you know, the jobs lost in the united states in manufacturing the great percentage of them wanted to countries. -- go to to countries. a country called efficiency and a country called productivity. the american business system the most efficient in the world has taken 40 plus percent of the jobs out of the manufacturing process, because of information technology, robotics process engineer and supply chain management. those 40% of the jobs are never coming back, but the way we get the jobs back, which mr. trumka wants, i want, and we all want is we do two things. number one, we encourage others to come here and produce their products. you could go around this country today and you would find representatives of europe looking for places to build their factories simply because their energy is three times more costly than ours.

and the second thing that we need to do in a fundamentally, efficient way is to go out and produce more things in our manufacturing plants and in new manufacturing plants that we would build and export them around the world. those are the only ways to expand manufacturing jobs in the united states. >> i wasn't here when the north american free trade agreement was negotiated. i can tell in you my state it's viewed as a net positive. for that region of the country. as the central free trade agreement is. senator cornyn: part of the consequences, i visited with senator kaine, down in honduras recently, you remember the influx of minors moving into the united states, and our failure

to have -- help our neighbors provide not only security but also help grow their economy where they live does have residual and impact on us in ways that perhaps we don't even recognize. so i appreciate the great work that you and the ranking member have undertaken on this and look forward to supporting the t.p.a. in tomorrow's markup. >> mr. chairman, might i comment, senator cornyn? senator, you indicated that we would have to have 535 different agreements without fast track. mr. trumka: that again -- there's a whole lot in between there. and i suggest that the following things to improve trade promotion authority. ensure that congress approves trade agreement partners before the negotiation begins. create negotiating objectives

that are specific because they are different. ensure that congress, not the executive branch, determines whether the congressional trade objectives have been met. ensure congress has effective opportunities to strip expedited consideration provisions from trade deals that fail to meet congressional objectives or will incorporate congressional and public participation. we also think that we ought to integrate this with the rest of the things necessary to make trade work: infrastructure training, and tax policy. it's not we're saying you can't have it or shouldn't have it, it's this one, the one you're considering, abrogates too much power. you give too much power away you have no control particularly over this agreement which is

completely negotiated. mr. donahue: mr. chairman, we all recognize that negotiation is a give and take. you have experienced it here in our own committee in recent weeks as you, working together have come up with a bill. that's exactly what happens in a trade negotiation. and the fundamental reality is we are in a new time. if we fail to inject ourselves at the right time and in a significant way in this trading process, those other large and growing countries are going to do it on their own. i know everybody believes america is so essential because they are because of technology because of our value system, and so on. we have got to keep the -- to keep that position we have got to enter into these agreements. we don't have to give away our value system. we have to deal with the things that are important, but there's no way that we can tell everybody else, look, just wait about 10 years.

we'll get our stuff together. we'll think about it. we'll work about it. we have got to have an expedited system. we have to have a system that lets people that do this every day, all day, professionals, to bring you the results based on what you have told them you want. but tomorrow is too late. today is time to move on these issues. senator hatch: thank you. senator schumer. senator schumer: thank you, mr. chairman. thank you for holding this discussion today. i thank our ranking member for pushing hard to get it and i want to thank both of our witnesses, mr. trumka, my belief is the greatest problem america faces is the decline of middle class incomes. it's harder to stay in the middle class. harder to gain the middle class. i know of almost no one who has tried to reverse that trend than you. thank you for your work. mr. done hue, thank you for your -- mr. donahue, thank you for

your strong advocacy and leadership. we have worked together on many issues. immigration above all. but export-import infrastructure. and most important, you're from st. theresa's parish in brooklyn. it's good to have you both here. we know the administration, when they tried to sell me on t.p.p., it's almost the geopolitics that prevails over the economics. we want to keep these countries in our orb rather than china's. if there's an economic web between them and china and not us, it's hard to do that. i agree with that goal. with that said, though, if that's one of the main goals of t.p.p., to lure countries away from china's influence, it makes perfect sense as part of the overall effort within t.p.p. or alongside t.p.p. to deal with china head on. to show them that there's not business as usual. china is our most rapacious trading partner. none of the other countries in t.p.p. do what china does. which is not only do they

manipulate their currency which has cost us millions of jobs and trillions of dollars of wealth unfairly flowing from us to them, they steal our intellectual property. that's been documented over and over again. and probably worst of all, when we have a good product, they don't let us in. we are at a new phase. we are doing high-end manufacturing. high-tech stuff. that's our hope and our future. we have already had the competition with china on furniture and toys and clothing. sort of low-end stuff. but if they start stealing our intellectual property in these areas and then they keep us out or they have us for us to join joint ventures that are 51% chinese government owned and take all that information to build their own industries from their protected market and then compete with us, i don't know of anything that is more frightening to me that will continue the thing that i believe is so important, which

is to get the middle class incomes going again like it was in the grand era of america from 1950 to about 2000. so i think we can do two things. and i know what china does. small companies, big companies. i had a small company in upstate new york, they needed material from china, rare earth. 500 jobs. the chinese told them, you want those rare earth you got to make that in china. the guy said i know that's against w.t.o., but i can't spend five years not having the good and going through the long w.t.o. process. then i spoke to the business round table, just about every one of them is one of your members, i told them i thought china doesn't play fair and it's hurting our big companies. and that's why we needed currency. we need to do more against china alongside, within, or alongside t.p.a. the position of the business round table is against that.

six of the major c.e.o.'s, all of whom you know, mr. donahue, we all know, came to me and said, we can't say anything. china retaliates against us. i appreciate that. it i was c.e.o. of one of these -- if i was c.e.o. of one of these companies, might do the same thing. but they said you keep it up. so my goal here is to do something about china. to do something about china, the most rapacious trading partner. i was disappointed in the efforts of president bush and i'm disappointed in the efforts of president obama. i dealt with five treasury secretaries on this issue of currency in particular from snow on. and none of them have done anything. this markup is a unique opportunity to stand -- to do something about the rapaciousness of china trade.

it's the one point in time throughout this process where congress will have the opportunity to show to china and the world it's not business as usual because they are just killing us. they are just taking everything from us. in a not fair way. the w.t.o. non-compliant way and they thumb their nose and say take us to w.t.o. i say to my colleagues, now is the time if there ever was one if not now, when? we have been trying for a long time. this is a unique opportunity to do something about china. some of us are against t.p.a., other people are for it. but we can all agree, we had 60 people as mr. trumka mentioned signing a letter we ought to do something as part of this process with china and i hope we will. i hope we will. we cannot have weak tea. anything that is just discretionary, that says the administration could do something against china if they want to, i have been through the wars on this one. i have tried every administration, i spent hours with every treasury secretary,

and they never will say china's a currency manipulator because the geopolitical forces are too strong the other way. unless we have something stronger than just given any administration, not just this one, more tools, it's not going to work. i hope we'll do something on currency. so my quick questions to each. mr. trumka, what do you feel about -- how do you feel about currency manipulation as part of this? mr. donahue, not on this particular bill, which i know you're strongly for, but do you believe we should be doing something on currency manipulation? that's it's a problem for our country, china's currency manipulation. mr. trumka: e.p.i. says currency manipulation alone cost this country five million jobs. if we eliminate we have the chance to gain almost six million jobs. we strongly support that. it needs to be part of the agreement. i would also say though, mr.

chairman -- senator schumer, that some of our partners in t.p.p. have been identified as currency manipulators, malaysia, japan, and singapore. senator schumer: i do. my bill just applies to china. mr. donahue. mr. donahue: as we have debated many subjects, as we know, that the china card, so to speak, is an issue we'll be dealing with for many years. it's complicated by serious problems in china as well. economic problems. my view about this bill is that there is a very serious attention to currency. as it should be. and it is at a point where i would encourage moving ahead without major amendments. in terms of dealing with currency outside the bill, there are a lot of things here that

are important. mr. trumka said, japan is a currency manipulator. they sure were back then. but they haven't been for a long time. people would accuse the united states of currency manipulation when we were dealing with the crises of recent years when we were handling and managing our interest rates and other factors that came out of the fed. the specific challenge that you raise about china is one that we will deal with for all of our lifetimes. i am very willing and very anxious to talk about other, beyond this agreement, other opportunities to get the facts straight, to look for ways to apply more -- i won't say aggressive, more successful pressure on these issues.

i understand the point about this theft of intellectual property. i make a point that we are making a little progress but not enough. i understand what happens when they decide to make a product and don't need us any longer. the china issue needs serious discussion. we'd like to be a part of it. i don't think at this date and this time you can go beyond what we are talking about on currency in this bill. senator hatch: thank you senator schumer. i want to make it clear that i believe this is a serious issue. and that i don't think it should be part of this agreement, which has been very fastidiously worked out. but i am willing to hold hearings and do appropriate work after we pass this bill, if we can get this passed with everybody's attention. senator cantwell, you're next.

senator cantwell: thank you, mr. chairman. i'm always struck when you two gentlemen are before the committee that there are many things that you actually agree on. and work force training and ex-im bank seem to be two of those. do i have that right? you're both supportive of like apprentice programs for job training? mr. trumka: we don't have enough of them. mr. donahue: the private sector spends something in the area of $60 billion a year on it. the public sector, rich and i have talked about this, the bill -- there will have to be a bill that job training and trade adjustment assistance, to follow all of these trade deals, but we really believe that has to be

thought out more. we are doing all old things in job training. we can do new things to train people for new industries. we both agree we need to do those things in the private sector and in the public sector. senator cantwell: good. we are proposing some new things, but i definitely am a big supporter of t.a.a. and don't think we should be doing t.p.a. or t.p.p. without it. i just think that this is -- mr. donahue, could you please tell the republican presidential candidates that they are wrong about the ex-im bank? mr. donahue: well, thank you. let me say, senator, we don't do presidential politics. we do every other kind. wait. we talk to people that are in the public world about presidential policies. and you're damn right we tell them. because we -- senator cantwell: that the ex-im bank should be passed. mr. donahue: i have told probably three of them myself and we are -- have a little plan to have a visit with some of

these people in the normal course of business and point out what the bank means to this country and to american industry in particular the thousands and thousands of small companies. senator cantwell: i want to say with my time that i'm a big -- i come from a big manufacturing state, and it has a lot of labor members in it, and it has a lot of people who support trade. in fact, probably one in three jobs are related to trade. i support having more bilaterals, multilaterals because a bunch have been done while we have been sitting around not having t.p.a. but at the same time i believe that we have to have these tools that work together, like the ex-im bank, and like trade adjustment assistance, and investment in apprentice programs, and the things that go along with this. so i just hope that we can get our colleagues here to understand that it's both. and i think you hold a lot of punch to make sure that we get these things done.

otherwise, then it's only shareholders at the top level benefitting from these deals and not working people. and i think that i would put up our manufacturing skills against anybody in the world. mr. donahue: best in the world. senator cantwell: i also don't apologize for our country being a leader in aerospace manufacturing and making a great product that's worth hundreds of millions of dollars. when people talk about boeing being a lot of the ex-im bank, it's almost as if people want us to apologize we don't make a lot of chotchkies and ship them over to china for them to buy. we are lucky we make an expensive product with a lot of skilled workers. we want people to buy those planes. i hope people will stop and realize for one second that aerospace manufacturing is a lot of jobs in the united states of america. mr. donahue: it's bad thing to make predictions because then the people you want to work hard let up. the things that you have raised,

the issues of job training and some of the related issues there, we could talk about community colleges and all of that, and the thing you raise on the bank, are issues that we are pushing very hard. and i feel we are going to get there. senator cantwell: thank you. thank you very much, mr. chairman. senator hatch: thank you senator cantwell. we'll turn to senator stabenow and then senator warner. senator stabenow: thank you for the hearing. when we are talking about trade we always need to start by saying we are in a global economy, we know we are going to trade. this is about whether we are exporting a product or jobs. it's a question of policy. we either have something that means we strengthen the middle class and it's a race to the top and we bring other countries with us, workers with us, or a race to the bottom. i will never forget sitting in greenville, michigan, with a

company that was making refrigerators a number of years ago, we were trying all kinds of ways to keep them in west michigan. finally they turned to us and said you can't compete with $1.57 an hour in wages, sorry. we can't be erased down to that. this has got to be a race up. fundamentally when we are talking about fast track, let's talk about fast tracking the middle class so that we can make it a race up. one of those issues is very much currency manipulation plays. i know my colleague, senator schumer, is talking about this. and others are talking about this as well. senator graham offered a letter with 60 members of the us senate, that's magic number, 60 members who said we would not support trade agreements. we wanted trade agreements to include enforceable currency language.

it needs to be in t.p.a. it needs to be in t.p.p. i'm wondering, mr. trumka, if you could talk -- i know you have talked about currency and the importance of enforcing it but talk more about what this means in terms of jobs. because from the numbers i have seen we have lost millions of jobs because we haven't enforced against china. or back when japan was doing it and they could do it again. it seems to me that's a very important part of enforcement. mr. trumka: absolutely. e.p.i. did a study and it estimates that correcting currency manipulation would create 5.8 million jobs in this country. that's almost six million jobs with currency manipulation being corrected. if you want -- if one of the reasons you want to vote for t.p.p. is because you want the u.s. to be a world leader, well, china is excluded from this agreement. china is a leader in that area and will continue to lead with

currency manipulation and we do nothing about it. we won't change the rules for currency manipulation between us and those trading partners or china and those trading partners. it will have a dramatic effect and continual drain of jobs. everything you gain in this agreement by reducing tariffs and other things, can be obviated overnight by people manipulating their currency. i want to say this, tom, i want to put your mind to rest i don't like you to worry. the actions of the federal reserve do not constitute currency manipulation, according to the i.m.f. desk. you don't have to worry about that. and that canard can be put to sleep. mr. donahue: others would accuse us because of the use of the fed to support us during a crisis of manipulating currency. mr. trumka: you agree it isn't currency manipulation. mr. donahue: i agree it isn't in standard terms and people

recently have come out and tried to agree within the international organizations that going ahead and dealing with interest rates that way wouldn't be manipulation, and they did it because all of europe has now gone to do that to try and save their own economy. senator stabenow: foreign currency issues versus domestic. we have economists from the right and left who have said here with the fed -- what is done here with the fed is not what we are talking about when we talk currency manipulation. i can say as we approach not just t.p.a. but after this t.p.p. and the ability to open up with japan which right now is closed. i grew up with father who had a car dealership. they couldn't put a car dealership in japan. they couldn't put cars in japan from the united states. cars made in michigan in japan

right now. so trying to open that up. but one of the concerns that i -- great concerns i have is when we see japanese auto makers who have made their whole profit in the past based on currency manipulation. let's compete fair and square. that's what i'm very concerned about as we move forward in these trade agreements. thank you very much. senator hatch: senator warner. senator warner: thank you, mr. chairman. gentlemen, it's great to see both of you again. a couple points i want to make. one, i do fear at times that the analogies back to nafta, thank goodness we are in a different world at this point. america is much more competitive on manufacturing. american energy costs because of things like you again both have supported like keystone and others make us more competitive. i think having a trade agreement strengthens our hands in terms of attracting jobs. i agree and one of the things

that senator schumer and senator stabenow mentioned was currency manipulation, it needs to be addressed. on the currency manipulation the way i read senator schumer's bill, this will be a prospective tool, but japan wouldn't apply right now on currency manipulation. there's a question whether china would with its current action. should we add more tools to our tool kit going forward as somebody who has lost money against companies in china through manipulated currency? absolutely. who have stolen our intellectual property? absolutely. but the notion of doing nothing right now and continuing a status quo would be a disaster for america. vis-a-vis china and the region. i point out to my colleagues, i wish senator schumer was still here, because most of his argument until he got to currency was in favor, you could argue, in favor of t.p.a. and t.p.p. because clearly america's position has weakened and it seems to be retreating.

i point out the new york sometimes article of saturday that points out the fact that we have, as a congress, have not taken up the i.m.f. reforms. we as a congress have not ended up doing export-import bank. that we have -- the chinese have started to create a brand new financial institution that is focused on asia, but ultimately could contest america in terms of the dollars of reserve currency. these are things if we want to truly protect american jobs, we ought to be worried about. so what do we do? well, there's 40% of the world we are talking about here, china's not part of t.p.p., who is going to set the framework for that region? i believe it ought to be american led. and i think the work of the chairman and the ranking member both in terms of the added transparency, adding intellectual property, and -- the fact there are not as strong standards on environment and labor as you like, but at least there are standards.

and i believe they are standards that can be enforced which has not been the case of what's happened in the past. if we take these 11 nations and combine them in what i hope would be an american-led trading entity, that this will give us an ability to actually increase our leverage vis-a-vis china who long-term, i believe we have to watch on every account, both in terms of intellectual property theft, in terms of trade advantage, in terms of currency. but let's not miss the opportunity for america to once again reassert its national and international leadership in trade in a way that i believe will actually increase jobs, increase job opportunities, and my fear is that refighting the battles of the 1990's in 2015 is not the format we ought to be looking at. let me just close with one question to mr. donahue,

although rich you can come back to me as well. i.s.d.s., we have folks, members of the senate who are saying this could open up a whole new can of worms. the ambassador has said repeatedly it does no. there are exceptions in the isds language that's been put forward. this is a tool that's not been used in the past. it is being ramped up and could undermine our labor and environmental laws. do you want to make a comment? mr. donahue: senator, it's an issue that can't stand the argument. it's so much stronger than the argument when you look at it. we have -- there are 3,000 trade agreements that have these provisions. we have never lost, never lost one of these issues. they have no authority to impede

on federal law. if we ever lost a negotiation, it would be somebody had to pay money. but it is -- it's been in trade agreements. it provides a rational way to address issues. the only reason anyone would bring this up is a reason not to do what we are about to do here is because they didn't want to do it. this argument doesn't carry the water. i think it's very important to understand something. we disagree 80% of the time. but we get along pretty well. i respect his positions. what's going on here is that the people who don't want to do the trade bills under the current circumstance would like to stop this bill because it's the only

way they could do it. i think to leave those trade bills on the side of the road to deny, as the senator from michigan said, the opportunity to create lots more serious jobs in manufacturing, and to sell to that 95% of the people around the world that want to buy our stuff, would be a serious mistake. i respect richard's real strong views here, but i am telling you he's going to have a hell of a lot more members if we do these deals than he is if we don't. senator hatch: your time is up. mr. trumka: may i respond, mr. chairman? first of all, senator, this isn't, again, an issue about doing nothing or having t.p.p. this is about making t.p.p. worthy of every american and not just the members. they are going to do real fine. -- not just tom's members.

they are going to do real fine. no matter what, they are going to do fine. it's everybody down below that that is when you say, these are some standards, they are better than no standards. we were told by the ustr general counsel that murdering a trade unionist doesn't violate these standards. the perpetuating violence against the trade unionist doesn't violate these agreements. excuse me, excuse me if i'm not willing to accept that standard because i think the country can do better. with regard to isds, look, this is a special privilege for companies. no individual gets access to isds. we haven't lost a case yet. we won a couple by technicalities that we would have lost. there was just a case in nova scotia two weeks ago. stone quarry. they wanted to expand a stone quarry. all around it was an environmentally sensitive area. they denied the permit to expand the stone quarry.

the isds panel said you're entitled to damages. they are going to collect because they didn't get an extension of their boundaries into a sensitive environmental area. this will affect food safety, it will affect the environment, it affects trade unionists, i can tell you that. this is a secret tribunal that you can't control because once you give them instructions, once that panel is impaneled, they have the absolute power to do what they want to do. and they have interpreted the language that you have given them, fair and reasonable economy beyond any stretch of an imagination. so senator, we can do a lot better and american workers deserve a lot better than what we are getting with t.p.p. or with this version of fast track. senator hatch: senator casey. senator casey: thank you, mr.

chairman. i appreciate the hearing. i thank mr. donahue and mr. trumka for being here. i especially want to note mr. trumka's pennsylvania roots and he's using that villanova law degree today. i'm grateful for the opportunity because it's important we debate this. even an issue that tends to divide the country and even divides both political parties between and among themselves at times. my concern here with both trade promotion authority and t.p.p. the trade deal itself, is the same concern i had about nafta and every other agreement since then. what is the impact not just broadly on pennsylvania, that's my first priority, but in particular what it means for workers and wages. and unless it can meet the test of -- that i set forth with

regard to workers and wages, it's very difficult for me to support either trade promotion authority or the trade deal itself. let me focus first on wages. i would argue that -- very similar to what senator schumer said about the middle class, our central challenge as a country our central domestic challenge is how do we solve this wage problem? there was a recent report by the economic policy institute which very graphically and in a very alarming manner set forth the correlation between wages and productivity, world war ii basically 48 to 73. almost perfect alignment. so if productivity was up as it was in those years, 97%, wages went up 91%. that's the way it ought to work. since 1973 for a whole variety of reasons, not simply because of trade, obviously, but certainly trade, i believe, is a

substantial factor, we have a -- in the united states of america, productivity up 74% in those 40 years, wages up 9, not 91, 9%. neither political party has come up with an answer to that central challenge. part of the debate -- part of this debate, i think -- probably should say part of the resolution of that problem is what we do on trade. not the only part of the solution. so we see now that a recent paper by economists at the university of pennsylvania as well as other universities found that when workers are displaced by trade, and they switch jobs they suffer real wage losses between 12% and 17%. i guess, mr. trumka, going to ask you, and some of this you set forth in your testimony,

what is the best approach in terms of using our trade policy to address this wage problem or lack of wage growth? mr. trumka: first of all you have to get it right on the trade authority. the fast track authority. i have laid out a series of things that would make it right so that congress has more control and can actually certify when they believe the objectives have been met. then when you look at it, we have laid out a whole chapter. in fact, we worked with the european union in anticipation of t-tip and laid out an entire chapter about how to make labor standards better so that we don't destroy their standards in europe or our standards here. i would love to submit that to you and put it into the record. senator casey: thanks very much. i want to say for the record as well, in this section of your testimony at the very end about

labor, and i'm quoting here when you analyze the so-called may 10 provisions and how they have fallen short, i think very few americans, very, very few, very tiny percentage of americans, know the story about what's happened in some of these countries to trade unionists. the number in colombia on murders you said was 105. that's evidence enough. even if it doesn't rise to the level of the gravity of a murder, just the intimidation and the threats failure to any kind of enforcement mechanism in place. what are we doing about that? i think virtually nothing as a country. so that's why, i think, your proposal as it relates to having -- giving congress more of a role in terms of weighing in on who these trading partners are and who gets in -- who gets into

our agreements, is a pretty reasonable and appropriate approach. i know i'm over time. thank you. senator hatch: thank you senator. senator menendez is next. senator menendez: thank you, mr. chairman. let me say at the outset i think we all have the same goal in mind and that is jobs for our families. markets for our businesses that together build a stronger american economy. and trade may offer some new opportunities but it also brings its challenges. we talk about breaking barriers to trade or ending barriers to trade, but i have a broader view of what those barriers are than just simply tariffs and regulations. for example, lower labor and environmental standards abroad make foreign workers with fewer skills, less expensive than highly skilled american workers with greater expectations for higher living standards. i think the failure to protect

our intellectual property in other countries leads to cuts in the values of or investments and value of our products in international markets. so at the end of the day, for me, and i have -- i voted -- i just haven't had a knee-jerk reaction against all trade bills. i voted for some i thought the balance was right. for me trade bills have been about protecting, providing opportunities for my state's workers and our businesses in a world where competition is not always fair and not always open. it seems to me we should have the standards we set for any trade deal and the deals themselves on how well they deliver on those priorities. with that, let me ask you, president trumka, i heard your comments in the office when i was getting ready to come, now -- i know you're very passionate about workers' rights.

i think a barrier to trade is also the ability to enforce the provisions of our trade agreements, which i think have sadly not gone in the direction that i'd like to see. and those include the provisions of trade agreements as it relates to negotiated labor standards. so can you talk a little bit -- you started with my colleague, senator casey, about colombia. about the lack of enforcement mechanisms and would you support an amendment that would mandate that all countries must meet negotiated labor standards prior to any new trade deal going into effect with them? in other words, to verify before we trust countries who have lax labor standards. mr. trumka: i would. the other thing i would suggest is the wage standard that's talked about in most of the trade agreements, including t.p.p., is the minimum wage. it doesn't talk about anything beyond the minimum wage. the minimum wage happens to be 65 cents an hour.

the lack of enforcement is one of the major problems of labor standards and environmental standards. the may 10 agreement was a step in the right direction, but it doesn't get us there. the truth is that the guatemalan situation where you're dealing with gross violations of the i.l.o. standards has been going on for six years now. with no end in sight. colombia, we have had 105 trade unionists killed since the labor action plan was put into place and there's nothing they can do about it. that's why senator, getting the rules right now is so important. because no matter how great the enforcement, if the rules that you have are inadequate, no matter how great the enforcement, they don't get there. and the rules or the standards that are being told to us that are in t.p.p. are inadequate to protect american workers and

discourage american manufacturers and employers from sending jobs offshore. so we are all for enforcement and i'm sure tom would agree that we want to eliminate every one of the cheaters that we can. but if you don't have the standards to enforce, you can't get the job done. senator menendez: i agree you need the right standards. even if we had standards some of us might agree to, we haven't had the enforcement mechanisms. let me ask you, president donahue, i have long advocated for a strong intellectual property protection in any trade deal. does the chamber believe that protecting innovation through strong i.p. protections is an important priority in any trade deal? mr. donahue: the chamber senator, has a major broad system both international and domestic, on dealing with counterfeiting and the theft of intellectual property.

we put a great deal of money in it. we work with individual countries and groups of countries. we have had significant improvement in about 70% of the countries which are giving us much better protection of intellectual property. we are also doing it at home. because you can lose your intellectual property here in the united states faster than you can get ready to go to work. the points made about china and others, there are still issues where there's a sophisticated way of going after intellectual property. senator menendez: the current u.s. standard is 12 years of patent protection for biologics. this is an incredibly important industry in my home state of new jersey. do you think our trade deals should protect that standard?

mr. donahue: i don't exactly know the answer to that but i will tell you something. i know more about the protection of biologics and patent deals on pharmaceuticals just in my own family. i'm dealing with that issue now. and i want to do anything i can to protect america's ability to drive the innovation that they are in biologics pharmaceuticals, and other things that we are doing. you can't catch up with me on that deal. senator menendez: i'm glad to hear that. i know that you have to run after me on that part. i look forward to working with you on that issue. senator hatch: your time is up. let me just say it was kennedy and myself who drove that 12-year data exclusivity

without which we would not have a biological empire in this country. so you're talking the truth. i appreciate you raising it. senator isakson. senator isakson: thank you, mr. chairman. i appreciate the opportunity and learned a lot from listening to other questions. i am one that favors doing business. i sold houses for 33 years of my life before i came to congress. i never saw the perfect deal but i made a lot of deals. had a meeting of the minds. this is not a perfect deal. the question i have in my mind is to make sure this is the best deal we can get to move forward for our country. i give you this premise. two years ago a mission to india, all american jobs had gone to india, remember that tom, when all the help desks were going with india? we went to meet with mr. murtry, the owner of the largest traded company on nasdaq. he had a campus in india where he was doing backroom operations

for hospitals, emergency rooms. we asked him this question, we said mr. murtry, all of america's so scared, all of our jobs are going to india because of what you're doing with lower wages and more technology and things like that. what would you tell the american people? why should we not fear india? he said a very simple reason. when i started my business, i drove an indian car, i banked with a bank of india, and drank an indian soft drink. today i drink coca-cola, i bank with citibank, and drive with ford. the point being when you do business with people, you end up doing business both ways. american products were then being sold in india. today interestingly enough, 12 years later, the help desk has come back to the midwestern united states and left india because the standards have grown in india for wages, labor laws and things like that where they went to a comparable playing field with the united states. i believe doing business is good for america. i respect the middle class. mr. trumka, i was in savannah, georgia, yesterday where we have a new plant, caterpillar has come into georgia from japan. where they have been building tractors in japan, they are

building them in georgia. that's good for manufacturing jobs in georgia. those are the middle class jobs. it's very important that we promote jobs that promote trade because 1.2 million georgians jobs' directly are dependent on trade. we are the eighth largest state in the union. we have over 10 million people. i want to make sure we continue to trade, a vibrant trade policy, not one that looks the other way at labor standards but one that's realistic enough to continue to do business. because if you do business with people you have a better chance to influence your rights than if you don't do business with them. would you agree with that, tom? mr. donahue: the history of the u.s. economy from our very beginning was doing business with people around the world to bring us products we didn't have, innovations we had yet achieved, and it shifted to where we are shifting products and innovations all around the world which has given us over

time more influence around the world than we otherwise would have had. we could sit here for a week and talk about the value of america's export of ideas and values and products. i think the argument here should come down on this particular bill to finally, after all these years, putting us in a place to do more of what we have done for years to sell american products, to move american ideas and values, and i hope we don't screw it up looking for the perfect or seeking to get rid of this bill because we really don't want to do the trade bills. mr. isakson: mr. trumka, i have a lot of respect for what you do and represent. one of the things you told me and means a lot to me is workers' rights and making sure people are treated right, but

you have a better way of influencing your values or exporting your values overseas if you're doing business with somebody rather than if you're folding your arms and not doing. one example, swaziland swaziland is in africa. i do a lot of work in africa with the african growth and opportunity act which i think , this week we'll hopefully extend for 10 years. in that, swaziland was a participant until we learned they were beating up their workers for not working hard enough and long enough. we withdrew them on -- suspended them on a temporary basis. they came back to the table and treated workers right because doing business with america was more important than abusing workers. my point is, and i would like you to respond to this, don't we have better leverage by having influence by doing business with people to encourage them to do better in terms of treating their folks, who do we have to insist on it being a part of the deal? mr. trumka: first of all, it is important to do business with people. but the rules are important. because the rules and the trade agreements that you have been talking about have been

resulting in a $500 billion deficit in this country each and every year, trillions and trillions of dollars flowing out , not coming in. that's why it's important for the rules. it's also important for the rules whenever you engage them to have the ability to help correct those things. if they are going to agree to the i.l.o. core standards, quite frankly if we are willing to agree to the i.l.o. core standards, because we haven't been willing to do that yet, then you got a chance to really influence them. and improve their conduct. but if all you do is say, all you have to do is comply with your minimum wage and then when they don't even comply with their minimum wage, we don't have the ability to influence or change it, it goes the opposite way. senator, they look at the united states as perpetuating that bad treatment not correcting it. and we are better than that. and we can do better than that if we can write the right rules and we have an agreement we can

enforce. then we can be a positive force for good around the world. but this trade agreement will not do that. mr. isakson: mr. chairman, let the record show i gave both sides a chance to make their case. senator hatch: you're up, senator brown. senator brown: thank you, mr. chairman. senator wyden, thank you. mr. trumka, mr. donahue, good to see you both. mr. trumka, a lot of people accuse you and me of being against trade and protectionist and being stuck in the last century or even the one before the last century. did a.f.l. oppose this from the beginning? mr. trumka: we engaged almost five years ago, we submitted dozens and dozens, a couple hundred suggested language changes to make the agreement better.

we did and still want to be able to support t.p.p., but in its current standards, it falls far short. senator brown: you could see from the amendments a number of us will offer, there will be a lot of them, mr. chairman, as you may have heard by now, that we will be offering on thursday, or wednesday, i guess, you could see that this trade agreement, the t.p.a. and t.p.p. could be improved significantly if -- if you would take two or three ideas that you have tried to constructively engage u.s.t.r. or the staff of this committee in to give me just some ideas of where we could do much better than we are doing on this. mr. trumka: with regard to t.p.a., first of all ensure that congress approves trade agreements before -- partners before they are negotiations begin. that you create objectives that are specific to each individual

trading partner. that congress and not the executive branch determine whether congressional trade objectives have been met. we have submitted a whole chapter on labor to make it better. we have submitted a chapter on currency. we have submitted a chapter on isds, and we submitted a chapter on the environment that doesn't include procurement rules and a number of other things that we think could make t.p.p. not only a good agreement, but one worthy -- senator brown: what has been accepted? mr. trumka: less than three or four changes have even been offered from our trade reps. they haven't been included in our proposal, no. senator brown: i have tried to engage in the process both as a member and staff level with the u.s. trade representative. i pushed for currency discipline i pushed for better enforcement , of labor standards, for improved state-owned enterprise

language for modified investor straight provision, literally more than a dozen more. if i were anti-trade, like you i wouldn't take the time, wouldn't bother, wouldn't get my staff to put the time in. ustr claims they have had 51 meetings. the ambassador sat where you are sitting late last week. they claim they have had 51 meetings with me and my staff. that may be true. we have asked them for the list of meetings. and true to form they haven't responded as they so often don't to members of this committee let alone the rest of the house and senate. when they do with me, it's not to exchange ideas or to rethink how we do things, it's to tell me why i'm wrong, that my concerns are not valid. the administration has taken this approach that you're either with us or against us on trade. nothing in between. and i have heard your testimony through all of this about talking about there's t.p.p. there's present law, there's something in between that's much more desirable that we could get real agreement on.

i just wonder why on trade agreements when we have seen what kinds of permanence they bring and how they affect all americans, why there is so much hostility to changing the direction of trade policy, the american public, as you point out, is pretty cynical about this and skeptical about congress's learning nothing where this t.p.a. with some exceptions, but minor, is not much different from t.p.a. of 10 years ago. it's been 13 years since congress passed fast track. yet the bill we are considering today is fundamentally the same. again, with small minor , relatively insignificant exceptions. i'm going to continue my effort tomorrow to improve u.s. trade policy. i think we have real opportunity in this amendment process. my question then for you, mr. trumka, last question is, could you comment in sort of a general but substantive way on what's at stake if we don't improve u.s. trade policy? what happens to our country? i heard mr. donahue's vision

that the world falls apart, more or less if we don't engage. china takes over the world. and maybe colonizes the united states, i'm not sure where he was going with that. if you would give us your view on what actually happens if we don't do this as written today. mr. trumka: t.p.p. is 40% of the world g.d.p. and t tip another 20%. that means it will cover 60% of the world's economy. if it's not done right, you'll see the continuation of wage stagnation. you'll see the continuation of a growth between inequality growing in this country. you will see the middle class continue to shrink and get decimated. you will also see eventually the weakening of our economy because you can't continually have a massive trade deficit every year

that sucks jobs out of the country and not be able to remedy that in some way or another. so one way to remedy is you stop buying other products, i guess. that would create a tremendous hardship on our economy and on the american worker. something none of us -- senator brown: i heard somebody, i will close with this, not a question, just a statement, that a billion dollars in service trade can translate into 7,000 jobs. that's great. it's a little bit, though, like saying the cleveland indians scored six runs yesterday. well, yeah but the tigers scored eight. when you talk about a billion dollars in services, trade 7,000 jobs, what is it when the surplus, when we are buying so much more than we are selling, china, $300 billion a year, and how many jobs is that? president bush the first said 13,000 jobs for every billion dollars in trade deficit. it's pretty significant job loss

that we continue to add to with one trade agreement after another. i'll stop there, mr. chairman. thank you for your indulgence. senator hatch: senator wyden would like to make a comment. then we'll turn to senator grassley. senator wyden: thank you very much, mr. chairman. i passed at the beginning because i wanted all of my democratic colleagues to have a chance to speak first. while senator brown is here i just want to be clear that i think he has had a very valid point that the playbook on international trade has to change. trade agreements in 2015 have to be very different than trade agreements from the 1990's. the president, to his credit, said in the state of the union that passed agreements haven't lived up to the hype. we have to make sure that our trade policies are not part of a time warp. 25 years ago, nobody had an

iphone nobody was texting, china wasn't an economic powerhouse. i will do this briefly because i didn't ask any questions early on, what is different with respect to the legislation that will be considered this week and in effect the old playbook? the first area in which it is different -- and especially appreciate senator brown focusing on this -- is on trade enforcement. trade enforcement has to focus on protecting american jobs, high skill american jobs that paid good wages. people think, why in the world would you be talking about a new trade agreement if you are not enforcing the laws on the books? you see this in the legislation. it includes the bipartisan enforce act. to go after tax cheats.

it includes an upgrade on 301 something i think our friends and labor have been absolutely right about. it includes a measure to have warning bells go off with this legislation, the united states will aim higher in trade deals. in the 1990's, labor and environment were basically an afterthought. if you had said in the 1990's you are going to have enforceable labor and environmental issues, people laughed at you. that is not the case and a longer. they will be enforceable embedded in the text for the first time. there will be a new provision to focus on human rights. i touched on secrecy questions. i can tell you, having been a young commerce men in those days, lots of people in the congress were in the dark about what was being debated with

respect to trade. those days are over. the american people will be able to sit at a town hall meeting for up to four months with the actual text of the agreement so they can ask questions of their members of congress. the legislation goes further than any trade promotion bill to protect american sovereignty. it guarantees that trade deals cannot change u.s. law without congressional action. it guarantees that foreign companies will have no more rights in international tribunals than in international courts today. no back doors to skirting the laws. finally, legislation that chairman hatch knows about because we had a lot of spirited conversation about it, it protects congress's ability to put the brakes on a bad deal. it is an opportunity for congress to stop a bad deal in

its tracks. the last point i will make response to why i have been in this from the beginning. i think mr. trumke is spot on in talking about the middle class and how important it is that they get a better break. wages have been stagnant for them for a lot of years. here is the way i was looking at it. it was kind of the defining judgment i made in getting into this. in the developing world, the middle class is going to double between now and 2025. that means there will be a billion middle-class consumers in the developing world. and i want them to buy our products. i want them to buy our computers our wine, our cars. our helicopters and bikes. that is a chance for people to get highly skilled, high wage jobs.

i think everybody knows we are going to have a spirited debate. fee have seen some of that today. i want to tell mr. trumke and mr. donahue that i will work closely with both of you in the days ahead. i'm committed to doing this in a way that works for middle-class families businesses. we can get trade done right and it will be a winner for american families. mr. chairman, thank you for the opportunity to wrap this up. i look forward to working with you and our colleagues tomorrow. senator hatch: senator grassley will be our last witness. i expect you to be the last witness. senator grassley: since i was absent i do not want the witnesses to think i do not have an interest in this trade issue. i had a hearing on the juvenile

justice reform in the judiciary committee that i chair. i just got done with that. but i thought i ought to come by and speak my support for moving ahead on trade agreements. to me, it is common sense when 95% of the people who live outside the united states and we are in exporting nation that whatever we can do to get our products into other countries and particularly countries with higher trade barriers that leveling the playing field -- a word we use around the hill -- so many times, it gets overused. but having a level playing field for exports. those jobs pay 15% above the national average.

it seems to me it is the thing we need to pursue. common sense being that 95% of the people are outside the united states. that is where the market is. a want to complement the chairman and the ranking member for moving ahead on this package of bills we have. particularly on giving the president the authority he needs. and we have given to presidents on and off since world war ii to do what they can to level the playing field for american exporters and jobs connected with that. i yield. senator hatch: this morning, congress received a letter signed by nearly 300 manufacturing organizations. urging swift actions to renew trade.

this motion will be entered into the record at this point. i want to thank my colleagues for their participation today. i want to thank our heavyweight witnesses for joining us today. i have great respect for both of you. and i have known you for a long time. i want everyone to know that i recognize there are passionately held views on both sides of these issues. and that these debates are not easy for anyone. no one has had a picnic you. you all know where i stand when it comes to trade. i want to convince everyone to support tpa. i wish we could report a tpa bill unanimously but i think it is clear we cannot do that. senator wyden and i have done our best to create a process so that this legislation is bipartisan. so far, i really think we have been successful. i think most people would agree with that.

this is important for our country, important for our industry. in the end, i think we will have members from both parties supporting our bill. i want to personally thank senator wyden once again for his help on this effort. it has been very difficult for him and many of my colleagues on the democrat side. and mr. trumka, you have not help them much with your criticism. mr. trumka: i appreciate that. senator hatch: i would expect nothing less. but senator wyden deserves a lot of credit. i think it is important we move forward. i'm looking forward to a more lively discussion tomorrow as we mark up the bill. let me just say that i have tremendous respect for both of you. mr. donahue, you have been

around here a long time. you are no shrinking violet. you handle your self very well and represent the business community about as well as anybody i have seen. mr. trumka, i think you represent the unions very well. you are a tough guy, a smart guy. even though we disagree on this bill, i have paid strict attention to you too. this is basically your administration that is doing this. i am trying to help the president on this bill. i think they are right in pushing it the way they have. but i still have the obligation to appreciate you as well. we are going to have to find some things we can work on together. we have in the past, but i think we have to find some things to work on together. i'm going to count on you to help me understand that, ok?

with that, let me say that i have been really appreciative for you to stay this long and to answer any question everybody has asked. with that, we will recess until further notice. thank you. [captions copyright national cable satellite corp. 2015] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org]

>> in terms of the enforced bill that is now part of the senate version of the customs organization, that has met resistance in the house for the same issue to fight division of duty. through you see a compromise -- do you see a compromise? senator hatch: we have worked this out over years between both houses. and between both parties.

and it is a sensitive thing that we have to get through. you know, i am not going to be very enamored with most amendments. >> do you expect the house floor to be first before the senate for the tpa bill? senator hatch: we expect the senate to be first. we have to do our job here for congressman ryan for his committee to do their job. >> is that from senator schumer? senator hatch: as i understand each of them have an amendment. he will have to see how that works out. >> you do not know if it is germane or not? senator hatch: we will rule on it to mark. -- tomorrow. >> the full senate vote, when do you expect that?

senator hatch: i have to go, you guys. >> the outlook for the vote count tomorrow on the legislation? for the vote tomorrow, the markup. senator hatch: i do not know we will do much more tomorrow. as you can see, there are some people -- >> do you think you will get a good amount of democratic support? senator hatch: we are on track. thank you. >> the senate finance committee is meeting tomorrow to mark of

legislation relating to pending trade measures. these include a fast-track promotion authority that would give the president authority when negotiating trade agreements and require congress to consider treaties with an up or down vote without amending them. see the meeting as it gets underway live at 10:45 eastern on c-span3. >> during this month, see spam -- c-span is pleased to present the winning entries of the studentcam competition. it encourages students to think critically about issues that affect the nation. 's students are asked to create document is based on the theme the three branches and you to demonstrate how a policy by one of the three branches of government has affected them or their community. nicholas mills jack rust, and

prim phoolsombat are one of the winners. they focused on the supplemental nutritional assistance program. >> in 1974, president johnson signed the food stamp act to help low income families with their food costs. today, the supplemental new it -- nutrition assistance program continues to provide assistance to low income households. ♪ >> it is nutrition assistance in the form of a benefit that people can use at grocery stores. >> the program is state operated, but the federal government pays full cost of the program. in maryland, it is called the food supplement program. according to the center on budget priority, 47 million americans perceived benefits from snap in 2014.

the department of agriculture says one in seven americans received snap benefits in august 2014. next two unemployment insurance, snap is the biggest federal program that assists low income households during economic slumps according to the center for budget priorities. almost any household with low income is eligible. >> our children, the elderly, or the disabled. >> one of the things i think is most important is that it is really responsive to the economy. even though it is a nutrition assistance program, because it is based on household income, it will be available when the economy gets worse and people lose their jobs. that is what we have seen. we have seen people join the program during a recession in record numbers because the recession was harsh on millions of americans. >> in 2009, the government

launched the american recovery and reinvestment act to support struggling americans during the recession. it boosted funding for snap and increased monthly benefits by 13.6%, helping millions of americans through the recession. >> the recovery act did boost benefits to everybody on snap. that was done partly because people were hurting during the recession. it was also done in order to inject money into the economy. >> after the effects of the boost in funding are clear. a study by the department of agriculture found that after arra low income households spent 5.4% more on food. >> it was always designed to be temporary. it did end in september of last year. the households that enjoyed a

benefit were caught. >> the program ended dramatically decreasing benefits for low income families. the repercussions are felt throughout the nation. >> every food stamp recipient lost an average of about $90. >> households of one person received an $11 cut two persons, a $20 cut. for a four-person household, a cut of $36 per month. in addition, snap provides only about $1.40 per person per meal. >> you cannot live on food stamp income alone. >> it was compounded by how hard it was to go into the supermarket. we did it for one week. we had to live on $24. extraordinarily difficult. >> the ending of arra was not

the end of the cuts to snap. the farm bill renews snapped under agricultural policy. the 2014 farm bill includes $8.7 billion in cuts to snap. these hurt the millions of citizens enrolled in the program. the cuts were the result of an effort by opponents to cut funding to the program. some members of congress argued that snape is a wasteful program and that funding it hurts the economy. >> it has created lots of problems. in 2001, there were 2.3 million total nonworking foodstamp households. >> on the contrary, the program stimulates the economy as more snap dollars are used. >> when you are buying food, you are stimulating the farm economy , stimulating the economy in lots and lots of ways. >> another misconception about

snap is that people are freeloading off of it because they do not want to work. >> the majority of able-bodied people work for a living. they earn so little that they qualify for snap. >> snap is the last federal program one would accuse of being an efficient. -- inefficient. >> there are those that want to say there is brought in the program. it has the lowest error rate of any federal program 3.8%. the denigration and humiliation of people who find themselves in difficult straits, some who thought they would never have to apply for the program that we would say no, it is not what we are about. >> we can solve it. if we solve it, i think it would

be a good example for the rest of the world. >> pope francis recently gave a speech at the end of a nutrition conference in rome several months ago. and he talked about the right to food. that it was our obligation, a moral obligation, to make sure that people have enough to eat. >> america is one of the richest countries in the world. despite its wealth, millions of americans cannot afford to eat. congress, you need to realize that hunger is a real problem in america and that people need snap. >> as i tell my colleagues who say that the government should not be funding programs like snap, we cannot afford to, my response is that we cannot afford not to. >> it is not a question of the program. it is a question of who we are as a nation. >> congress, it is your moral

obligation to the citizens of americans to prevent hunger. >> to watch all the winning videos and learn more about the competition, go to www.c-span.org and click on studentcam. also tell us what you think about the issues the students addressed on facebook and twitter. >> coming up, a look at expanding u.s. trade with cuba as the countries normalize relations. later, former president bill clinton shares stories about his life as a public servant. >> on the next "washington journal," reid ribble has the latest on foreign-policy challenges, including the proposed nuclear deal with iran and combating isis. then michael capuano talked

about dodd frank as it approaches its fifth anniversary. after that, our spotlight on magazine series with the christian science monitor's michael ferrell on cyber security. those conversations with your calls and e-mails. >> here are a few of the book festivals we will be covering the spring on book tv. this weekend, we will be in maryland's state capital hearing from alberto gonzales and james risen. in may, we will revisit maryland for the gaithersburg book festival along with david axelrod. we will close out may at book

expo america, where the publishing industry of -- showcases upcoming books. then we are live for the printers row lit fest with lawrence wright. that is this spring on c-span2's book tv. >> next, senate agriculture committee looks at expanding produce and farm equipment trading with cuba. speakers include u.s. farmers and ranchers along with officials from the treasury and commerce departments. they discuss opportunities and challenges of trading with the island nation, following president obama's announcement in december 2 normal as relation. legislation is being sponsored in the senate that would temporarily lift the trade embargo. the hearing is two hours and 10 minutes. >> let it go.

it sure got quite. the committee will call to order. a call this meeting on agriculture and for history to order. at the beginning of this congress, i was extremely hopeful trade would be an area where we could work across the aisle to find agreement. i still maintain that hope. we certainly hope that is the case. we are working very hard in the finance committee to make it happen. tomorrow, the senate finance committee will mark up the trade authority promotion bill, that allows negotiators to garner the best deal possible for american exporters. tpa is good for agriculture, and i look forward to getting it passed. the trade of agricultural products is critical to the nation and to the nation's

economy. along with farmers and ranchers. 71,000 jobs, about $12 million. i have long fought to eliminate barriers to trade. i think we should work to continue to words -- towards new market opportunities for farmers. and that is what we are here to talk about today today. the united states and cuba certainly have a long history for of contention and instability. there is no shortage of opinion from members of congress about the relationship between our countries. both present and future. some are concerned about human rights. rightfully so. others about socioeconomic ideology. but those concerns are not what this committee will focus on this morning. today, we are here to discuss the role of agriculture, opportunities and challenges in cuba. for over 50 years agriculture

exports to the island had seen ups and downs. sometimes due to politics and sometimes due to mother nature and the tropical storms she brings. this is not an issue we will fix overnight. it will take ever. --effort and hard work to normalize trade with cuba. decisions are made regarding trade with cuba must be made carefully. four months ago, the president announced a major shift in u.s. policy towards cuba. it is my hope that the president will work with the congress to determine the best path forward. foreign policy does not happen in a vacuum. we have to take a realistic approach and work out a step-by-step plan towards lifting the embargo. this is a goal that shouldn't use -- should include congress. we will hear from a panel of experts, from the regulators

responsible for writing our policies and those that seek to grow the market for their products. i understand that many witnesses have traveled to cuba to see what challenges and opportunities exist. i book forward to hearing about what we might be able to achieve with more trade with cuba but we also need to hear about the difficulties that lie ahead. if we want to be successful in creating a successful engagement with cuba, we are going to have to really put in the work. agriculture has long been used as a tool, not a weapon. a tool for peace and stability. it is my hope that cuba will embrace the practices of free trade, enterprise, and commerce so that both countries will gain from increased relations. earlier this year, the u.s. agriculture coalition for cuba was launched. they have shared a statement and additional information in support of our work today.

i ask unanimous consent it be entered into the record at this point. >> without objection. mr. roberts: i look forward to hearing from our witness, and i recognize senator stabenow. senator stabenow: thank you, mr. chairman. it is great to have an opportunity to talk about this topic. i appreciate the opportunity to work with you on trade opportunities between the u.s. and cuba. three thanked those who are with us, officials, industry representatives testifying today for your part in the process. we look forward to hearing from you. trade with cuba not only represents a great opportunity for american farmers and ranchers, but a meaningful way to help rebuild trust between our countries. after more than 50 years of stalemate, it is time for a new policy in cuba. when i visited cuba earlier this year with senator leahy, who is

really one of the senate's experts on various pieces of cuban culture and economy and someone, we visited days this is the second time i've had the opportunity to be in cuba with senator leahy and others. it was very different the second time, with people instead of being very reserved and cautious, cubans were coming up to us and were very eager to develop a new relationship. it was a very different tenor. but we can only do that with meaningful steps that will soften the barriers that exist between us. america's farmers and ranchers are uniquely positioned to lead the way. i agree with senator roberts that agriculture is in a key position. in 2014, the u.s. exported just

over 290 million in agricultural goods to cuba. good start. this is a country only 90 miles off our shores. we can do better than that. cuba's import agency estimates it will receive 2.2 billion in u.s. dollars worth of food and agriculture this year. we can do even better than that. that type of economic potential deserves a chance to succeed. it is one reason why many of the largest trade associations, companies within agriculture have come together to increase engagement. many on the committee have taken the opportunity to go to cuba in addition to senator leahy who he and his staff have been real leaders in developing our relationship with cuba. we appreciate your leadership

and your efforts. the commitment to democratic ideas and human rights we share as americans are best realized through engagement. i believe our bedrock principles a company every product that our farmers and ranchers send to cuba. last week's actions by the president is a step forward in normalizing the relationship and will test the commitment of the cubans to this process. even while we are making progress in rebuilding our relationship, the policies governing trade between our countries are not yet designed to allow a steady flow of goods and services. mr. chairman, i look forward to working with you and others to find a path for u.s. financial institutions to safely and securely work with cuban purchasers, including extending lines of credit to look for a broader range of goods and services that we can export to cuba.

these measures are not only good for business, but they will help cuba's agricultural capacity and make the island a better trading partner in the long run. i know that working together we can write the next chapter in the u.s.-cuban relationship. sen. roberts: thank you. i now have the pleasure of introducing a friend and colleague of mine, senator leahy , the undeclared but yet accurate king of the dairy policy. and the dairy policy policy who comes in at the 11th hour to help us write a farm bill from time to time. you may go manage a bill on the floor in your very snappy attire. sen. leahy: thank you, mr. chairman. i like being with a chairman who knows how to comb his hair. [laughter] sen. roberts: i appreciate that so much.

just let it go. sen. leahy: i can't do as well as you do on the tones on your phone, but i commend you for holding this. all seriousness, this is an important hearing. here is cuba, 90 miles from our shores, we have the ability to help them gain control of their own life, and we could also expand american farmers. we have to temper our hopes and remember that cuba's economy is a shambles. its people are suffering. but i would note what senator stabenow said. she spent time with the agricultural community on our last trip. i've been going to cuba numerous times in the last 20 some odd years. this last trip, you saw a huge

difference. you started seeing american flags in the stores, american flags on the taxis. a lot of the taxis are mid-50's automobiles. they have flags of different countries. never seen american flags on them before. we are not going to have an immediate commercial windfall for american agriculture, but cuba has used our embargo as a phony excuse for its own failed policies. now, we have a chance to create a more efficient opportunity for cubans to buy u.s. products. canada and the european union are there already. they were talking about things that we produced that they were bringing in from new zealand. and we are 90 miles away. i think that american

agriculture has often been the bridge in normalizing countries. this will allow us to do that but also let the cuban people see that it is their own government responsible for the depression in their country. i say the all that really to applaud you for doing this. i think we can all learn by this. i look forward to my next trip. sen. roberts: i thank you for your comments. i know you have to manage a bill on the floor, something we are different -- we are doing differently this year. we are managing bills. good luck in that respect. welcome to our first panel of witnesses. the honorable michael scuse serves as undersecretary for farm and foreign agriculture services. undersecretary scuse has

previously served as the deputy undersecretary for farm and foreign agriculture services as well as secretary of agriculture for the state of delaware. welcome. i look forward to your testimony. mr. scuse: chairman roberts, ranking member state to know -- stabenow.,, i'm pleased to come before you today to discuss agricultural trade with cuba. in december, president obama announced policy changes to chart a new course in u.s. relations with cuba. the measures seek to expand opportunities for america's farmers and ranchers to sell goods in cuba. in january, the treasury department published regulatory changes including a revised interpretation of the term "cash in advance" and authorization for u.s. banks to establish accounts. these changes have been sought

by members of the u.s. agriculture community. congress lifted the decades-old ban on exported agricultural product's to cuba. u.s. government agencies including the usda remain prohibited from providing export assistance and credit guarantees for exports to cuba. as secretary bill stack is said, he can't use a single dollar for trade with cuba. these restrictions apply to usda's very successful market development programs like the market access program and the foreign market development program. the policy changes are significant, but legislative hurdles remain. bills have been introduced to further open trade with cuba including legislation sponsored and cosponsored by members of this committee. usda stands ready to provide

assistance to congress as it considers further openings with cuba. if the embargo is removed, we could see this become a major partner with cuba. cuba depends on imports to feed its citizens. according to the world food program, cuba imports about 80% of its food, which means potential for our producers here is significant. the united states has potentially huge advantages in exporting to cuba. chief among them is location. we are less than 100 miles away. meaning lower shipping costs and transit times, especially compared to our current top competitors, brazil and members of the eu. in fiscal year 2008, u.s. agricultural exports to cuba reached $658 million. by the end of last fiscal year they had fallen to $300 million.

global agricultural exports to cuba have doubled over the past decade to approximately $2 billion. right now, the largest u.s. agricultural exports to cuba, poultry, soybeans, and corn. i'm confident that u.s. agricultural exporters can capture the market in cuba, but i don't want to minimalize the obstacles. cuba is a country with limited foreign exchange. we are also behind our foreign competitors in market development. another impediment is cuba's import policy, requiring all u.s. imports to be channeled through one state corporation. the policy changes towards cuba are just one example of opportunities to help farmers and ranchers build on their record agricultural exports. in fiscal year 2014, agricultural exports reached a

record $152.5 billion, and supported nearly one million american jobs. the potential for u.s. agricultural exports around the globe is considerable. it is critically important that congress consider and pass bipartisan trade promotion authority legislation introduced last week. tpa will help ensure that america's farmers, ranchers, and food processors receive the greatest benefit from trade agreements currently being negotiated. in conclusion, there is potential for expanding agricultural exports to cuba over time. agriculture has served as a bridge to foster cooperation understanding, and exchange of ideas. agriculture will play an important role as we expand our relationship with the cuban people. thank you. sen. roberts: thank you, sir.

mr. matthew borman currently serves as the deputy assistant secretary of commerce for export administration. mr. borman is responsible for implementing the bureau of industry and security controls on the export dual use items for national security, foreign policy nonproliferation, and short supply reasons. welcome, mr. borman. i look forward to your testimony. i think undersecretary scuse for being on time. most senators can read all of their staff can read. feel free to summarize your statements. sen. stabenow: -- mr. borman: thank you, mr. chairman. it is a pleasure to be here. i will address the role of the department of commerce.

as you know, in terms of the cuba embargo, the commerce department is responsible for regulating items to cuba. the treasury department responsible for financial transactions. as you know, on december 17, 2014 the president announced significant changes in cuba policy. these changes are intended to create more opportunities for the american and cuban people. to implement these changes, we at the department of commerce amended our export administration regulations on january 16, 2015, to expand the authorization for exports of certain categories of items to cuba. we expanded the license exceptions available for commune nications devices. we also expanded the ability for u.s. exporters to send gift

parcels and consolidated packages to cuba without a license, and we created a new license exception for the cuban people. a license exception means as long as the exporter complies with conditions of a license exception, they don't have to submit a license application and wait for the government to say yes or no. exporters always feel that license exceptions facilitate trade. the principal focus of the license exceptions support for cuban people is getting hands into the private -- getting items into the hands of the private sector in cuba. u.s. persons are now able to export building materials for private sector building in cuba. they are able to export items into the private agricultural sector in cuba. generally, things that go to

private sector entrepreneurs. the focus is to make it easier for the export of items from the united states to the private sector of cuba. the license exception also authorizes the export of items to the internet infrastructure in cuba to again facilitate communication among the cuban people. you will notice, there's only a little bit of focus on agriculture. we did not change our primary regulatory process for agricultural exports to cuba. the reason is, that is pretty well covered by the trade sanctions reform act. we have an expedited process in place where a u.s. company that wants to make an agricultural export to cuba is referred to the state department. we give them an answer typically in 12 days. it is an expedited process, but still a licensing process. that is largely governed by the

requirements of the trade sanctions reform act. under that process, exporters can get an online application. we consult with the state department. we screen the end users of the agricultural exports to make sure they are not involved in terrorist activities. the last requirement is that those exports that are licensed must be made within one year of the license. last year, we processed 56 notifications under this expedited process valued at about $2.4 billion. that is what we authorized. the actual value of exports was far less than that, roughly $290 million. there is a tremendous market in cuba. currently, they only export a small fraction of that.

all of those exports go through the cuban agricultural import agency. so there's really no changes in our regulations specifically on agricultural exports to cuba. that is limited by the trade sanctions reform act. thank you. sen. roberts: thank you for your statement. our next witness, johnny smith acting director of the office of foreign access of the department of treasury. that is mr. smith's acronym pfac. -- ofac. prior to joining ofac, mr. smith served as an expert to the united nations taliban sanctions

committee, was an attorney at the u.s. department of justice. welcome to your new job. thank you for joining us, mr. smith. i look forward to hearing from you. mr. smith: good morning, chairman roberts, ranking member stabenow and distinguished members of the committee. thank you for the opportunity to discuss the amendments to the cuban assets control regulations and the implications for agricultural trade. on december 17, the president announced significant policy changes regarding our relationship with cuba. to implement the policy changes treasury's office of foreign assets control amended the cuban assets control regulations and our colleagues at the department of commerce amended the administration regulations on january 16. these amendments these sanctions related to cuba in key areas including trade, financial services travel, and remittances.

these changes are intended to enhance commerce and communication between the united states and cuba, and help the cuban people freely determine their own future. ofac expects its recent changes will benefit american exporters in at least four respects. ofac expanded the financing provisions of the regulations to allow america's agricultural exporters to be more competitive in cuba. ofac broadened the ability of u.s. institutions to provide services and effectuate payments for exporters and others in trade with cuba. ofac authorized trade delegations satisfying the conditions of its regulations to travel to cuba without needing to come into ofac first, and expanded the ability of airlines and other u.s. travel services

companies to offer more reliable, and potentially cheaper, travel, with far less paperwork. finally, ofac permitted certain humanitarian projects, including those related to agricultural development. with respect to the first change ofac modified the term "cash in advance" which requires -- which describes a financing requirement. previously ofac determined the term to mean that the exporter had to receive payment prior to the goods leaving american shores. an interpretation that u.s. exporters said made their products less competitive than those from other countries. ofac has revised its interpretation of the term to mean that payment is required prior to transfer of title to

and control of the goods. this should provide for more efficient, less expensive means for cuban importers to purchase american produced agricultural, medical, and other authorized products. u.s. exporters continue to face barriers including that all u.s. agricultural goods are imported the a cuban state run monopoly. u.s. exporters continue to be prevented by statute from offering loans for authorized agricultural exports. a limitation that may prevent them from being attractive to cuban exporters. with respect to the second regulatory change, to improve the speed, efficiency, and oversight of authorized payments novak has authorized -- ofac has authorized u.s. banks to establish accounts in cuba.

this is intended to ease the flow of authorized payments and eliminate the need for third country payment structures, which should benefit u.s. exporters to cuba. with respect to the third change, it is important to note that all fact -- ofac's program is the only such program that restricts travel to a country. recent amendments eased regulations by licensing certain additional travel within the 12 existing categories of travel and ofac regulations without the need for a specific license. this means that exporters and other travelers may travel to cuba and conduct travel related transactions there without requesting individual authorization from ofac. with respect to the fourth change, to help strengthen cuban civil society, ofac eased

certain restrictions on remittances to cuba and authorized remittances to certain individual organizations in cuba for humanitarian projects, including those related to agricultural and rural development. increased remittances will afford individual cubans with increased financial resources to purchase american produced goods. thank you. sen. roberts: to the entire panel, thank you again for sharing your professional experiences and perspectives about the opportunities and challenges in opening trade with cuba. what was the administration's process in preparing for this major policy shift in the united states' relationship with cuba? what was the involvement of the stakeholders in determining what changes could be made, and how have you worked with industry during the process? big question. hopefully a short answer.

undersecretary scuse? mr. scuse: mr. chairman, we've been working with the cooperators now for quite some time, not just at the national level, but also at the state level. it is evident for a number of years that our stakeholders have wanted cuba opened up for the markets, further products that our farmers and ranchers produce in this country. we've been at a very big disadvantage because of the restrictions that have been in place. our stakeholders have made it known that this is a country that they want to do business in. when you look at -- i'll give you an example. rice. half the rice consumed in that country is imported and it is coming from vietnam.

it is not coming from the united states and it should be. our stakeholders, this is something they've been wanting for a great deal of time. we look forward to the opportunity to eventually get products in their on a level playing field. sen. roberts: mr. bormann. mr. borman: thank you. [inaudible] in the executive branch to identify ways that we could facilitate trade to the private sector in cuba within the bounds of the existing embargo. that is how we came from license requirements to license exceptions. since the announcement of our regulations, we've done several dozen outreach events in washington and across the country where we explain the changes and answer questions. we probably talk to, as part of these events, well over 3000 people. we continue to solicit feedback

from those that want to understand the regulations. sen. roberts: mr. smith. mr. smith: we worked very closely within the executive branch to utilize the comments we receive from the industry and members of congress about how we could better change our regulations. we have worked with other agencies to actively promote our regulatory changes so people know what the new rules are. sen. roberts: this is for undersecretary scuse. i've traveled to cuba as many others have done. i went down, we didn't tell anybody, we just went down. for 18 hours discovered the world according to fidel castro, and also with an ag group trying to establish trade. i want to make sure we go about this change in the right way.

after a long history of no engagement with cuba, many of these folks have met with people and been informed, yes you can trade, only to find out you can trade with hospitals schools and what was the other 1 -- i'll think of it in a minute. three very limited situations. all of a sudden, you come up against this state owned enterprise. that is where it ended. all of the talk happened and nothing really happened. do you envision the reestablishment of diplomatic relations to be helpful to agricultural trade? are there any concerns you have with this new relationship and the interaction with exports within cuba? mr. scuse: i think normalizing relations and opening trade will have a tremendous impact on agriculture.

the united states is the only country, to my knowledge, that has to go through the state owned corporation to get its products in. hopefully with the normalization of relations and opening of trade, that restriction would be lifted. number two, there's been a study done by texas a&m as well as the american farm bureau that said once relations are normalized and trade is opened, there will be an increase in the purchase of products by cuba. what the study showed was that u.s. sales of agricultural supplies to cuba could accede $1 billion. that is a tremendous increase over the $300 million we are selling today. sen. roberts: this is for all of the panel. i apologize to my colleagues for going over time. all of you made reference to the state run monopoly through which

all u.s. agricultural imports are channeled. it was churches, schools, and hospitals. we were able to export products to them. removing restrictions on our side, what commitments have been made by the cuban government to provide the same ability that our competitors receive to trade with other cuban organizations? mr. smith? mr. smith: i'd have to say that's a question i defer to the state department. that is something we'd expect as part of a normalization. that would be discussed as part of the talks. i don't know of any him -- any commitments that have been made. sen. roberts: mr. borman? mr. borman: we have an ongoing series of discussions with cuban government officials. i suspect this would be one of

those topics in those discussions? sen. roberts: undersecretary scuse. mr. scuse: i defer to my colleague. sen. roberts: senator stabenow. sen. stabenow: thank you, mr. chairman. i had the same conversations with the secretary of agriculture about the process. they were indicating about 80% of the farmland is owned by the government. about 20% by the private sector. i said, can we sell to the 20%? no. it has to all go through the same process. there's a lot of change that needs to occur. i do want to stress that we have tremendous opportunities. senator leahy was talking about products in new zealand. they are getting powdered milk from new zealand.