wrapup output and as mexico considers important reforms to enable an increase in production. at the summit, an initiative seeks to enhance electrical interned -- interconnection and builds on the u.s. partnership from the last summit to increase the availability of reliable and affordable electricity and accelerate we believe these close economic ties make us more competitive. second only to the safety of americans living abroad, our top priority is to make sure the region can pursue these opportunities. thank you again for the opportunity to be here today to discuss this important issue.

i look forward to working with this committee. >> that we thank both of you for your testimony. before i go to questions, let me ask unanimous consent the with- unanimous consent to enter a statement with chevron. >> without objection, so ordered. >> i appreciate both of your testimony so far as the positive aspects and the promise and the opportunities, which i share. but promises and opportunities cannot be fulfilled if there are a series of challenges that make that investment dubious in terms of transparency, rule of law, arbitrary and capricious tax changes, intellectual property rights challenges and a series

of issues. let me explore some of those challenges with you since you both describe what is the promise. let's talk about some of those challenges. property rights are incredibly important. if you are going to have american companies make investments, you want to make sure those property rights can be upheld. the state department announced in june that the u.s. fiscal transparency waiver for nicaragua and the $3 million of bilateral tax will not be renewed this year. given the blatant disregard for the democratic process displayed by the president of nicolai what, i am not surprised by that announcement. -- nicaragua, i am not surprised by that announcement.

there are $1.40 billion in multilateral loans tied to it. the ortega government has consistently criticized the united states and has accused the democratic process to advance his own agenda at the expense of the nicaraguan people. it did not renew its transparency waiver. why with the state department decided to renew the property river -- property waiver? that is a message that we want to send to any country that is backsliding in its democratic responsibilities and its responsibilities for property rights? >> thank you, sir.

the secretary did renew the nicaraguan property waiver. it has been in place since 1994. there was a broad analysis that took place in the process of deciding whether to renew that waiver. one of the key factors was that the computations we conducted resulted in a remarkable number of cases being resolved. there were a large number of cases that resolved. we decided the property way for should be renewed. we share the concerns and the conditions -- about the conditions of democracy in nicaragua. >> on the one hand, we make a decision that we transparency waiver was not there. that is a minor amount, $3 million. then we let $1.30 million in

bilateral loans proceeds. we still have 337 pending cases that have not been resolved years later. i am not quite sure we are sending the right message. what about in light of ecuador's imposition of a wide range of safe guard duties against imports and the president of that country's failure to cooperate in narcotics trafficking, expelling the u.s. counter narcotics unit, where it was monitoring drug shipments heading to the united states -- is the administration considering extending atpa benefits to ecuador? >> it is not our decision to decide if it should be extended ping it is congress'.

we look forward to consulting with you and other members of congress. we have not taken any position on that. we are aware of the concerns you have addressed. >> i would expect the administration to take a position on that. if we -- unless we have a different set of realities, the administration would encourage us not to extend it. here is my other big question. you should be promoting u.s. companies. we get into trade agreements and some of those include international arbitration process is -- process these -- processes.

we go through international arbitration. ecuador has that with chevron. imaging equipment at the ports is incredibly important to make sure those ports do not have products or concerns for the united states in terms of narcotics trafficking, in terms of the opportunity for someone to use those ports to bring a dirty bomb to be united states. you have argentina refusing to pay for its bondholders. the question is, if we are going to have the opportunity that you both describe be fulfilled, you have to have a process by which, when you make your investment and there is a dispute and you agreed that the process to resolve that dispute is international arbitration and

the award comes down on behalf of an american company and the country will not abide by it, those countries are sending a message to the international community and to u.s. businesses that that is not a good place to invest in. second, what are we doing to get those companies to abide by their obligations under treaties and in these arbitration awards? >> thank you, mr. chairman. we share your concerns with ecuador and argentina. which ecuador, we share your concern that there seems to be a lack of commitment to honor the international arbitration process and investor disputes. that sends a chilling message to the investment community. part of what happens is, when they pursue these policies, you see the impact of foreign direct investment.

we have raised this issue has high at high levels with the ecuadoran government. we are monitoring the situation. the deputy assistant secretary said it is the prerogative of congress to extend or not to extend atpa. we are going to consult with the business community, with members of congress, as well as express our deep concern with ecuador to some of the policies they have taken. with regard to argentina, argentina is sending messages to the investor and trade community that are confusing and chilling. currently, argentina is ranked 113th out of 183 countries in the doing business index.

that poor ranking has to do with some of the issues you raised. in that country, we have raised these issues at the highest levels. we have been in close consultation with our business community to understand how this is impacting them. we have also been in consultation with argentinian businesses that have been adversely affected. they are not receiving an platts they need for their agricultural communities -- inputs that they need for their agricultural communities. many countries are affected by argentina's policies in the region. the eu recently started consultations to pursue a wto case. we are approaching this in every way possible to make sure that

countries having these policies understand the full impact of their actions. >> i am not confused by the argentinian. i appreciate your diplomacy. they are sending a clear message. they have protectionist policies. they do not live up to their responsibilities to pay debt to bondholders. and are acting in a way that sends a message not to invest. i hope you will consider filing a wto case to address the concerns of american business. i will turn to senator rubio. >> what is the general feeling from the american business community in terms of opportunities in investment and growth in mexico.

i have been concerned by all of the violence and the drug problems they are getting. there is also this emerging middle class and consumer class that is being created. what is the view of the business community about mexico moving forward if thinew administration comes in? >> thank you senator rubio. the investment community is optimistic. we are optimistic. we start with a good foundation with mexico through nafta. our trade has increased dramatically over the last 15 years. we abided mexico to join tpp, as you pointed out in your opening statement. a lot of what we do at the department of congress -- commerce and the department of state is blocking and tackling.

it will not be front-page news, but it has potential for resolutions. we have more recently been working on trying to make sure we are maximizing efficiency at the border for supply chain efficiency to make both countries more competitive. the business community is optimistic. we will continue to engage in ways that strength and that commercial relationship. >> this is a topic that is different and i hope we can look at it from the view of commerce. there is frustration that we have not developed a workable guest worker program similar to what they have with canada. it has a common element to it. we should explore moving

forward. the second question is for both of you. it is about to paraguay, which has been in the news recently regarding some issues that happens with the constitution. maybe you could describe to me what the american business view toward paraguay is. we want a strengthening of our relationship with paraguay. >> thank you, senator. as you noted, paraguay has been through a tumultuous few weeks. we have been pleased with the action of the opposition of american states. we have a way forward for their elections. we had a series of engagements over the last several years with derogate to try to seek a trading relationship -- with

paraguay to try to seek a trading relationship with that country. we want to make sure they earned getting the most of the privileges they enjoy. we worked with them through an mou to help them with their intellectual property rights. it is key to intellectual driven -- intellectually driven business. we would like to expand those relationships to the extent possible. >> we want to engage commercially with paraguay. our commercial office stands ready to help american companies that are interested there. on the policy side, we work closely with paraguay on pathways to prosperity, specifically which border facilitation and the more

efficient and secure movement of goods. there are opportunities there. recent events make the business community somewhat nervous. the business community likes uncertainty. i am hopeful that this is a short-term problem. we will continue to work with any american business that is interested in commercial engagement there. >> i would say that for the business community, they should be encouraged by what happened in paraguay. it happens by constitutional order. you had the senate conducting its rightful role. people may not like the outcome, but they follow the law and the way the law was created. it is a case for certainty as opposed to having the army in the streets and people being jailed. the last question is about el salvador. i am concerned about that as i said in my opening statement.

the chairman met with some folks last week and made his views on it clear. i was not able to make that meeting. i want to use this forum to say that our foreign aid programs have been set of approval. if you a point to give that aid to foreign countries, you want them to meet certain benchmarks. i was pleased to see the house of a door -- el salvadoran cooperation with us. they created a constitutional crisis. two sets of supreme court judges -- it does in danger and the economic aid programs we have. moving forward, i will make that an issue.

i do not think we can continue to push forward on some of these a programs as long as this is the kind of -- aid programs as long as they have this kind of government. how does the business community feel about a country that has certain leaders that are putting together these kinds of coalitions to do these kinds of things? i imagine it is not good for business. but how bad is it and if it continues to play out, how troubling is that? the country has turned over the issue to an external body. >> senator, you raising valid concerns. the-you raise -- you raise valid concerns. there will be a panel following

us that will express directly how they feel. business 6 certainty. the constitutional crisis does not promote certainty. it raises a lot of troubling questions. we have been working closely with el salvador to help them try to create a fertile business climate. i believe this runs contrary to that. i hope the government of el salvador can resolve this soon because it is in their interest to do so. >> senator, thank you. we share those concerns. we have made clear those concerns directly to the salvadoran government. we want to make clear that a political solution to this crisis needs to be found that

respects transparency and separation of powers. we have been encouraged by recent movement toward a political solution. i think salvadoran leaders are clear that a solution that does not incorporate a separation of powers and good governance does call into question our assistance program. >> thank you, senator rubio. let me just have one or two more questions. mr. secretary, you mentioned in your opening statement about the legislation that i supported on the finance committee. i had a colloquy with the majority leader on the floor today. sometime later today or tomorrow there will be an effort to move those. i do hope that you take the

message back, as well as the secretary, that i am all for creating economic opportunity and jobs in the dr and in the region as well as in the african countries. we need to be concerned about creating jobs in the united states. it is totally unacceptable that a u.s. manufacturer has to pay a 13.5% tariff for the same imported cotton material that a foreign country, under these trade agreements, can send in for zero. how is it that an american manufacturer can compete? they cannot. in my own state, there are hundreds of jobs. there are over 10,000 jobs. i hope the administration is going to work with us toward the cotton and world -- and wool

trust funds and create a level playing field that you want for hemispheric the best hemispheric trade. is that something we can get -- hemispheric trade. is that something we can get help on? >> yes, thank you. the fixes will help create jobs. it is important and we appreciate your support. i am well aware of the issue you raised. in my office, we focus on textile and apparel. i look forward to working with you and your staff and constituent companies to see how we can help them on this particular issue and any other issues they have in supporting their manufacturing efforts. >> let me ask you, in a broad

context, are we willing to use -- this is a concern i have. i look at the dominican republic by way of example. they have an international arbitration award that has u.s. investors in it. they are not willing to fulfil our international arbitration decision. it ruled in favor of the company. you have another company that has investors and has a contract given to its ratified -- it ratified by the dominican congress regulating cargo that goes to the ports, which has been problematic. they do not want to live by that contract. you have some of the other countries i mentioned today with

arbitration awards that have gone against them. they do not want to live by that. mr. secretary, this might be more of your ballot with -- your area. what are we willing to do? it seems to me that if you do not send a message that you cannot, with impunity, violates those trade agreements and arbitration award that you agreed to as a process and still have a us voting for you to get money for a variety of purposes -- if those countries can get away with that, they will. that puts american cut -- american companies at a tremendous disadvantage. >> thank you, senator. in other cases, we have done that. >> i hope you are going to look at the dominican republic.

>> as the case unfolds, we look at all of those tools. in other cases, we have a voted against loans for argentina sheehan -- argentina in light of their protectionist policies. we have not renewed their awards. those schools are certainly on the table. as these cases unfolds, we will not hesitate to use them. >> as part of its ascension into the tpp negotiations, there were guidelines that allow for implementation to provide test data protection for pharmaceuticals, something that is important to my state, which is the medicine cabinet to the

world. this is an important step toward strengthening mexico's ipr regime and to make sure companies complied with their obligations. the mexican government does not intend to provide the protection for biologics. if this is the mexican government's position, it is troubling. this was one of the preconditions for its entry into ipp. -- tpp. does the administration have a position in terms of what the administration intends to do in this regard? >> thank you, mr. chairman. we were pleased that mexico issued a recommendation. we continue to take a closer look at it. on its face, the regulation does

not appear to exclude biologics. we work closely with the industry and we will consult with the mexican government to express our strong interest in biologics not being included -- being excluded. >> i understand that when something is not excluded it does not mean it is included. i would hope our advocacy would be to insure that it is included. that would be part of mexico's naphtha -- nafta obligations. we have to make sure we have that which is already been agreed to be included. thank you for your testimony. we look forward in continuing to

working with both of you. >> thank you, mr. chairman. >> as my two witnesses the park, let me call my second panel. the-as my two witnesses the parts, let me call my second panel. -- two witnesses depart, but recall my second panel. eric farnswork and jodi bond. we ask that you keep your testimony to 5 minutes or so. we will include your full testimony in the record. since i am cuban, it means ladies go first.

>> thank you chairman my name is jodi bond. the u.s. chamber of commerce is the world's largest business federation representing the interests of more than 3 million businesses both sizes sectors and regions as well as state and local chambers and industry associations. thank you for the opportunity to speak to this sque about some of the opportunities and challenges. for the united states and its business community in the americas today. let me begin by underscoring the strategic importance of the americas to the united states. the western hemisphere accounts for 44% of all u.s. exports. and 12 of our 20 free trade partners are from this hemisphere. nevertheless, widespread challenges in particular hold

back the economic dinism of the hemisphere. in light of this pressing problem, two years ago the u.s. chamber of commerce established the coalition for the rule of law and global market which has highlighted five factors. transparency, predictability, stability, accountability, and due process that we believe are need ford a sound legal environment for business. we found that where these five factors are present investment thrives, economies grow, jobs are created and prosperity follows. where they're absent corruption thrive, inform mat reins, and tax revenues plummet. one case in point is argentina a country that has enjoyed impressive growth but whose unorthodox policies have contributed to a continuing boom-bust cycle. many of our companies have been invested in argentina for

decades. they find a rich culture, highly skilled workforce yet we're concerned about policies making it extremely difficult for them to do business. policies like nonautomatic import licenses and import-export balancing requirements which we believe to be wto inconsistent. we have similar concerns about equador where both the department ofs of state and commer have noticed weaknesses. concerns we understand wrr echoed from a recent memo from senator lugar to kirk. that has been at times been exploited to take advantage including u.s. companies. it has denounced free existing binding ash tall awards. we're greatly concerned that if met with indifference this

conduct sets a dangerous precedent for other countries. indeed, a disturbing level of contagion has already been evident with government lapses seeming to go hand in hand with breakdown in broader political governance as recently seen. further, we're alarmed by the rapid spread of commerce in the region of global scourge that by some accounts now equals 10% of global g.d.p. we need to work with our partners like panama whose otherwise strategic geography unfortunately attracts the bad actors as well as the good. still there are several things the united states should do. first champion an expanded lalten america presence in tpp. reinforce cooperation with our north american partners mexico and canada and promote regional

priorities such as security trade if a silltation and rule of law. more specifically, in the southern cone the u.s. chambers is advocating for an ambitious agenda with brazil to increase our substantial $50 billion trading relationship. we believe the time is ripe for the u.s. and brazil to explore a partnership agreement that not only includes traditional market access but new areas of economic and commercial cooperation in the areas of energy, infrastructure, and try laltral cooperation such as preference programs with poor countries like haiti. it has helped make such a partnership possible by working to resolve the irtants to our trade relationships like ethanol, orange juice, cotton and we can do the same with the government of argentina with respect to its market access

priorities on lemon and beef if orge tina engages in a constructive dialogue. to conclude, we're at a pivotal point in our relationships because the economic forecasts are strong and the region is in a growth mode there is still ample opportunity for the united states to lead. but if we do not it is certain that our partners are looking elsewhere because latin america is not sitting still. >> thank you. mr. farnsworth. >> thank you, mr. chairman. good jamp it is a real privilege to be with you today. and while not necessarily the focus of this particular hearing i want to thank you upfront for your comments in the "washington post" in support of human rights and we join you and other members in mourning the untimely and tragic loss of the gentleman in cuba. as cuba illustrates challenges remain in the hemisphere. the good news is that long term

trinds is positive. the region is coming into its own with an expanding middle class, democratic governments. economies have stabilized and strengthened. at the same time, the past several years have presented a favorable external environment to enlarge members to china's appetite for raw materials. this has commercial implications including the conduct of business in the roinl and i would like to focus my brief comments on this aspect today. by exporting to china much of the region was able to avoid recession during the global crisis. rather than being a cause, latin america has proven to be an engine of economic recovery. this is a positive and note worthy change. of course growth across the region is now slowing as china desell rates, the united states

struggles and europe remains embroid in its own financial crisis. not all countries are alike. those relying on commodities exports have done well and will continue to do so, until they don't. in the meantime, imports of cheaper manufacturerd products from china have inundated latin america and the region is undergoing a process of deindustrialization where manufactured products to primary goods is decreasing. chinese products are also having an impact. in the first instance much promised investment has not yet materialized. still investment is flowing and it is rapidly increasing particularly in those sectors including energy, mining, and infrastructure where china feels the need to lock in access. or particular interest is energy and the trend

accelerating as proven energy expands to shale gas and coal in columbia. what we are seeing in latin america as well as in africa and east asia is that the chinese investment model differs from others. in the first instance the initial purchase is generally underwritten by the chinese government. there by allowing investors to outbid their western counter parts. entities often pay a premium for their purchases in order to lock in assets. indeed the price that c nook just offered its biggest overseas energy deal is at a 60% premium. once an investment is confirmed western investment values of job creation in the local economy, tech knowledge and management transfer, corporate governance, respect for rights, anti-corruption and corporate responsibility are not necessarily priorities. this can unfairly put u.s. and other companies at disadvantage

by lowering the cost of chinese production. but there are larger implications as well. efforts to promoted labor and environmental reforms through trade agreements such as you champion are undermined which chinese businesses are not expected to operate under the same conditions. china's huge purchases of commodities and provisions of credits on favorable terms allow regional leaders the flexibility to postpone reforms that would be consistent with open market democratic governance and the rule of law. with this in mind the united states must do a betterob contending for the region. and you have spoken about that. we need a more strategic approach. in the first instance the united states would do well to deepen further our economic relations with canada and mexico, nations that engage in common business practices with the united states and europe as

partners in the promotion of a common agenda. more prodly, we need to reactivate an ambitious economic agenda for the hemisphere. the partnership is a meaningful start but needs to be reenvisioned for the americas not just asia should be expanded to include colombia and panama and include other like-minded nations. the focus on energy partnership in the americas would also be appropriate as would a stronger focus on regional financial markets and activities that promote trade and investment generally. the battle for if soul of latin america continues and the united states must engage in a positive proactive manner to offer the region a vision for cooperation consistent with our values. so i want to thank you again for the opportunity to testify before you this afternoon and i look forward to your questions. >> thank you both for your testimony. and i appreciate it. sort of like squared off

different sections of this issue so let me pursue it in that regard. was the chamber at the summit of the americas? and if so, what were your take aways from the summit of the americas as it relates to business executives in terms of their advocacy, their views, their concerns within the hemisphere? >> thank you, mr. president. yes. the u.s. chamber was present and in fact leading up to the summit of the americas the u.s. chamber was asked to provide some private sector recommendations to the summit and to do so we put together a survey to identify the interests in the hemisphere of our companies to give some feedback and we're happy to say that the results were provided to each member of the presidential delegations that were at the summit. and i would be happy to submit

a copy of these findings for the record. but the key findings were that the obstacles were primarily in the areas of in the short term focused on the rule of law and in the long term the state of the education system within the hemisphere. that said, where the c.e.o. summit is concerned i think it was a complete success. it really filled filled that space between the private sector and regional governments and we would be proud to work with the various organizations and the u.s. government to ensure that this space continues. >> so in that regard, was the interaction with private sector in latin america, with the governments of latin america, with both? the chambers interaction and this initiative? >> correct. actually our c.e.o. was at the summit and we had several other hemispheric c.e.o.s.

we took a delegation of about 15 c.e.o.s from u.s. companies and other countries did as well. canada and all of latin america were represented's at the summit with about 400 business leaders and the opportunity to interact with the different heads of state. >> the reason i ask because i wonder whether there is an opportunity to make the private sector within latin america an advocate for some of this transparency rule of law issues that we as a government would want to see but getting the private sector to be an advocate within their countries for opening up the door to greater investment and trade. do you believe there's an opportunity for that to be realized? >> absolutely. i think as i referred to in my testimony we established the coalition for the rule of law to focus on the areas where we have had experience where these countries can actually do

better to attract investment. and yet through our network of american chambers of commerce in latin america, of which there are 23 in his hemisphere, we have the opportunity to message and be a voice on rule of law issues with those local organizations. >> let me ask you, you talked a lot about china and it is a concern certainly to me. it seems to me that the chinese are clearly in one of its priorities after latin america mineral resources. and within the context of seeking those resources i understand their enormous appetite for them. but how much is actually are the chinese exporting to latin america?

you mentioned a little bit of that. and what specifically, is there specific trade sectors in which we find ourselves in very severe competition with them in the hemisphere? >> that's a very good question. the first thing to understand is that what china is doing with latin america is very consistent what they're doing with the rest of the world. they're relatively late to the game in latin america. their presence there has only been in the mod rn era in the last ten years. since that time, the engagement has dramatically increased. but even today u.s. exports and trade with the region still outnumber the amount of trade that china is doing with the region by a factor of 4:1. so it is still relatively small but it is certainly growing and becoming much more of a competitive factor. clearly china's interest is in the commodities very consistent with their global outreach. they seem this as consistent

with their national growth strategy, consistent with the need to keep the political legitimacy of the communist party. and to the extent that growth depends, they're going to look wherever they can to find those commodities. so at one level they don't really care what's going on in latin america per se. they care about what latin america can sell to them and in return what the chinese have done is what they have done in other parts of the world. it's a classic america tallist strategy. you bring in the resources from outside you add value and sell them back to the countries in question or in china's case globally. this is actually impacting latin america's development in a negative way. because while the producers of these are doing quite well and that has underwritten latin america's economic growth, the manufacturers in latin america

are telling a different story particularly in brazil, particularly in countries that are well along the way to development. because their competition is directly from chinese manufacturers. and so the story is a little more complicated but one can say that what the chinese are doing is more of a traditional mer can tillist model. they are beginning to understand the negative impact that's having in terms of what it means with relations in terms of the united states but that is an evolutionry process again they've really only been involved in the region for a short period of time and it will be interesting to see how that evolves overtime. one quick thing i would add is that the latin america governments are not unaware of this. in fact at the rio plus 20 meeting in june just last month, brazil and china signed an agreement on the economic cooperation agreement which was specifically designed to try to bring more into balance the trade relationship so that

without reducing the sale of commodities to china, they're also going to try to increase the sale of manufactured products to china and that's the real growth area that they are trying to develop. >> let me pursue one thing. china has made rather large loans to brazil and venezuela particularly in their energy sectors. do you have any sense of whether those loans are being repaid in oil? and if so, then does that give china an advantage in setting the price for oil it's receiving and placing american companies at a disadvantage? >> very good and important question. >> the short answer is it depends on which country. venezuela and equador yes it is in petroleum products. argentina more in terms of agriculture. just depends on what the country has that china wants. but in the energy sect whar we've seen is large loans that will be paid back over time in

energy. generally those contracts are written so that the price of the energy is at market prices and so from that perspective because the energy market globally will rebalance and readjust, it's not that china is taking additional energy off the market. it's the same amount of energy and they're going to use energy no matter where they get it from. so at a certain level it's not being anti-competitive with u.s. companies. it does have several implications, though. one is that it allows countries like venezuela to front load a lot of pop list spending. so what we've seen for example is the government in crack cass is now amping up or juicing the venezuelan economy in advance of the october elections. this is something that without a lot of disposable income they would be able to do. so it does have certainly political implications number one. and number two, is what it means is it commits the venezuelan or the eek dorn or

other populations to a relationship with china for the longer term that if conditions in their own countries happen to change they're still committed to those for the long term. so it's almost like the old tv commercial you can pay me now or pay me later. it doesn't matter. the chinese isn't going to care what government is in power. they want to get paid back in energy. so what the governments are committing to do is commiting their populations to a wealth transfer down the road in advance of that payment up front. and in the final thing is to the extent that it allows the chinese government to shall we say get preferential conversation for their companies in bidding for specific energy projects, whether they be in venezuela or equador or somewhere else, that would have an anti-competitive feature in terms of u.s. companies and frankly other companies international lifment so it's a multifaceted thing. so the thing to remember is

that by giving a lot of money to the region without a lot of condition at, what the chinese presence is doing in the region is really enabling government who might not want to pursue the path or the course that the u.s. and other western economies might otherwise like to see or encourage, that gives the flexibility for some of those other leaders to pursue a different course. >> in doing so that perpwuts the possibility that countries venezuela as an example, that obviously have a whole series of democracy transparency free press issues can be perpetuated. >> abshule. >> and that continues to be a challenge to the united states. one final set of questions to both of you even though ms. hanson focused on it. you talked about those five elements of transparency, predictability, accountability,

due process and i forget the fifth one but all within their essence to some degree within the rule of law process. what would you if you had two or three actions that you would like to see the united states government pursue so that all those principles would be a broader reality in the hemisphere so that we would have greater invistment opportunities to be realized, what would you want to see the united states government do in pursuit of that? >> well, thank you again for the opportunity. i think there are several things. first we want to encriminal positive actions by ensuring that a strong relationship with the united states brings rewards. so in the context of trade agreements or activities whether it's through cafta dr which we've talked about nafta some of the other trade

agreements to ensure that those are working for the people not just the united states but also the region. but to make sure that these are developing the economies in a way that including our own certainly in a way that's very positive. so you have to have benefits to be a friend of the united states. that's point number one. point number two there is there are a number of tools that we have. we talked about those. some have been applied to certain countries and some have yet to be applied. we need to understand what tools we have available because this is a globalized environment and ultimately countries don't respond to the united states necessarily in the same way as when we were the only actor in the western hemisphere or the primary actor in the western hemisphere. this is where china is changing the example. but i do think there are instances where a country for example equador which has been talked about may be in breach of international investments obligations and i think at that point the united states is well within our rights to have a

look at unilateral preferences that we may have granted over time whether it be trade or investment or access to loans. the ifis or mcc assistance not necessarily for equador because they don't have a program but the point being that we have a number of programs that we can take a look at and certainly atp, dea, and gsp preferences are part of that. so one has to take a look at those aspects. so you certainly have a carrot and a stick. i think we need to focus on the piece that i don't think we've done a great job is focusing on the carrot aspect in working with mexico, colombia, peru, and chile of the world to bring out that broader economic agenda and i would encourage that. thank you very much plup. i do -- mr. chairman. we need to strengthen the u.s.'s ability to have some say in these regions. by the fact that we need to

enforce our free trade agreements and we need to ensure that there is reason for other countries to be trading with the united states. we need to have the opportunity to be able to convey with messaging what it is that u.s. businesses provide to these countries when they're doing business overseas that there's the opportunity to strengthen these two-way ties because the fact of the matter is u.s. companies are the businesses that any country should want to be doing business in their countries. the fact is that u.s. companies localize like none other. we create partnerships on the ground in country where we do business. in fact, i referenced the oe stnch study in which we gave some private sector inputs to. over 90% of the u.s. companies that we surveyed do some form of corporate social responsibility. the fact is that localization in these markets is part of a long term business strategy for

growth and we would love it if the u.s. government could work with us more fasstidyussly to message that out to these governments that there is more promise and opportunity that comes with doing business with u.s. businesses. further we would also next like to strengthen international arbitration organizations and i i outlined some of this in my testimony and would like to outline more what we're doing with regard to our work through the coalition for the rule of law and then also we would like to build out the private sector mechanisms with which we communicate with our government, using our amjam network as the basis to be communicating these fundamental elements of engagement in these countries with regard to rule of law. i think that we have had made some strides with economic state craft to the degree that we have many u.s. ambassadors who are conducting calls with the business community. we have had some test pilot

calls and we would like to see more of that messaging occur with our embassies overseas and our amjam. >> thank you both for your answers and your testimony. i agree with you that carrots could be enhanced and we should. i however have a sense that we have a rhett sense to, when we have exhausted the carrots not to use the stick. and that is the problematic. because carrots don't come in unlimited supplies. and so in that balance i'm afraid that sometimes i don't know why we seem to have a retsance to pursue the authorities that we have and the leverages that we have in different ways that i hope to pursue more aggressively through the committee in terms of understanding and getting

the government to be focused on that. and then i do think that to the extent that we are spending money in the hemisphere rule of law programs and efforts to strengthen rule of law is incredibly important because at the end of the day you can have all the investments in the world. if your investments are arbitrarily taken and if you have the equivalent of the changing after major investments are made tax treatment of those investments if you have international arbitration awards that still cannot be honored, you have an environment in which all the potential doesn't get realized. either for american companies and for that fact the citizens of the hemisphere who would benefit from those investments in all the way that ms. hanson has spoken about and that we believe also exist. so i look forward to continuing

this conversation with both of you and others in the days ahead. with the thanks of the committee, this hearing will have the record open for another two days. anyone who wishes to submit a question i would urge our panelists to answer them as expeditiously as possible. with that this hearing is with that this hearing is adjourned.