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Hearing of the House Small Business Committee - Impact of Pending Free Trade Agreements on U.S. Small Business Panel I

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Location: Washington, DC


Hearing of the House Small Business Committee - Impact of Pending Free Trade Agreements on U.S. Small Business Panel I

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REP. MAZIE HORONO (D-HI): Thank you very much, Madame Chair.

Mr. Ambassador, did you say that 40 percent of economic growth in the United States has been due to exports?

MR. VERONEAU: Yes, ma'am. by ID:

REP. HIRONO: And how much of that was due to exports based on FTAs?

MR. VERONEAU: The -- I don't have that figure. What I do know is that our exports to STA countries over the past year have been growing 60 percent faster than exports to non-STA countries. So I -- and couple that with the fact that our FTAs account for almost 50 percent, or our FTAs including the ones I'm testifying about today, account for almost 50 percent of our exports. I would say that of that 40 percent, a not insignificant amount of that is attributable to our free trading partner.

REP. HIRONO: Actually --

MR. VERONEAU: Sorry for those, I think I did four extrapolations, so I apologize.

REP. HIRONO: Thank you for that clarification, because I didn't realize that our FTAs accounted for almost 50 percent of our exports. That is an astoundingly high number.

My understanding was that most of our trade with other countries are done pretty much outside of FTAs.

MR. VERONEAU: When -- when the -- my staff is double checking. My recollection is, including these four FTAs, Korea, et cetera, the figure will be -- all right, that's a different number -- you know, obviously Canada, a major trading partner of ours, and Mexico. So our exports to STA partners, including these pending FTAs is I believe almost 50 percent. I will confirm that number for you.

REP. HIRONO: And the reasons I ask these questions is that I would like to get an understanding of really how much of our trade really is done through FTAs as opposed to just the fact that we are trading with all of these countries and have been for decades.

I have a question, perhaps you've already gone through this, and I apologize for being late, for a lot of us the environmental and the labor standards that are relatively new to these -- to the new round of trade agreements is really an important part of us moving forward in the kind of trade agreements that we would want to see.

Now that's great, but my question really is around enforcement, because if you have all these requirements and standards, but we're not enforcing them, what good are they? That's my view.

What kind of enforcement is our country doing to make sure that the other countries with whom we have these trade agreements are living up to their part of the bargain, particularly in reference to labor and environmental requirements?

MR. VERONEAU: Well, I would say that enforcement is very high. I mean compliance with these trade agreements is extremely high, I mean as one would expect. Attention is paid to those instances where there is noncompliance. But compliance is very high, so I wouldn't want to leave here with the impression that enforcement is a systemic problem, because that has not been my experience in my current capacity or my prior capacity as a general counsel.

The -- the -- the agreements provide for dispute settlement mechanisms, basically panels to be established to adjudicate cases. We've had a number of NAFTA panels, some that we have been the plaintiff so to speak, and others we've been the defendant.

But these -- these are panels that I think do a very good job of sorting out disputes. So I would -- I would expect that certainly this administration and any future administration would take seriously any charges that a country is not living up to its commitments, and if you can't find your way to resolve those, short of bringing a formal action, then you bring the formal action.

I've detected no resistance to bringing formal actions in the face of noncompliance.

REP. HIRONO: Can you provide -- Madame Chair, if I could just request that you provide to the committee the list of actions that have been taken by our country to enforce trade agreements, the provisions of trade agreements, because I don't have that kind of information. And you indicate that the enforcement part has been a very active part of--

REP. VELAZQUEZ: Ms. Hirono, will you yield?

REP. HIRONO: Yes.

REP. VELAZQUEZ: And I would like for the ambassador to also address the issue, you say compliance is high. What about the area of intellectual property and textiles?

MR. VERONEAU: The -- I think on intellectual property again, if you look around the world, our biggest -- some of our biggest problems have been with partners that we don't have bilateral trade agreements with. China and Russia are the two countries that we're having the major problems with on intellectual property, and in that sense, frankly, the FTAs that are the subject of this hearing today provide mechanisms to address intellectual property that we don't have with -- with those other countries in the same fullness.

But I would be pleased to provide information about -- about enforcement actions, but I think it's important to not -- to be clear that enforcement actions encompass much more than bringing formal disputes. I mean everyday I or someone at USTR is on the phone with -- with a foreign government to say, hey, you've got to -- you've got to live up to this obligation.

So enforcement is -- the vast majority of enforcement is not through formal dispute mechanism, but through pressuring and jawboning and putting pressure on countries to meet their obligation.

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