Hearing of the Senate Finance Committee - Nominations for the office of the United States Trade Representative and the Pension benefit Guaranty Corporation

Hearing

Today we have before the committee two nominees: Marisa Lago, who has been
nominated to serve as Deputy United States Trade Representative, and Thomas Reeder, who has
been nominated to be the Director of the Pension Benefit Guaranty Corporation, or PBGC.

I want to welcome both nominees to the committee and commend them both for their
willingness to serve.

Ms. Lago, if confirmed, you will be working during one of the most active periods for U.S.
trade policy in recent history. After meeting with you, I believe you are a fine nominee and I feel
confident that you are qualified to complete all the tasks that lie ahead.

I understand from USTR that you will not be responsible for any of the on-going trade
negotiations. I find it strange that the administration does not empower its Deputy U.S. Trade
Representatives, positions that have been created by statute and are confirmed by the Senate,
to manage trade negotiations. However, that is a decision that the President has apparently
made and I do not believe it should impact your nomination.

However, as we conduct this nomination hearing, negotiations to conclude the TransPacific
Partnership are underway. I want to take a few minutes to outline my expectations for a
strong TPP agreement, with five key components that I believe are necessary to win sufficient
support for the agreement in the Senate.

First, strong intellectual property rights protections are a critically important
objective. Intellectual property is the backbone of our modern economy, impacting large and
small businesses across America.

In my home state of Utah, for example, half a million jobs and 67 percent of our exports
are directly connected to intellectual property.

That is why the TPA law recently passed by Congress and signed by President Obama
requires that trade agreements meet the high standards for IP protections found in U.S. law. I
fully expect the TPP to reflect these standards, including twelve years of regulatory data
protection for biologics, strong copyright and trademark protections, prevention of trade secrets
theft, and transparency and procedural fairness for reimbursement decisions relating to medical
devices and pharmaceuticals.

Second, we need to ensure that U.S. investors receive the same basic protections that we
give to investors -- foreign and domestic -- here at home. This includes maintaining strong
investor-state dispute settlement provisions that do not exempt products or industries from
coverage.

Third, TPP must provide real and comprehensive market access opportunities for U.S.
exporters. That means significant reduction, and ultimately elimination, of tariffs on U.S.
exports of goods, services, and, of course, agricultural products.

Several parties to TPP are resisting our efforts to open agricultural markets. Let me be
clear: If our TPP partners -- like Japan and Canada -- are not willing to open their markets to our
exports, the final agreement will never receive sufficient support in Congress.

Fourth, TPP must also reflect the priorities set forth in our TPA law regarding digital
trade. This includes ensuring foreign governments do not impede cross-border data flows and
eliminating forced localization requirements. These commitments should apply broadly to all
sectors, including financial services and public telecommunications.

Finally, an increasingly difficult problem our exporters face is unfair competition from
state-owned enterprises. I want American businesses to be able to compete anywhere in the
world. It is essential for TPP to ensure that state-owned enterprises -- including those owned by
sovereign wealth funds -- act on a commercial basis.

I expect that the administration will reach a TPP agreement that meets these and other
high standards outlined in our TPA law. Of course, if it falls short, Congress retains the right to
reject the agreement or remove the expedited procedures, a right I will readily embrace if
necessary.

So, as you can see, Ms. Lago, there are a lot of issues on USTR's plate. I trust you will do
your best to see that the objectives I outlined are met.

Now, I'd like to take a few minutes to talk about Thomas Reeder.

For those that don't know, Mr. Reeder is a veteran of this committee and worked for
Chairman Baucus.

Welcome back, Mr. Reeder.

If confirmed, you will serve during one of the most challenging periods the PBGC has ever
faced. As you know, this agency was established by the Employee Retirement Income Security
Act of 1974 to insure the pensions owed to employees under private defined-benefit plans. In
the 40 years it has been in existence, the PBGC has become a very important agency, insuring
pensions for more than 1.5 million participants in nearly 4,700 failed single-employer and
multiemployer plans.

For example, the PBGC made $5.6 billion in payments in FY 2014 alone.
But, in some ways, this understates the challenges faced by the PBGC, particularly when
we're talking about multiemployer pension plans.

Last year, reports indicated that the deficits in PBGC's single-employer pension insurance
program were projected to drop from more than $27 billion to just over $7 billion in
2023. However, the story for the multiemployer program was altogether different, as those
deficits are projected to increase from around $8 billion to nearly $50 billion over the next
decade.

Late last year, as part of the so-called Cromnibus, at the request of multiemployer
pension plan managers, employers who contribute to multiemployer pension plans, and many
unions representing employees, Congress passed the Multiemployer Pension Reform Act. This
new law gives pension plan trustees the power, in extreme cases and pursuant to regulations
published by the Treasury, to reduce benefits in order to avoid plan insolvency and increased
future reductions.

So, as I have said before, this is a sobering moment for the pension system. And beyond
the hardship some retirees inevitably will experience, it highlights both the challenge of
delivering on the promise of lifetime retirement income and the stakes for retirees if the system
fails.

So, Mr. Reeder, if confirmed, you will have your work cut out for you.

Once again, I want to welcome both of our nominees today and I look forward to their
testimony.

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