's families. The executive office will have to make cuts. You get good value for our 247 employees, and we will not yield on our efforts to double exports.

Baucus: How are you going to do that? Isn't it ambitious?

Kirk: Unless you aim extra high, you don't get anywhere close to that goal. I learned this as mayor. Every economist tells us, most job growth is created among small businesses. So we are working with ITC and others to help small businesses. I don't recall if you or Chairman Grassley mentioned this, but we can help small businesses, and we're simplifying rules to make it easier to trade.

Baucus: However you can break down these goals, we'd like to help you. Some countries have acheived sucesse with export policies that are aggressive. We have to do the same.

Sen. Lincoln: I want to thank you for your fine work. The current Doha deal is unacceptable given the balance of concessions on market access. I am pleased to see you standing up in that regard. I've always been an advocate for free trade, and am pleased to see export goal. I've urged him to see Panama, Colombia and Korea deals sent to Congress, especially true with respect to Korea. Agriculture is one of only sectors that enjoys a trade surplus, and we should not take this for granted. It's our job to open our markets for our farmers. two immediate steps we should take: let's open trade with Cuba, and leveling the playing field for our catfish farmers through new FDA rule. Why are these not priorities for the administation? Why have you opposed transfer of jurisdiction of all catfish to USDA? How can we deal with health concerns as well?

Kirk: With respect to Cuba, President has sent a signal to move beyond embargo. We have loosened travel restrictions. That decision will ultimately rest on our broader strategy, with State leading. I'm glad you noted the agricultural surplus, it helps support jobs.

We are working with USDA on catfish. We want to make sure that our safety standards are met - but we don't want to create a backdoor for countries to harm our poultry or other exports.

Sen. Stabenow: I want to echo the support for exports. From my perspective, I want to make sure we're exporting our products, not our jobs. I want to thank you for working to resolve exclusions from Japanese market for U.S. autos. When you met with me to talk about what trade agenda should be, I said: make manufacturing our priority, and getting trade deals right. I'm glad to see agenda focuses on enforcement, but I am disappointed that it doesn't make manufacturing a priority. On Korea, we have an issue of getting a trade deal right. I am anxious as anyone to open export markets, I'm going to make sure we get deals right. I'm happy to see manufacturing tax credit, but we need a coherent policy that will combat CHina trade deficit. We have to rebuild comparative advtange. I don't call Chinese poilcy of disrespect for rule of law and currency manipulation a competitive advantage, I call it cheating. Help me explain to people back home to make sure manufacturing a priority.

Kirk: Michigan understands the importance of trade, so much of our trade is with Canada. The reason we've taken time to engage you and labor is to get to a place where we can pass Korea. But the disparity in autos trade is hard to defend. I would encourage you to tell your constituents: we can't be world's largest consumer, we have to save and export more. But we still manufacture a lot here in America. The Made in America brand is still powerful. We have to find a way to bridge our domestic difference that gives you comfort that we've addreessed worker rights. I hope your constituents believe we are taking them seriously.

Sen. Roberts: I hope we have hearings on benchmarks. Sen. Johanns raised an issue with Sec. LaHood, on the issue of beef and car safety. What if we cut off all imports of autos to retaliate against their blocking of U.S. beef? We've reached that point.


I am pleased with NEI. We're interested in how you'll explain to Main Street how we're going to do it. I'm worried it will work like a prism, to distract from obvious gaps in our trade agenda. What about the three pending FTAs? You've met with people that depend on trade. I hope NEI doesn't distract.

Kirk: In our confirmation hearing, I mentioned that I don't have deal fever. We needed to take at least a break to make sure that we can create a strategic approach. The NEI is intended to bring a sharper focus, including the FTAs and the TPP. It's intended to bring a more holistic focus.

With respect to beef, it's been hard hit by what other countries have done. We are pleased with continuing support from Korea. We've been disappointed with legislature's overriding of WTO obligations in Taiwan.

Roberts: Some in environmental and labor community oppose this trade agenda. They want to have additional enforcements with May 10 deal. You need to visit House leaders and say we have an aggressive trade agenda, with all due respect, that's not the way to do business. You can't impose labor conditions on a sovereign country. This committee isn't the problem, by the way.

Sen. Enzi: Question about soda ash.

Sen. Kerry: I largely support president's trade agenda. Our balance with China remains a fundamental issue. I worry about Chinese conditioning market access on handing over proprietary information. We have a major concern with expanding trade with Pakistan and Afghanistan. I know there are some that have concerns about textile floods. It's just not true. We need some kind of a trade agreement with Pakistan.

Sen. Nelson: Whenever you consider anything having to do with Cuba trade. The Cuban government has prohibited us from access to Alan Gross, who has been held for a month. Question about Haiti trade.

Sen. Carper: Question about poultry. FTAs are just about leveling the playing field, this is a no brainer. Talk to us about moving forward on Panama and Colombia.

Kirk: YOur analysis on preferences is the correct one, especially with Panama and Colombia, who have had GSP. Now FTAs are just our payback. President Uribe has made tremendous progress, but some in labor believe that this has not been accompanied by legislative and judicial reforms. We are near end of process of going through comments on Colombia, to present them with a list for moving forward with legislative changes.

Carper: Just to get this right, who are we penalizing by not leveling playing field.

Kirk: Senator, you and I are on the same side of this, but I have to make an effort to listen to people on the other side. I don't want to just propose a deal, I want it to pass.

On Panama, we're making good progress. The tax issue came up halfway through the process, and Rangel and Baucus were with us at Summit of Americas when this issue came up. But the good news is that the adminsitration has been willing to work with us on this.

Sen. Cantwell: Question about Airbus. Question about NAFTA trucks.

Kirk: Thanks for helping us getting an appropriations bill through that does not continue the prohibitory language. Obama has asked LaHood to come up with a program to get this resolved, and I know that it has hurt agriculture.

Cantwell: Chamber of Commerce estimates that this has been a costly dispute.

Baucus: can you tell us what you are doing to resolve outstanding issues related to the FTAs? You mentioned something about legislative system in Colombia?

Kirk: We've published notice in Federal Register on how to move forward on Colombia. We've gotten 300 comments, and we're trying to whittle those down to a number of workable issues. We have not finished this process, but we will work with you.

We are hopeful that this will wrap up in next few months. We don't want to keep moving goal post. We are aware that Colombia has signed many other trade agreements.

Baucus: DO you have precise changes?

Kirk: Not at this time.

Baucus: What is breakdown of response?

Kirk:We got as many responses that were go-go-go as those that didn't want to do anything. In fairness to Colombia, we've got to give them a workable list of reforms, not just the raw emotion of those who don't want to do anything. You know the political environment.

Baucus: we want to get these up here fast.

Kirk: We'd like nothing more than to do that.

Baucus: this is one area where we can do something positive. Question about China.

Sen. Nelson: I'm concerned about tainted products from China, including toxic drywall, which require houses to be stripped down to studs. Yesteday, there's a CPSC report saying that there were 9 deaths associated with contamination of respitory system. You all have had some conversations with Chinese officials, they tried to blow me off last summer.

Kirk: It's appropriate you mentioned the CPSC study. Tenenbaum has travelled to China, and they're trying to work out a more acceptable solution longterm.

Nelson: Respectively, I'll mention that China is going to sidestep the issue. I tried to get them to realize that when you export toys that kill our children, that this puts a black mark on your country. Typically, we don't bring in Chinese drywall, but the lack of supply post-hurricane led to new imports. If there is a connection now, and CPSC has identified it, between drywall and effect on health, then the government of China has got to be responsible. This is going to take the full weight of the U.S. government. Insurance claim they don't have responsibiilty, homebuilders are bankrupt, distributor says they don't have any obligation. Who does homeowner turn to? Banks won't work with homeownerns because they owe money on mortgage. At end of the day, we need US government slamming its fist on the table in dealing with the Chinese.

They blew me off, paid more attention to Tenenbaum, but then President didn't bring it up in the JCCT. It's got to have your personal attention, socking them between the eyes to get the Chinese government to recognize its obligations, same with Chinese toys. At that point, CPSC wasn't doing its job. Tenenbaum is now doing her job, but that doesn't solve the problem for the homeowners.

I want you to ball up your fist and hit the table.

Kirk: As a former mayor, I can tell you that I pound the table, but they're trying to turn me into a diplomat. But I take your point.

Cantwell: Question on China. on energy tariffs.

Kirk: It's what I call a coalition of the willing, where those of us who see value of lowering environmetnal tariffs go ahead and do so. It's an integral part of our discussion with TPP< and frankly with NAFTA, since we are effectively tariff free now.

Cantwell: Does the administration support the footwear act, which eliminates the charges 65% tariffs on shoes? We don't make these products, but we're penalizing it, more than even luxury goods.

Kirk: You're right, we don't make them here. That's more an issue of congressional prerogative now.

Sen. Menendez: I'm one of the 13 senators who pushed for a job creation policy. As we pursue export opportuniies, I am worried that .... I would assume we want to deal with countries that observe the rule of law. I assume we want to deal with any market, as long as it pays at the end of the day. If there's a history of non-payment, we would be concerned? I often believe that human rights and democracy is not something we can be blind to... all these questions lead me to Cuba. Agreements are not enforced there. If we look at the Paris debtor club, Cuba has defaulted on billions of dollars. I am concerned about the nature of human rights and democracy there.

I hope that it is not the policy of the adminsitation to push exports without understanding human rights abuses in that country, which was condemned by the OAS human rights division, and who have assisted the Basque separatists in assassinating the prime minister.

What role does USTR play in NEI, and Cuba?

Kirk: The trade agenda showed that we were committed to rule of law. One of the ways we can recalibrate and show some Americans the value proposition of our trade policy, is that. USTR's role in the NEI is to focus on market access initiatives.

USTRs are often judged on whether they pass trade agreements, with no attention as to whether we're getting access we signed up for.

Our Cuba policy is very gradual...

Menendez: It's untenable that a U.S. citizen would be held for so long... I'm eager to see us move on deal with Panama, where we would be the beneficiary of.

Wyden: It is my intention to work with Baucus, and I think a number of suggestions he made this morning makes a lot of sense. I want to get into issue of China with you. A lot of discussions about China are elliptical...  Question on China. Sen. Cantwell and I have voted for every market opening agreement since we've been in office. We have to draw a line. I don't bring these level of passion on many trade issues. Question on softwood lumber.

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