[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
HEARING ON ADVANCING AMERICA'S INTERESTS
AT THE WORLD TRADE ORGANIZATION'S 13TH
MINISTERIAL MEETING
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HEARING
BEFORE THE
SUBCOMMITTEE ON TRADE
OF THE
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
FEBRUARY 7, 2024
__________
Serial # 118-TR04
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Printed for the use of the Committee on Ways and Means
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U.S. GOVERNMENT PUBLISHING OFFICE
55-470 WASHINGTON : 2024
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COMMITTEE ON WAYS AND MEANS
JASON SMITH, Missouri, Chairman
VERN BUCHANAN, Florida RICHARD E. NEAL, Massachusetts
ADRIAN SMITH, Nebraska LLOYD DOGGETT, Texas
MIKE KELLY, Pennsylvania MIKE THOMPSON, California
DAVID SCHWEIKERT, Arizona JOHN B. LARSON, Connecticut
DARIN LaHOOD, Illinois EARL BLUMENAUER, Oregon
BRAD WENSTRUP, Ohio BILL PASCRELL, Jr., New Jersey
JODEY ARRINGTON, Texas DANNY DAVIS, Illinois
DREW FERGUSON, Georgia LINDA SANCHEZ, California
RON ESTES, Kansas TERRI SEWELL, Alabama
LLOYD SMUCKER, Pennsylvania SUZAN DelBENE, Washington
KEVIN HERN, Oklahoma JUDY CHU, California
CAROL MILLER, West Virginia GWEN MOORE, Wisconsin
GREG MURPHY, North Carolina DAN KILDEE, Michigan
DAVID KUSTOFF, Tennessee DON BEYER, Virginia
BRIAN FITZPATRICK, Pennsylvania DWIGHT EVANS, Pennsylvania
GREG STEUBE, Florida BRAD SCHNEIDER, Illinois
CLAUDIA TENNEY, New York JIMMY PANETTA, California
MICHELLE FISCHBACH, Minnesota JIMMY GOMEZ, California
BLAKE MOORE, Utah
MICHELLE STEEL, California
BETH VAN DUYNE, Texas
RANDY FEENSTRA, Iowa
NICOLE MALLIOTAKIS, New York
MIKE CAREY, Ohio
Mark Roman, Staff Director
Brandon Casey, Minority Chief Counsel
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SUBCOMMITTEE ON TRADE
ADRIAN SMITH, Nebraska, Chairman
VERN BUCHANAN, Florida EARL BLUMENAUER, Oregon
DARIN LaHOOD, Illinois DAN KILDEE, Michigan
JODEY ARRINGTON, Texas JIMMY PANETTA, California
RON ESTES, Kansas SUZAN DelBENE, Washington
CAROL MILLER, West Virginia DON BEYER, Virginia
LLOYD SMUCKER, Pennsylvania LINDA SANCHEZ, California
GREG MURPHY, North Carolina TERRI SEWELL, Alabama
GREG STEUBE, Florida BRAD SCHNEIDER, Illinois
MICHELLE FISHBACH, Minnesota
DAVID KUSTOFF, Tennessee
CONTENTS
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OPENING STATEMENTS
Page
Hon. Adrian Smith, Nebraska, Chairman............................ 1
Hon. Earl Blumenauer, Oregon, Ranking Member..................... 44
Advisory of February 7, 2024 announcing the hearing.............. V
WITNESSES
Dennis Shea, Executive Director, J. Ronald Terwilliger Center for
Housing Policy, Bipartisan Policy Center; former Deputy U.S.
Trade Representative and U.S. Ambassador to the World Trade
Organization................................................... 3
Bobby Hanks, CEO, Supreme Rice; Chair, International Trade Policy
Committee, USA Rice Federation................................. 11
Kelly Ann Shaw, Partner, Hogan Lovells; Lecturer in Law, Columbia
Law School; former Deputy Assistant to the President for
International Economics........................................ 21
Eddie Sullivan, President, SAB Biotherapeutics, Inc.............. 27
Bruce Hirsh, Founder, Tailwind Global Strategies, LLC............ 34
QUESTIONS FOR THE RECORD
Member Questions for the Record and Responses from Bruce Hirsh,
Founder, Tailwind Global Strategies, LLC....................... 93
PUBLIC SUBMISSIONS FOR THE RECORD
Public Submissions............................................... 96
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ADVANCING AMERICA'S INTERESTS AT THE WORLD TRADE ORGANIZATION'S 13TH
MINISTERIAL MEETING
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WEDNESDAY, FEBRUARY 7, 2024
House of Representatives,
Subcommittee on Trade,
Committee on Ways and Means,
Washington, DC.
The subcommittee met, pursuant to call, at 9:03 a.m., in
Room 1100, Longworth House Office Building, Hon. Adrian Smith
[chairman of the subcommittee] presiding.
Chairman SMITH. Good morning. The subcommittee will come to
order.
I appreciate my colleagues. Certainly, thank you to our
panel here for being here today.
We meet at an important time for international trade. At
the end of the month, the world's economies will meet in Abu
Dhabi for the World Trade Organization's 13th Ministerial
Meeting.
This ministerial represents both a challenge and an
opportunity. On one hand, protectionist nations aim to use the
ministerial as a chance to undermine intellectual property
rights, fragment the global market, and promote gross
protectionism in agriculture. Despite this, the ministerial
offers a pivotal opportunity for U.S. leadership. Countless WTO
members are looking to our country to defend the free flow of
data, protect IP rights, and drive a hard bargain for the new
rules against unfair practices, starting with fisheries
subsidies.
The purpose of today's hearing is to help us meet this
moment and signal to the Biden administration what strong U.S.
leadership at the WTO looks like. This should not be a partisan
issue.
Since 1947, the multilateral trading rules have been a key
element of American competitiveness. Today, 65 percent of U.S.
trade is covered exclusively by WTO rules rather than any rules
from our free trade agreements. Our farmers, ranchers, small
businesses, and workers need strict enforcement of these rules
to export competitively.
Yet, the WTO is not without challenges. Negotiations for
new trade agreements have stalled as a handful of spoiler
countries veto progress on new ag market access or trade in
environmental goods. Judicial activism by the WTO's appellate
body has undermined confidence in the organization and degraded
the ability of the U.S. to hold China accountable for its
unfair practices. Many countries, especially China, either do
not play by certain rules, such as those requiring notification
of subsidies, or in other cases, engage in predatory, unfair,
and anti-free market behavior outside the scope of the WTO's
rules. All of these challenges come at a cost to American
farmers, workers, and small businesses.
These concerns about the WTO are widely shared, long-
standing, and bipartisan. Yet the Biden administration appears
poised to cede U.S. leadership.
I was deeply disappointed when the administration withdrew
robust digital trade proposals from the, quote, ``joint
initiative on e-commerce,'' end quote, negotiations at the WTO.
These rules, which received overwhelming bipartisan support in
the U.S.-Mexico-Canada Agreement, are key to U.S. innovation
leadership. This digital trade abdication does not inspire
confidence that the administration will vigorously defend the
renewal of the long-standing moratorium on the imposition of
customs duties on electronic transmissions.
Similarly, I strongly oppose the waiver of IP rights for
COVID-19 vaccines that the Biden administration agreed to at
the 12th ministerial. To make matters worse, the administration
is considering whether to expand that waiver to the IP for
diagnostics and therapeutics. Such a move would be as harmful
as it is illogical. Recent independent analysis by the
International Trade Commission found that, generally, IP is not
a barrier to access for COVID-19 treatments.
At the last ministerial, WTO members finally reached an
agreement on fisheries subsidies. While I was pleased to see
some progress to limit subsidies for illegal, unreported, and
unregulated fishing, the initial agreement does not cover other
harmful practices like forced labor or subsidies that
contribute to fishing overcapacity. As WTO members discuss a
second phase of the fisheries agreement later this month, we
need to know that the Biden administration will negotiate
aggressively to address these exploitative practices.
I want to thank our witnesses again for their
participation, and I look forward to hearing what we can do to
ensure continued U.S. leadership at the WTO.
Chairman SMITH. Mr. Blumenauer will be here shortly, and so
we will certainly proceed with our witness testimony and then
recognize him when he does arrive.
I now have the pleasure of introducing our witnesses.
Dennis Shea is executive director of the J. Ronald
Terwilliger Center for Housing Policy at the Bipartisan Policy
Center and previously served as deputy U.S. trade
representative as a U.S. ambassador to the WTO.
Bobby Hanks is CEO of Supreme Rice and currently serves as
chair of USA Rice Federation's International Trade Policy
Committee.
Kelly Ann Shaw, no stranger to this committee room, is
partner at Hogan Lovells, a lecturer in law at Columbia Law
School, and is a former deputy assistant to the President for
international economics. Ms. Shaw also served here at the Ways
and Means Committee as a trade counsel. Welcome back.
Eddie Sullivan is president of SAB Therapeutics. I
appreciate you being here today.
And lastly, Bruce Hirsh is founder of Tailwind Global
Strategies, LLC.
Again, thank you for sharing your insights here today. Your
written statement will be made part of the record, and you each
have 5 minutes to deliver your remarks. You will see the timing
light there, and when that turns yellow, if you could bring the
flag in for landing, we will be all better off for that.
We do have votes that will be sooner rather than later, so
I hope we can get as much done before votes happen.
So, Mr. Shea, you may begin with your 5 minutes.
STATEMENT OF DENNIS SHEA, EXECUTIVE DIRECTOR, J. RONALD
TERWILLIGER CENTER FOR HOUSING POLICY, BIPARTISAN POLICY
CENTER, FORMER DEPUTY U.S. TRADE REPRESENTATIVE AND U.S.
AMBASSADOR TO THE WORLD TRADE ORGANIZATION
Mr. SHEA. Well, Chairman Smith, Ranking Member Blumenauer,
and members of the subcommittee, thank you for the opportunity
to appear before you today. Let me emphasize I am speaking
solely in my personal capacity.
As U.S. ambassador to the WTO during the Trump
administration, it was a privilege to work with USTR Bob
Lighthizer to try to reinvigorate the WTO through a
comprehensive reform agenda that included a major effort to
improve transparency, a reaffirmation that market orientation
is a fundamental WTO norm, the establishment of objective
criteria for determining whether a WTO member may avail itself
of special and differential treatment, and a comprehensive
critique of the institutional creep of the WTO's appellate body
which had done much damage to the interest of the United
States.
During my WTO tenure, the U.S. was also an active
participant in the JSI on Electronic Commerce, one of the new
plurilaterals that emerged from MC11. In this negotiation, we
insisted on strong and reciprocally assumed disciplines that
protect cross-border data flows, prohibit data localization
mandates, and safeguard U.S.-owned source code from forced
disclosure.
A major focus of my work was also educating other WTO
members about the incompatibility of the state-led nonmarket
economy of China with WTO norms of openness, nondiscrimination,
and market orientation.
Despite these efforts and the current administration's
approach of ``WTO-reform-by-doing,'' it seems very little has
changed in Geneva that would signal a sustained upward
trajectory for the organization. Recent dispute settlement
panel decisions challenging the self-judging nature of the
essential security exception in GATT article XXI(b) have set
the WTO back further.
So, what can we expect at MC13? To answer this question,
let's look first at the outcomes of MC12. In my judgment, the
following outcomes were important and gave WTO some--diminished
WTO some space to argue for its continuing relevance. I am
talking about the 2-year extension of the moratorium on customs
duties for electronic transmissions, a new multilateral
agreement prohibiting certain harmful fisheries subsidies, and
a ministerial decision exempting World Food Program
humanitarian purchases from export prohibitions.
One MC12 outcome, however, was decidedly against U.S.
interests, a ministerial decision waiving TRIPS Agreement
protections for COVID-19 vaccines.
Looking ahead to MC13, the outcomes we can expect are
likely to be even less ambitious than those achieved at MC12,
and from the U.S. perspective, I think that should be perfectly
acceptable.
The one must-do at MC13 is extending the current moratorium
on the imposition of customs duties on electronic transmissions
until at least the next ministerial. While the prospects of
establishing a permanent moratorium at MC13 are remote, another
2-year extension combined with a robust work program should be
a good outcome.
A nice-to-have outcome at MC13 would be a follow-up fish
agreement that disciplines harmful subsidies that contribute
specifically to overcapacity and overfishing. Developing strong
disciplines for these types of subsidies has always been a key
U.S. negotiating objective, including during the Trump
administration.
In terms of must-not-dos, the first is getting pushed into
an unacceptable agreement on dispute settlement reform,
particularly if it leads to restoration of the appellate body.
The U.S. has consistently argued the appellate body's intended
mandate was a limited one to correct legal errors by panels and
to do so expeditiously. It is clear that some WTO members view
the appellate body quite differently as an independent
international court charged with establishing binding
precedent, filling gaps in the WTO agreements, and creating a
global common law of trade, and reconciling this clash of
visions can't be papered over with a few word tweaks.
A second must-not-do is expanding the misguided TRIPS
waiver to COVID-19 therapeutics and diagnostics as China,
India, and South Africa have urged.
With respect to agriculture, the Trump administration
advocated for a reset of negotiations based on an updated
understanding of the state of agricultural trade. In various
fora, we asked how the WTO could credibly negotiate disciplines
in agricultural domestic support when we do not have a clear
picture of what the largest subsidizers in the world are doing.
And similarly, the Biden administration has called for a
holistic approach to negotiations.
With very little movement, it appears that the agricultural
outcome at MC13 will be limited to a work program leading up to
MC14. In the discussions at MC13, the United States should
continue to insist on greater transparency and the need to
liberalize agricultural trade through lower tariffs and greater
market access.
Thank you.
[The statement of Mr. Shea follows:]
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Chairman SMITH. Thank you. Thank you for your testimony.
Mr. Hanks, you are recognized for 5 minutes.
STATEMENT OF BOBBY HANKS, CEO, SUPREME RICE; CHAIR,
INTERNATIONAL TRADE POLICY COMMITTEE, USA RICE FEDERATION
Mr. HANKS. Good morning, Chairman Smith, Ranking Member
Blumenauer, and members of the subcommittee. Thank you for the
opportunity to testify before you today concerning agriculture
and the WTO.
My name is Bobby Hanks. I am the CEO of Supreme Rice, a
mill in Crowley, Louisiana, where we process more than a
billion pounds of U.S. rice per year. My wife, Molly, and I are
proud to have raised our three children in the town of Crowley
and to have a business that provides more than 300 critical
jobs in rural Louisiana and Arkansas.
I am here today representing USA Rice, the global advocate
for U.S. rice industry, a $34 billion industry representing
American rice farmers, millers, merchants, and allied
businesses.
Rice is grown on approximately 3 million acres of family
farmland across the U.S. About half of our rice is consumed
here, while the other half is exported to more than 120
countries around the globe.
It is widely understood and accepted that the global rice
market is among the most distorted of any sector, a factor that
underscores the vital importance of the U.S. farm safety net
for rice farmers. The impact of the price distortion of world
rice prices on our industry is the main reason we are
represented here today and because the WTO should and could
play a vital role in making sure our industry can compete
fairly.
Over the last 20 years, rice imports into the United States
have grown 286 percent, primarily driven by imports from
heavily subsidized Asian rice. Without intervention, this
troubling trend is likely to continue.
I acknowledge that the WTO has its problems. Disputes take
too long and have too many administrative hurdles, raising
costs for both plaintiffs and defendants. We also need to see
the WTO members do a better job notifying their policies
accurately to the WTO.
Many countries are extremely delinquent or use faulty
methodology which obscures the real policy effects. This makes
it difficult to monitor policies and negotiate new rules.
Without appropriate enforcement around transparency, trust in
the WTO system erodes.
This is why USA Rice led the way in bringing together about
a dozen other organizations to form a coalition that we call
Aggies for WTO Reform, with the goal of encouraging and
supporting robust U.S. engagement at the WTO on agricultural
issues, including dispute settlement. We want the WTO to work
better, to be a place where negotiations can happen, and where
rules can be enforced.
One of the coalition's top goals is to avoid backsliding on
agricultural commitments, including at the upcoming MC13. We
are especially concerned about the insistence of India that
their subsidies for commodities like rice should be exempt from
the WTO rules. India has threatened to take hostage virtually
any outcome at the WTO unless they get what they want. But for
our coalition, the status quo is better than the outcome the
Indian delegation at the WTO have proposed.
India tends to demand permanent public stockholding
exceptions at MC13 by holding up progress on negotiations
across the WTO chapters. By tying public stockholding to
unrelated discussions, India may prevent any critical
breakthroughs around dispute settlement and the eventual
restoration of the appellate body.
India has a limit of 10 percent of the value of production
that it can provide to rice specifically. In 2020-2021, they
were subsidizing up to 93.9 percent, according to the U.S. That
must change.
We are grateful to USTR and USDA for continuing to hold the
line and prevent backsliding, but we need the U.S. Government
to better engage and lead the way in WTO reform negotiations at
MC13 and beyond. USA Rice and some Members of Congress,
including members of this distinguished panel, have repeatedly
urged USTR to file a dispute against India who, last year,
controlled 40 percent of the global rice exports.
This leads us to dispute settlement reforms. U.S.
agriculture needs the WTO to have binding dispute settlements
where the loser cannot block a decision that is lost. Right
now, with no appellate body, WTO members can appeal panel
decisions into the void and the case effectively ends.
In summary, the WTO is an irreplaceable asset for U.S.
agriculture and rice farmers. It needs to be more effective,
not less, and we need more compliance to support global trade,
not more so-called policy space to undermine it. It is critical
that our competitors abide by the same rules that the U.S.
abides by, especially if I expect my business to stay
sustainable and profitable and support more than 300 rural jobs
in our community.
I would like to thank the members of this subcommittee for
their time and attention, and I welcome your questions.
[The statement of Mr. Hanks follows:]
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Chairman SMITH. Thank you.
Ms. Shaw, you are recognized for 5 minutes.
STATEMENT OF KELLY ANN SHAW, PARTNER, HOGAN LOVELLS; LECTURER
IN LAW, COLUMBIA LAW SCHOOL; FORMER DEPUTY ASSISTANT TO THE
PRESIDENT FOR INTERNATIONAL ECONOMICS
Ms. SHAW. Thank you.
Chairman Smith, Ranking Member Blumenauer, distinguished
members of the committee, thank you for the opportunity to
discuss America's objectives for the forthcoming 13th
Ministerial Conference, MC13, in Abu Dhabi.
Prior to my current role in private practice, I was
privileged to spend a decade in government service representing
the United States in multiple trade negotiations, including at
the WTO in Geneva, where I negotiated and litigated WTO
disputes on behalf of American workers and businesses. While I
will draw on these experiences, I also want to be clear that
the testimony I provide this morning is solely my own.
Let me start with the punchline: The WTO is in serious
trouble, and when it comes to the upcoming ministerial, there
is very little, if anything, on the agenda that will advance
U.S. interests.
As someone who spent years working in and around the
multilateral system, I wish I could deliver a more positive
message this morning. Following World War II, it was the United
States and other democratic nations that spent decades building
a rules-based global trading system centered around the
principles of nondiscrimination, whereby participating
countries that played by the rules were rewarded with lower
barriers to trade in one another's markets. But the WTO in its
current form is no longer capable of advancing mutually
beneficial concessions or developing new rules that further
facilitate trade, address new challenges, and deal with China's
unfair trade practices.
As of today, the WTO's negotiating function--its primary
and key function--is effectively paralyzed. The WTO's last
major negotiating round collapsed in 2011. While some
negotiations still continued, most of these focused on narrow,
technical issues, only involved a subset of the membership, or
simply lacked ambition. In fact, the agenda for the upcoming
ministerial demonstrates how limited the role of the WTO has
actually become in advancing new trade rules relevant for
today's global challenges. Instead, the more ambitious
negotiations are occurring completely outside the WTO framework
through major bilateral and regional trade deals that, at least
right now, do not include the United States.
The key issues on the table for MC13 include renewal of the
e-commerce moratorium, efforts by developing countries to
expand the TRIPS waiver, India's demands for a permanent waiver
for its public stocktaking programs, special and differential
treatment for developing countries, a phase II agreement on
fisheries subsidies, and various proposals to reform certain
WTO functions. With the exception of renewing the e-commerce
moratorium, which at this point is uncertain, and a meaningful
outcome on fisheries subsidies largely aimed at China and
India, which seems unlikely, the overwhelming number of issues,
if agreed, would be detrimental to American workers,
innovators, and farmers.
The e-commerce moratorium, for example, which has been
consistently renewed since 1998, is critical for American small
businesses and consumers alike. Some countries, like India, are
actively pushing to terminate the moratorium so that they can
impose tariffs and other barriers on electronic transmissions
of both digital goods and digital services. And because renewal
of the moratorium requires consensus, India in particular is
now holding the entire WTO membership hostage in exchange for
an agreement on its public stockholding practices that distort
global agricultural markets and disadvantage American farmers.
With respect to dispute settlement, the WTO does not need
an appellate body or a two-tier dispute settlement system, and
we should neither negotiate nor agree to one.
The single biggest challenge facing the WTO is not dispute
settlement but, rather, the inability of WTO members to
negotiate new rules. A membership of 164 countries has simply
proven unworkable. The requirement that decisions be taken by
consensus among members, including both India and China, has
ground the WTO to a halt.
So, when considering the agenda for MC13, I think it would
be fair for the committee to ask what exactly is the point of
continuing to invest in a multilateral system when the only
issues on the table are largely defensive, don't advance U.S.
interests, have little relevance for today's economy, and would
largely make Americans worse off.
The answer is that a strong set of multilateral rules is
still in America's interest for many of the reasons that I
outlined in my written testimony and the reasons that drove us
to create the system in 1947 in the first place.
The real question for this committee, along with other WTO
members, is whether we are in or we are out when it comes to
multilateralism, because the WTO cannot continue down its
current path. If we are in--and at least at this point I think
we should be--the United States, along with a subset of like-
minded allies, needs to pour real resources into renegotiating
and fundamentally rebuilding a multilateral framework that
addresses modern economic challenges, reflects today's reality,
and results in meaningful outcomes for the American people. In
other words, a club of truly preferential partners and most
favored nations. The current WTO is no longer that.
Thank you.
[The statement of Ms. Shaw follows:]
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Chairman SMITH. Thank you.
Mr. Sullivan, you are recognized for 5 minutes.
STATEMENT OF EDDIE SULLIVAN, PRESIDENT, SAB BIOTHERAPEUTICS,
INC.
Mr. SULLIVAN. Mr. Chairman, Ranking Member Blumenauer,
members of the subcommittee, thank you for this opportunity to
share my perspective as the cofounder and president of a small
biopharmaceutical company based in South Dakota on the proposed
expansion of an IP waiver for COVID-19 therapeutics and
diagnostics now before the WTO. The stakes for the United
States in our continued global leadership in the life sciences
could not be higher, and I commend the subcommittee for airing
these issues.
There is no objective evidence suggesting that IP
protections have limited patient access to COVID-19
therapeutics around the world. Rather, regulatory barriers,
trade restrictions, inadequate investments in health systems,
and lack of adequate infrastructure are genuine limiting
factors on supply and access. A waiver of IP rights would
significantly disrupt the economic model by which innovative
biotech emerging companies, like SAB Biotherapeutics, have
successfully advanced medical science to meet global health
challenges, create jobs, and maintain our country's leadership
in this critical field.
SAB Biotherapeutics is a clinical-stage, publicly traded
biopharmaceutical company employing around 65 people, primarily
in South Dakota, but with employees in Florida, Illinois, Iowa,
Kentucky, Massachusetts, Minnesota, Missouri, New York,
Pennsylvania, and Utah, uniquely focused on the development of
powerful and proprietary immunotherapeutics polyclonal
antibodies to treat and prevent autoimmune disorders and
infectious diseases. Our development programs harness the
body's natural defense systems to address disease that have
significant mortality and health impacts on patients, with a
current focus on type 1 diabetes.
I have been in biopharma leadership for over 30 years,
leading initiatives to develop infectious disease, cancer, and
autoimmune therapies, and have raised over $800 million in
capital to develop biopharmaceutical platform technologies.
Underlying our technology platform is a robust IP
portfolio, including a patent which has recently been granted
by the USPTO, which we have leveraged to secure funding and
foster research collaborations related to COVID-19. Our
technology platform, with continued research and development,
has the potential not only to combat COVID but address other
known and novel emerging diseases.
An agreement to waive IP rights for COVID-19 therapeutics
at WTO would needlessly expose our company's IP assets
protecting our platform technology. A waiver of IP rights could
potentially allow our patents to be infringed and our
technology platform deployed by competitors to develop COVID
treatments or other diseases without meaningful legal recourse.
IP rights are the currency used by innovative biotech
companies to encourage investment in new and emerging
technologies with significant promise. Biotechnology research
and development has a greater than 90 percent failure rate and
can take many years and cost hundreds of millions of dollars.
We cannot expect rational investors to fund this work if we
cannot demonstrate that we have a secure and enforceable right
to our technology. Investors scrutinize our patent portfolio as
part of any due diligence. It can make or break a company long
before we have our first approved product.
This challenge with access to capital is particularly acute
for U.S.-based small- and medium-sized enterprises who led the
global R&D campaign to rapidly develop drug candidates to treat
COVID-19 and still account for over 75 percent of the projects
in global pharmaceutical clinical pipelines.
Most of the innovation in biotech stems from these SMEs,
and many of these companies have yet to bring an improved
product to market or have a revenue stream. Most are entirely
dependent on private capital markets to fund their research and
IP in their primary asset--IP is the primary asset.
A waiver of IP at WTO would disrupt the vital funding,
acutely impacting U.S.-based SMEs to the detriment of science,
public health, and U.S. competitiveness and leadership in the
life sciences.
I am happy to say that SAB has recently announced a private
placement investment of over $100 million in our company to
advance a disease-modifying immunotherapy to delay the onset or
progression of type 1 diabetes, and we just announced the phase
1 clinical trial. If we would have had to disclose a waiver of
our IP rights to our COVID-19 portfolio, it would have put our
company at serious risk of losing major investments.
The threat to the delicate balance of investment risk
cannot be understated in an already competitive environment
that could negatively impact companies that respond to the
COVID pandemic and perhaps future pandemics. With news of the
WHO declaring the end of the COVID public health emergency and
with global supply therapies far exceeding demand, a waiver is
wholly unnecessary.
Appreciate the time today, but this is a very serious
issue. Thank you.
[The statement of Mr. Sullivan follows:]
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Chairman SMITH. Thank you.
Mr. Hirsh, you are recognized for 5 minutes.
STATEMENT OF BRUCE HIRSH, FOUNDER, TAILWIND GLOBAL STRATEGIES,
LLC
Mr. HIRSH. Mr. Chairman, Ranking Member Blumenauer, and
members of the subcommittee, thank you for the opportunity to
appear today. My testimony will focus on the prospects for MC13
outcomes on changes to the dispute settlement system.
Under the best of circumstances, WTO negotiations move
slowly, constrained by a decision-making process that requires
consensus among its 164 members. As a result, those looking to
each ministerial with expectations of bold outcomes are often
disappointed, and this ministerial is likely to be no
exception.
Having said that, even without headline outcomes,
ministerials like MC13 can prove important in laying the
groundwork for new initiatives and in advancing the ball in
ongoing initiatives like dispute settlement reform.
The United States was a driving force behind the creation
of the dispute settlement system, viewing it as key to
enforcing WTO commitments and ensuring day-to-day respect for
the rules. WTO dispute settlement has proven popular, with more
than 620 disputes brought since the WTO's creation in 1995,
roughly double the count under the previous 50 years of the
WTO's predecessor, the GATT.
The system has been hobbled since 2019, when the United
States blocked appointments to the system's appellate body,
resulting in the appellate body losing a quorum to make
decisions. The U.S. did so out of long-standing bipartisan
concerns that the appellate body was increasingly straying from
its limited role of correcting panel errors to filling gaps in
the WTO agreement and otherwise creating new obligations and
limiting existing rights. The United States began flagging this
concern in the early 2000s but made little progress at the
time.
There have been meetings in various configurations since
2019 to better understand U.S. concerns and consider how to
address them. The most promising of these has been taking place
for the past 2 years: an informal, bottom-up process in which
members have discussed their interests in the dispute
settlement system and how it can best operate. By virtue of
this interest-based approach and at the urging of Ambassador
Tai, the process is considering not only U.S. concerns but also
how the system can work more effectively for the entire
membership, including developing countries.
Recent discussions have been marked by an unusual level of
cooperation, with members generating a number of textual
proposals on alternatives to litigation and to streamline the
system. Discussions on the more contentious U.S. concerns have
lagged. The positive news is that members appear to be
listening to U.S. concerns in a way they have not in the past.
The prospects for outcomes on dispute settlement reform at
MC13 are thus uncertain. There has been some discussion on
whether to reach some sort of agreement on the process-related
proposals which are furthest along, a prospect the United
States has been open to. Other participants have been reluctant
to agree on anything until there is greater certainty on how
U.S. concerns with the appellate body might be handled.
Regardless of whether there is agreement at MC13 on some
issues, the meeting represents an opportunity for ministers to
engage with each other to explore how to close gaps in
positions and to recommit to completion of reform discussions.
It is important that they do so.
For all of its flaws, the WTO dispute settlement system has
played an important role in resolving and containing disputes
and, more generally, in reinforcing respect for the rules. The
increasing resort by members to appealing into the void; that
is, preventing disputes from reaching their conclusion by
appealing to the nonexistent appellate body, highlights the
risk of a more general deterioration of respect for the rules
to the detriment of U.S. workers, producers, farmers, and
exporters. And, without a functioning dispute settlement
system, we are likely to see more tit-for-tat trade wars that
involve cascading cycles of retaliation.
In conclusion, it would be prudent to temper one's
expectations for a breakthrough on dispute settlement reform
issues at MC13. Having said that, MC13 could provide a welcome
boost to the current talks, which provide a real opportunity to
address U.S. concerns and restore a more effective dispute
settlement system.
Thank you very much.
[The statement of Mr. Hirsh follows:]
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Chairman SMITH. Thank you, Mr. Hirsh.
Thank you to all of our panel here again today. You bring
some very relevant issues and timely as well.
I will now recognize Mr. Blumenauer, ranking member, for
his opening statement.
Mr. BLUMENAUER. Thank you very much, Mr. Chairman. I
apologize for the delay.
But I very much appreciate the testimony from our witnesses
suggesting that we temper our expectations but that we stay
with the process. I strongly support the WTO but, sadly, the
limitations that have been mentioned are ones that challenge
that optimism. It is important that we remain relevant by
addressing the issues that they mentioned: the nonmarket
practices, forced labor, climate change, and women's economic
empowerment.
I really appreciate Ambassador Tai and her team in Geneva,
led by Ambassador Pagan, for the robust agenda at the upcoming
WTO ministerial. It includes numerous pressing topics that I
support, such as addressing harmful fishing subsidies, an area
of some progress, and extending the e-commerce moratorium.
Substance, not arbitrary deadlines, should drive the outcomes
at the ministerial.
I urge the Biden administration to resist any efforts from
our trading partners, including some of our closest allies, to
agree to outcomes that do not fully reflect American interests
just for the sake of agreeing and getting along.
The success should be measured by the ability of the WTO
members to craft a forward-looking vision for the WTO that
takes into account the needs of the least-developed countries.
In this regard, two least-developed countries, Comoros and
Timor-Leste, will become the newest WTO members of MC13. These
two countries are a welcome addition to the organization.
I also support reforming the WTO by equipping it to
addressing the climate crisis. The agreement that established
the WTO recognizes the multilateral trade system should seek to
protect and preserve the environment. I would like to hear from
our witnesses how we can form this recognition into concrete
commitments.
Another important WTO reform that has been addressed by our
witnesses is the dispute settlement system. For over 20 years,
multiple administrations and the United States Congress have
raised concerns for the WTO dispute settlement system,
especially the appellate body. We are going to hear from
today's witnesses about how the WTO appellate body has gone
beyond WTO rules in a variety of areas, ultimately restricting
the ability of the United States to regulate in the public
interest as well as protecting American workers and businesses.
And speaking of unfair trading practices, the WTO reform
must also address the disruption caused by nonmarket economies.
Nonmarket practices are fundamentally inconsistent with the
norms of the WTO. China, which continues to discriminate
against American companies and subsidizing its case, is the
most egregious example. WTO reform needs to address harmful
nonmarket practices.
I appreciate the clear-eyed suggestions from our witnesses
that we approach this in a realistic sense, tamp down our
expectations, but nonetheless, understand, despite the
frustrations, it is worth our being involved. And I appreciate
their guidance in terms of our being realistic, but we need to
continue moving forward. I think this hearing is a small step
in that direction.
Thank you, Mr. Chairman.
Chairman SMITH. Thank you, Mr. Blumenauer.
We will now move to questions from members. And, again,
thank you for your insights. Thank you to our panel.
Mr. Sullivan, I want to talk to you about the expansion of
the TRIPS waiver. As you know, the TRIPS waiver is a process
that waives the protection of intellectual property so that
other countries would have access to this intellectual
property, through no expense of their own, despite the fact
that a great expense has been had by American companies as they
develop the intellectual property.
It concerns me that the Biden administration appears to
believe that waiving IP rights is actually in our national
interest. They supported a waiver 2 years ago for COVID-19
vaccines, and they very well may support an expansion of a
similar waiver to diagnostics and therapeutics. At least we
have no reason to believe they would head in a different
direction.
From interchangeable parts to the steel plow, for example,
or the intricate details in intellectual property of vaccines,
innovation has always been a very helpful tool, a very useful
tool of American competitiveness. Giving away that innovation
actually undermines incentives to continue in an innovative
trajectory.
It is clear to me that IP giveaways would not end with
COVID-19 or health-related products. In fact, last year, the
director general of the WTO was asked if she would support a
TRIPS waiver beyond what is currently being contemplated such
as for green technologies. She said, and I quote, ``I could not
agree more.'' Very concerning to me.
Mr. Sullivan, you are an innovator. I salute you for your
efforts to find a better way of doing things and to ultimately
help people, especially in the healthcare arena. Explain to us,
perhaps, how a TRIPS waiver would impact your business and the
broader innovation ecosystem later on.
Mr. SULLIVAN. Thank you, Mr. Chairman. And I certainly do
share your concerns for what the waiver could mean from the
broadest perspective. But as an innovator and as a pre-revenue
company--and, by the way, 75 percent of new biotechnologies
come from companies just like ours--75 percent. That is the
majority of new and innovative medicines that help save lives.
We rely on investment dollars in order to be able to
advance these technologies. These investment dollars allow us
to go through the very rigorous process of getting a new
medicine from the research bench all the way through to a
licensure and into the hands of patients.
When we go in and walk into a room to talk to investors,
one of the first things that they ask us is, what is the
intellectual property portfolio of this particular asset that
you are asking us to risk our investment in, remembering that
nearly 90 percent of new innovation that happens actually
doesn't survive. It is only the 10 percent that survives. So
these are high-risk investments, and the investors are
interested in how we protect those rights, not just in the U.S.
but globally, in order to ensure that that investment is done
in a way that they can rightfully expect some return on that
investment sometime, perhaps decades in the future.
And so it is very, very important that we realize that it
is not just about what this means in its intent to get drugs
into the hands of patients, but what it means even on the
innovation level and being able to get these drugs to market.
So it is very, very important.
And USITC basically said, look, it is not IP rights that
are holding this back. There are other issues that we need to
be talking about to get these innovations into the hands of
people all over the world.
Chairman SMITH. Thank you. Thank you.
Ms. Shaw, I want to turn to you about the importance of
what is referred to as the e-commerce moratorium or certainly a
moratorium on, say, duties on e-commerce. And this has been an
issue that I have been focused on for a long time and certainly
my colleagues, Mr. LaHood and Ms. DelBene, are very focused on
this issue as well.
We all know that allowing countries to impose tariffs on
data would uniquely hurt our country economically, among other
ways. Our tech firms, farmers, manufacturers, and service
providers all rely on the free flow of data to be successful.
In addition to the critical importance to the U.S., I am
convinced that developing countries actually benefit greatly
from this moratorium as they seek to advance their own
industries in the modern economy.
What I think is less appreciated, however, is the strategic
threat posed by a failure to renew this moratorium. Can you
explain to the committee how failure to renew the moratorium
actually helps China at the expense of U.S. competitiveness?
Ms. SHAW. Thank you so much for the question. And just to
be clear, China currently is not supporting India, Indonesia,
and South Africa in this crusade at the WTO, which should be
pretty shocking because this is even a bridge too far for
China. That is how bad this policy is.
But when you look at the possibility of losing the e-
commerce moratorium, coupled with the administration's decision
to support the TRIPS waiver and the possibility of expanding
that waiver to cover diagnostics and therapeutics, as well as
the October decision to withdraw from long-standing bipartisan
U.S. views on the importance of the free flow of digital trade,
it paints a very alarming picture, not just for commercial
reasons, as you point out, but also for our national security
objectives and broader values.
And so what the administration is pointing at policy space,
is the same policy space that the CCP uses to steal American
intellectual property, censor its citizens, to restrict the
free flow of information, and to build its state-directed
economic model.
This is not consistent with American democratic values with
the free flow of information, the exchange of ideas that we are
accustomed to. And it is certainly concerning not just to
bipartisan members on the dais and us here in this room, but
also to our allies who don't understand what we are doing.
It is leading to an increasing fracturing of the global
trading system as well. I think we really need to strongly
rethink these policies and go back to the free flow of data, a
system that is consistent with American values and a
partnership with our allies.
Thank you.
Chairman SMITH. Thank you very much for your insight.
I now recognize Mr. Blumenauer for his questions before we
proceed. Thank you.
Mr. BLUMENAUER. Thank you, Mr. Chairman.
Ms. Shaw, you sort of laid it out in terms of the
alternatives that we face, and your conclusion is that we ought
to put real resources into renegotiating and rebuilding the MFN
multilateral framework, like-minded trading partners that
address modern American economic challenges, reflect today's
reality, and result in meaningful outcome for the American
people.
Can you elaborate on what actually that would look like?
Ms. SHAW. Yeah. Thank you so much for the question. So the
WTO is facing an existential crisis, as is the United States
and other members who are serious about seeing the system
survive and thrive.
I appreciate your views that we need to invest in the
system, and I share them. But we have a choice right now.
Either we continue to pursue things on a bilateral basis or
take unilateral action when it comes to trade policies, or we
invest in a system with other like-minded allies to address
things like China's unfair trade practices, to address concerns
we have with labor and the environment, to address digital
trade and new economy issues. And, if we don't do that with the
group of countries who are willing to invest and support those
ideas, we are going to have an increasingly fractured trade
regulatory system that is going to disadvantage and
discriminate our workers, our businesses, and our companies. I
don't think that is a best-case scenario or a desired outcome.
But part of the challenge is trying to get other members of
the WTO to agree with that approach. And so, if they don't, you
know, we are left in sort of a bilateral world, a go-it-alone
approach. But, ideally, we can work with those members to build
something greater, but the current paralysis of the negotiating
function of the WTO is just not sustainable.
Thank you.
Mr. BLUMENAUER. Mr. Hirsh, could you comment on the second
phase of the fisheries subsidies negotiations as being
critical? This initial round appeared to be one of the bright
spots of the WTO. Where is this going to lead us?
Mr. HIRSH. Thank you for the question. The resulted MC13--
the first phase of the negotiation--was, in fact, historic. It
proved that the WTO can get something done and get something
done in the environment area.
The second phase is really where the rubber is going to hit
the road, though, because it is going to be dealing with those
subsidies that are contributing to overcapacity and overfishing
very directly.
You know, right now, these subsidies are resulting in too
many boats chasing an increasingly dwindling supply of fish,
threatening fish stocks collapse. This is bad for the
environment. It is bad for farmers. And so it is going to be
critical to get this one right.
You know, the work is not far enough along at this point to
have result here at MC13, but, you know, the fact that we did
get phase I done is, you know, a source of optimism that phase
II can get done eventually as well.
Mr. BLUMENAUER. Mr. Hirsh, you heard my question to Ms.
Shaw. Do you have a reaction to her reaction?
Mr. HIRSH. You know, as I mentioned in my statement, it is
frustrating to try to accomplish things at the WTO. It takes
time. I had the good fortune, when I was in government, to be
involved in a couple of negotiations where I had the wind at my
back: fish subsidies and trade facilitation. So it is, with
patience, possible to get things done.
But, more importantly, you know, the WTO provides a real
baseline of--you know, for the operation of the international
trading system. As was pointed out by Chairman Smith, 65
percent of our trade is done under the WTO rules only. So, you
know, we do have to continue to invest in the institution and
make it reflect our priorities. Certainly, this does not
exclude the possibility of working with like-minded allies
outside to resolve and to deal with many of the challenges of
today, but we have to recognize that if we are to be like-
minded with those allies, we are going to need to continue to
commit to the WTO because they all are very much committed to
the WTO.
So, you know, I don't think it is mutually exclusive. You
know, we should be working with our allies on initiatives, but
we can't leave the WTO behind.
Mr. BLUMENAUER. Thank you, Mr. Chairman.
Chairman SMITH. Thank you.
I now recognize the chairman of the full committee, Jason
Smith.
Chairman SMITH of Missouri. Thank you, Subcommittee
Chairman Smith and Ranking Member Blumenauer, for leading this
hearing today just a couple weeks away from the World Trade
Organization's 13th Ministerial Conference.
The United States must lead at the WTO. We cannot afford to
cede the playing field of setting and enforcing global trade
rules to China. While the Biden administration has maintained
President Trump's blockade of the appellate body, until we see
real reforms to address judicial activism at the WTO, the
administration has also--and the administration has also pulled
back on reform proposals related to transparency and the
ability of WTO members to self-declare as developing countries.
Both issues are key to leveling the playing field with China.
The agreement that was finally reached on fisheries
subsidies failed to include important provisions on forced
labor and subsidies that contribute to overcapacity. There has
also been no progress on agriculture, even as many nations
undermine the competitiveness of our farmers and growers with
unfair and protectionist barriers.
After backing a waiver to the TRIPS Agreement to give away
U.S. intellectual property on COVID-19 vaccines, the
administration is now considering expanding that waiver to
cover diagnostics and therapeutics as well. USTR even colluded
with progressive activists to cede U.S. leadership on digital
trade, proposals that enjoyed enormous--enormous bipartisan
support in USMCA to China.
So I am glad we are hearing from witnesses today who can
help us chart a better path forward. That starts with tearing
down unfair barriers to U.S. exports.
Mr. Hanks, as you know, southeast Missouri, my home, is
home to 187,000 acres of planted rice, making the State fourth
in production in the entire country, and all that production is
only in our congressional district. It generates over $150
million for the local economy.
I regularly meet with Missouri rice producers who have
consistently told me that they face a very unlevel--unlevel
playing field abroad. U.S. export opportunities are being
diminished by foreign competitors and flawed WTO rules and
unfairly--unfairly subsidized rice production. India has been
the most egregious violator, flaunting both the letter and
spirit of WTO rules.
That is why this week I requested the United States
International Trade Commission conduct an investigation into
the global competitiveness of the U.S. rice industry. This
report would include analysis of India's distorted public
stockholding policies and other subsidies.
So, Mr. Hanks, can you speak to the impact that these
policies have on U.S. workers and the importance of USTR
pushing back on India's efforts to further weaken WTO rules in
their favor?
Mr. HANKS. Sure. Thank you for the question. I think the
answer is it is a job killer. It is an investment killer. It is
making our U.S. rice farmers unprofitable.
As I mentioned in my statement, India is controlling 40
percent of the global trade. We compete with them and many
countries, and it is becoming--all the market share in those
countries are becoming inaccessible because of their cheap
subsidies flooding into their rice production and that
correspondingly flooding into those markets. Rice farmers don't
want handouts. They want opportunity.
The USITC study that you mentioned--the update of that
study is going to be very eye-opening. In 2015, that study
revealed that U.S. rice farmers are very, very competitive and
given an equal playing field that we can compete in the global
market, including our own market here in the United States.
We have won two victories at the WTO against China, and
those cases are still in the void, as we say. And we don't know
what victory looks like when we bring cases to the WTO because
their bad behavior is still ongoing. They are dumping rice into
Puerto Rico as we speak.
So we are just looking for a level playing field, and we
appreciate the study being updated. So thank you.
Chairman SMITH of Missouri. Thank you, Mr. Hanks.
I want to thank all the witnesses for being here.
And thank you, Chairman Smith.
Chairman SMITH. Thank you.
I now recognize Mr. Kildee from Michigan for 5 minutes.
Mr. KILDEE. Thank you, Mr. Chairman, and to the ranking
member, for holding this important hearing.
One persistent problem that I have been focused on for the
time that I have been here in Congress, both in the United
States trade agreements and broader trade agenda, is the issue
of forced labor.
Across the globe, an estimated 28 million people work in
conditions of forced labor. Forced and slave labor, as a matter
of fact. Whether it is taking place in Xinjiang, China or in
the Dominican sugar industry, it is a violation of basic human
rights. All workers deserve basic labor protections, and
institutions like the WTO should be working to uphold those
protections around the world.
We have seen through our own trade agreements, like the
U.S.-Canada-Mexico Agreement, that clear, enforceable labor
standards help protect the basic rights of workers abroad, and
importantly--I think most importantly, in some ways--support
workers right here at home in the U.S.
To that end, I support the United States' efforts to
encourage WTO members to address forced labor on fishing
vessels, for example, and hope that the U.S. Trade
Representative will continue seeking opportunities to address
forced labor and workers' rights at the WTO.
So if I could turn to Mr. Hirsh. I wonder if you might
describe the United States' efforts to address the issues of
forced labor with WTO members and how these efforts support
American workers, the challenges associated with that
initiative, of course, and how the efforts can protect workers
around the world.
Mr. HIRSH. Thank you very much for the question. You know,
the Biden administration has been working to broaden the
consensus on the importance of considering labor issues
generally as well as forced labor specifically. You know, in
the WTO, in the context of the fisheries negotiations, they
have put forward a proposal specifically on forced labor and
are advocating for it. There is obviously pushback right now,
as there are in a lot of aspects of the negotiation, but they
are showing no sign of letting up on it.
Mr. KILDEE. Thank you.
I wonder if you could further comment. As you may recall,
when Congress passed the Uruguay Round Agreements Act, the
legislation that affirmed our participation in WTO, it directed
the President to establish--to seek to establish a working
party at the WTO to examine the relationship between
international trade and worker rights, including the trade
impacts of systemically denying workers their basic rights, an
initiative that obviously would facilitate addressing some of
these issues.
And I wonder if you would comment on what you know about
the status of the development of this working party and what
actions the U.S. has taken or what we might take, particularly
in this upcoming ministerial, to advance the development of
that working party.
Mr. HIRSH. Well, over the years, USTR and the U.S.
Government has raised the issue, has pushed for the issue, but
unfortunately, there has been pushback. And as we have been
discussing today, decisions at the WTO are made by consensus.
So, unfortunately, to date, that has not been set up.
However, the administration is continuing to push.
President Biden, last fall at the UN General Assembly, raised
the issue on the importance of introducing labor into WTO
discussions, and Ambassador Tai regularly raises this issue
and, in fact, has tied it to the interest in reform at the WTO.
Mr. KILDEE. Thank you, Mr. Hirsh.
I wonder, Ms. Shaw, given your testimony and your
commentary particularly on some of the sort of natural
limitations that come with an organization as diverse and broad
as the WTO, if you might comment on what you think the capacity
of the WTO might be to address something as fundamental as
basic worker rights, forced labor, child labor, those sorts of
issues.
Ms. SHAW. Thank you for the question. I think at 164, soon
to be 166 members, the odds of that happening are pretty much
zero because the WTO makes these decisions by consensus.
You know, historically, the WTO has been allergic to
addressing issues related to labor within the auspices of the
organization. It was one of the reasons we created the
International Labor Organization to specifically address those.
But I think your point is fair in that there is certainly an
economic relationship when it comes to forced labor and the
disadvantages and the discrimination that our own producers
face when we pay our workers a fair wage and other countries
don't.
So there is certainly a trade argument to be made for why
the WTO should be considering some of these issues, and when it
comes to forced labor, it is just clearly the right thing to
do. But in its current makeup, I think you will find that quite
challenging.
Mr. KILDEE. I appreciate that.
And I do think it is important that you point out that we
all recognize that this is not just about the fundamental
question of human rights, but the economic interest of American
workers is served by making sure that we have enforcement
mechanisms to prevent exploitative efforts like what we see
across the globe when it comes to forced labor and slave labor,
et cetera.
Thank you, Mr. Chairman. I appreciate the hearing. I yield
back.
Chairman SMITH. Thank you.
I now recognize, from Illinois, Mr. LaHood for 5 minutes.
Mr. LaHOOD. Thank you, Mr. Chairman.
And I want to thank our witnesses for your valuable
testimony here today.
I would like to first focus on the issue of digital trade
and the recent decision by the Biden administration to abandon
long-held bipartisan digital trade proposals at the World Trade
Organization. The sudden change in policy without any
consultation with Congress represents a troubling trend to walk
back American leadership and creates an opportunity for
countries, particularly China, to influence the rules of the
digital economy.
The administration attempted to justify this abandonment by
clinging to the belief that the WTO Joint Statement Initiative
on Electronic Commerce does not allow for domestic regulations
to be put in place. This approach, in my view, is misguided,
and we see the continued proliferation of the new restrictive
regulations, digital services taxes, and restrictions on data
flows abroad, which all run counter to our U.S. interests.
Last November, Rep. DelBene and I co-led a letter, along
with 36 of our House colleagues, to Ambassador Tai underscoring
how USTR's decision emboldens adversaries like the CCP, the
Communist Chinese Party, to advance a model of digital
governance that permits censorship and surveillance. It also
promotes human and worker rights abuses and forces unwanted
technology transfers through initiatives like the Digital Silk
Road.
Mr. Chairman, I would ask unanimous consent that this
letter be entered into the record, the one I just referenced.
Chairman SMITH. Without objection, so ordered.
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Mr. LaHOOD. Thank you. While I agree that we should bolster
consumer data privacy and cybersecurity safeguards, we can do
so without giving the impression to the world that the United
States will no longer protect our industries and workers
against unfair practices.
Mr. Shea, my question, how does USTR decision to walk away
from these digital trade proposals not only undermine broad
American interests, but also threaten American workers?
Mr. SHEA. Well, thank you for the question, Congressman.
When we joined the JSI on digital trade, my mandate at the WTO
was to insist on high ambition, so that meant strong
prohibitions against forced disclosure of source code,
prohibitions against cross-border data interference,
prohibitions against data localization, and make sure that
these agreements were reciprocally assumed by every member of
the Joint Statement Initiative.
We took very strong positions. I think it was well-
appreciated by the leaders of the JSI, Australia, Japan, and
Singapore. And I think people are probably just at the WTO
shaking their heads, what did the U.S. just do? They just did a
180. And we kind of did a 180 on the TRIPS waiver for COVID
vaccines.
So, I think it damages U.S. perception at the WTO, and I
think we are ceding the field to countries like China, who have
what I would describe as a Stalinist approach to information
control. So they are the--you know, we are kind of dumbing down
the negotiation, which was a big, big mistake.
Mr. LaHOOD. Thank you for that.
On a related note, following up on the comments by Chairman
Smith, I would like to underscore how important renewing the e-
commerce moratorium will be for Americans' small- and medium-
size enterprises and the countries they do business in.
Last month, I, along with subcommittee Chair Smith, Ranking
Member Blumenauer, and Rep. DelBene, along with 28 House
Members, sent a letter to USTR urging the administration to
support a renewed e-commerce moratorium at this year's WTO
ministerial.
Mr. Chairman, I would ask unanimous consent that this
letter be entered in the record as well.
Chairman SMITH. Without objection, so ordered.
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Mr. LaHOOD. As our witnesses today have highlighted, the e-
commerce moratorium has been renewed at each WTO ministerial
since 1998. However, countries like India and Indonesia are
threatening to depart from this established understanding to
impose tariffs and regulations that would disproportionately
harm U.S. businesses.
Ms. Shaw, can you expand on your written testimony on this
issue and discuss how these efforts by countries like India and
Indonesia can be viewed as a direct threat to small businesses
and workers in the United States?
Ms. SHAW. Yeah. Thank you for the question. Absolutely. I
think loss of the e-commerce moratorium would be absolutely
devastating, in particular for the United States who has built
this services and digital economy for the globe, but also, in
particular, for small- and medium-size enterprises who rely on
the internet to buy and sell goods and to set up businesses.
But it wouldn't just impact those individuals in the United
States; it would also disproportionately impact women around
the world who haven't traditionally had access to the formal
economy but can use their phones to start a business and start
a life for themselves and their family.
I just think that this policy is so absurd, and clearly,
the data doesn't support it. The small amount that would be
collected in tax revenue does not even amount to a drop in the
bucket compared to the cost that it would take to administer
this policy. The United States should fight hard to maintain
the moratorium.
Mr. LaHOOD. Thank you. I yield back.
Chairman SMITH. Thank you.
Next, I recognize from California, Mr. Panetta, for 5
minutes.
Mr. PANETTA. Thank you, Mr. Chairman.
Thank you, Ranking Member Blumenauer.
Thank you to all of our witnesses. Appreciate your time
today.
One of mine, well, I guess as you are hearing, one of our
concerns is illegal, unregulated, and unreported, IUU fishing,
which I think we can all agree is prevalent on the high seas
and taints our seafood supply chains. IUU fishing is linked to
overfishing, environmental degradation, and, of course, forced
labor.
Now, exposing these concerns, there has been many articles,
be it by The New Yorker, or by The Economist, which has found
direct evidence of forced migrant labor on fishing vessels and
in seafood processing and China, including those tied to Uyghur
labor. Now, these stories are pretty bad, I think as you will
all admit, and compel us to address what drives these abuses.
We know that one of the contributors to IUU fishing and the
forced labor connection are these subsidies from foreign
governments. Thankfully, USTR has been pushing for a strong WTO
fisheries agreement that prohibits subsidies that contribute to
overfishing, including subsidies to vessels engaged in IUU
fishing, fishing on over-fished stocks, and fishing on the
unregulated high seas.
Now, I am proud that the U.S. has already gotten 57
countries to ratify this agreement and encourage them to
continue to build support for it. However, the agreement does
fall short in some ways: One, it does not directly address
forced labor on fishing vessels; and two, China, it allows
China, which has the largest distant water fleet in the world,
to be treated as a developing country despite its massive
subsidies.
Ambassador Shea, I just kind of want to go to you, and just
briefly, if you could, one, give me your summary of why it is
important to continue to prioritize the inclusion of forced
labor provisions in the fisheries subsidies agreement; two, why
have countries been so darn reluctant to agree to higher
standards, especially when it relates to forced labor and IUU
fishing, and have they given any justifications for their
opposition?
Mr. SHEA. Well, basic humanity is the first. We should be
supporting people, helping people who are subject to these
conditions. That is number one. Number two, it does have a
trade impact, trade disruptive impact. If producers use forced
labor, that makes their goods cheaper, and as a result, that
has an anti--that spills over.
I will make a point, every 2 years, there is a discussion
around cotton at the WTO. Everything is supposed to be on the
table. I wrote a piece a couple years ago, I said forced labor
should be on the table in Xinjiang, because that definitely
impacts the global price of cotton.
So China insists that forced labor should not be an issue
at the WTO, does not belong at the WTO, belongs at ILO or, you
know, other organizations. It is ridiculous that China is
treated as a developing country, and it has the right
automatically to say it is exempt from certain rules.
The problem with the fishery subsidies negotiations, a lot
of major fish producers, or fishers, are developing countries
at the WTO, so they are constantly seeking carveouts from the
rules.
Mr. PANETTA. Okay. Thank you, Mr. Shea.
Let me move on to another, going from fishing, going to
agriculture. I was proud to launch the Ag Trade Caucus with
Chairman Adrian Smith and Congressman Costa and Congressman
Dusty Johnson, a bipartisan effort. Obviously, as we know,
trade barriers not only hurt American farmers, but more
importantly, they contribute to global food insecurity.
American farmers can feed the world, but, if there are markets
abroad and science-based SPS standards that can hurt it,
opposition to agricultural biotechnology in particular hinders
our ability to develop and export heartier and more nutritious
crops.
Thankfully, there is the WTO SPS agreement, which could
help address these issues, but even that agreement can be
undermined by trade partners such as the EU, the European
Union.
Mr. Hanks, what can be done to reform the WTO to improve
compliance with initiatives like the SPS agreement?
Mr. HANKS. Well, as I said in my statement, you know, the
subsidies portion of agriculture really needs to be the focus
of, you know, the U.S. and other WTO members. What we see
globally is our inability to compete specifically as a result
of many countries, in particular, India, China, a lot of Asian
countries that are heavily, heavily subsidizing and violating
their WTO commitments.
So holding those countries to their commitments I think, we
think, is vital to a working WTO.
Mr. PANETTA. Thank you. Thanks to all the witnesses.
Mr. Chairman, I yield back.
Chairman SMITH. Thank you.
I now recognize from Kansas, Mr. Estes, for 5 minutes.
Mr. ESTES. Thank you, Mr. Chairman.
And thank you to our distinguished panel for joining us
today. I am glad that you and my colleagues touched on the
disastrous precedent set by the TRIPS waiver. It is ridiculous
that our current administration is willing to allow other
countries to steal the intellectual property of American
businesses.
I want to touch on this as well, but from a broader
perspective, on U.S. R&D competitiveness, and the tax
consequences of forced technology transfers, localized
operations, and data localization. Intellectual property is a
direct result of research and development. Our current tax
system has incentivized the execution of R&D in several ways.
The first is the immediate R&D expensing, which we will
hopefully get over the finish line with the Senate soon with
the bill we just passed the House last week. This is
complemented with an R&D tax credit that is especially useful
to small- and medium-size businesses that engage in cutting-
edge research. Additionally, our global tax system contains the
Foreign-Derived Intangible Income, FDII, deduction that rewards
companies for domiciling IP in the United States.
As strong as these incentives are, I believe that the
administration's active participation in IT theft is a massive
disincentive for American businesses to conduct R&D here. The
TRIPS waiver has put us on a slippery slope. We now have
countries at the WTO proposing more tech transfers, localized
operations, and data localization, in short, to complete
abandonment of U.S. digital trade priorities.
Ms. Shaw, what do you believe the overall effects on U.S.
economy and research and development if the administration
fails to oppose foreign government demands on localization?
Ms. SHAW. Thank you so much for the question. And, you
know, it is bewildering to me that an expansion of the TRIPS
waiver is even being considered at the WTO, in particular,
considering the Biden administration and the World Health
Organization have already declared the COVID pandemic over.
There doesn't seem to be any justification for this discussion
that is happening.
And I think we have talked about this morning a number of
the negative impacts that the TRIPS waiver would have, the
chilling impact on R&D, and the potential, as you say, for a
slippery slope for this to expand to other types of either
medical devices or topics altogether.
The United States is going down an alarming path right now,
between the TRIPS waiver, the possibility of losing the e-
commerce moratorium, and the reversal of longstanding
bipartisan proposals on digital trade. And we are positioning
ourselves to be more like China than the western alliance that
we have been part of for so long.
So I strongly support efforts by the administration to push
back on the TRIPS waiver and to kick it out of the WTO
altogether. Thank you.
Mr. ESTES. All right. Thank you.
This concerns me not just from a trade perspective but from
a tax perspective as well. On the surface, these proposals may
result in U.S. companies having permanent establishments in
foreign countries, ceding primary taxing right to those
countries, causing jobs to migrate away from the United States,
and decreasing payroll taxes remitted to the U.S. Treasury.
However, what is most alarming to me is the interaction of
the WTO policies with our global tax system and OECD's Pillar
Two. When we addressed international tax in the Tax Cuts and
Jobs Act in 2017, we created the FDII and GILTI regimes, which
basically function as a carrot and a stick. If you have IP in
the U.S. and sell overseas, those profits are taxed at a lower
rate; if you have IP overseas, those profits are taxed at a
higher rate. This system has been successful in bringing IP
back to the United States and stopping corporate inversion.
However, the success of this system relies on the U.S.
retaining primary taxing right on IP within the United States.
As many of my colleagues know, I have been adamant in
opposition to the OECD's Pillar Two for a variety of reasons.
In relation to this topic, what concerns me the most is the
qualified domestic minimum top-up tax, the QDMTT. A QDMTT would
be assessed by foreign countries on U.S. companies with a
physical presence in that country if it is determined that that
company's effective tax rate is under 15 percent.
Due to OECD's ordering rules and the U.S. Treasury not
defending our tax system, QDMTTs are given priority over GILTI
and FDII. Any QDMTT paid by a U.S. company would generate a
foreign tax credit, which would be an additional drain on the
U.S. Treasury.
With this additional information, Ambassador Shea, what do
you think would be the overall effects on the U.S. tax base,
and will U.S. tax receipts be increased or decreased?
Mr. SHEA. With respect to OECD?
Mr. ESTES. Yes.
Mr. SHEA. I just am not confident to answer that question.
I am not familiar with the Pillar Two.
Mr. ESTES. Right, okay. Well, obviously that has an impact
on our trade just because of the way it is discussed. And, I
mean, the work that you have done so much on WTO has been so
beneficial in highlighting the weaknesses there.
Mr. SHEA. Well, it is great to--I remember you visiting us,
so it is good to see you again.
Mr. ESTES. It is good seeing you, too, as well.
So, you know, in summary, I think we need to have the USTR
focus on policies that are beneficial for the United States and
utilizing what WTO was originally crafted to be to help us in
international trade. Thank you.
Mr. SHEA. Thank you.
Mr. ESTES. I yield back.
Chairman SMITH. Thank you.
I now recognize from Washington State, Ms. DelBene, for 5
minutes.
Ms. DelBENE. Thank you, Mr. Chairman.
And I just want to thank all of our witnesses for being
with us today.
I wanted to start with the nexus of trade and climate. In
2022, Democrats passed the Inflation Reduction Act, which is
the most significant Federal investment in U.S. history to
tackle the climate crisis, and to strengthen American energy
security. It enables the U.S. to cut greenhouse gas emissions
by 40 percent and invest billions of dollars to enable American
manufacturers of steel, cement, aluminum, and other high-
emitting industries to decarbonize.
So combined with the bipartisan infrastructure law, the
industrial sector is expected to see the largest emissions
reduction after the power industry. Many businesses across the
country are doing the right thing by using green energy and
making processes more efficient, but their competitors in
certain foreign countries are taking advantage of weaker
environmental regulations to undercut American industries.
And, as a result, American jobs in important sectors have
been lost to countries like China and India, where production
is three to four times as carbon-intensive. That is why I
believe that Congress should act to pass legislation, like the
Clean Competition Act that I recently introduced with Senator
Whitehouse and Representatives Don Beyer, Kathy Castor, and Ami
Bera, to drive down carbon emissions globally, and level the
playing field for American workers by imposing a border fee on
high carbon products.
Ambassador Shea, in a 2022 Politico article, your former
boss and our former trade representative Bob Lighthizer, under
President Trump, he was quoted as saying, ``When you let
polluters sell in your market without a border adjustment, you
are losing U.S. jobs in competing industries, and essentially,
you are subsidizing the polluters. This makes no sense.''
And I wondered just kind of, what are your general views
about the value of a carbon border adjustment tariff, and how
do you think we should move forward?
Mr. SHEA. Well, thank you for the question, Congresswoman.
As a general matter, I don't have a problem with the carbon
border adjustment. If countries have very low environmental
standards and are getting an advantage on price and export
trade as a result of that and hurting U.S. producers who have
to abide by higher environmental standards, I think a carbon
border adjustment properly structured, you know, could help
level the playing field, both for businesses and workers in the
United States.
I know that at the WTO, before we left, we submitted a
proposed general counsel decision that would clarify that the
agreement on subsidies and countervailing measures would allow
a member to bring a countervailing duty against another member,
who had an environmental regime below a fundamental threshold
of acceptability. So I agree with--generally agree with--you
know, of course, I agree with Bob Lighthizer, my former boss,
but I think carbon border adjustment, I am glad to see there is
more bipartisan support growing around that concept----
Ms. DelBENE. Thank you.
Mr. SHEA [continued]. In Congress.
Ms. DelBENE. Thank you.
Mr. Hirsh, could you discuss how potential U.S. carbon
border adjustment policy would interact with existing
international trade rules at the WTO?
Mr. HIRSH. Sure. And just, first, let me say that, you
know, given the nature of the climate challenge, we have to
look at every option, and this is certainly one of them. You
know, there are others who are probably more steeped in the
technical details than I am on that issue, but, I mean, from
what I understand there should be a way to design a carbon
border adjustment that would be consistent with trade rules.
You know, Ambassador Shea mentioned properly designed, and,
you know, there is always some work to take a look at it and
make sure that we are actually--accurately reflecting what the
carbon loads are of goods and how our regulations, for example,
are taking that into account. And it is work. Your legislation
obviously is a start in getting that work done, but, you know,
with that work it probably can be done.
Ms. DelBENE. Thank you.
Just a real quick question for Ms. Shaw, and kind of
following up on earlier conversation around the e-commerce
moratorium: It has been reported that certain countries,
including India, South Africa, and Indonesia, may be trying to
use that moratorium as a negotiating leverage to exact
concessions from the U.S. And I wondered, what do you think--
what strategies should the U.S. employ to ensure that the
moratorium is extended?
Ms. SHAW. Yeah. Thank you for the question. And I am also
from the great State of Washington, so very much appreciate
your views.
You know, this is a tough issue, right. The administration
should certainly go to the mat on this, right. This is probably
the most important issue in terms of advancing U.S. interests
in the WTO for this ministerial. That said, the more the United
States wants something, the more other countries are going to
ask in exchange, right.
So we need some other point of leverage over India,
Indonesia, South Africa, and others who are looking to flout
WTO norms and rules, and whether that is the threat of
retaliation, whether that is the ability to impose taxes on,
say, Bollywood or some of India's telecommunications and
computing products, we have to think creatively out of the box
to give the administration more tools to be able to get the
outcomes we need. But certainly, pushing the administration to
fight for it is step one.
Ms. DelBENE. Thank you.
I yield back, Mr. Chairman.
Chairman SMITH. Thank you.
I now recognize from West Virginia, Mrs. Miller, for 5
minutes.
Mrs. MILLER. Thank you, Chairman Smith, Ranking Member
Blumenauer.
As we say down south, and thank you all, all y'all, for
being here today and sharing your expertise on this critical
topic.
This year, we have witnessed the consequences of
disjunctive, contradictory international trade policies in the
Middle East, the Red Sea, and our adversaries who want to see
the demise of the U.S. economy. This is why this ministerial
conference is critical to coordinate with our allies and set
ourselves and the world up for continued success.
Ms. Shaw, you have worked extensively with the WTO as well
as USMCA's dispute resolution mechanisms. From your experience
and knowledge regarding trade disputes, what impact do these
disputes have on long-term consumer prices, and what mechanisms
should the World Trade Organization implement to ensure
effective and timely resolutions?
Ms. SHAW. Thank you so much for the question,
Congresswoman. So dispute settlement, whether it is at the
World Trade Organization or under one of our FTAs, like the
USMCA agreement, is fundamentally our stick, right. It is the
tool that we have to hold our trading partners accountable for
the discriminatory practices that they may adopt that
disadvantage U.S. workers, businesses, farmers.
So on that basis, you know, what impact does it have on
consumer prices? Sometimes policies that are employed by
certain nations result in increased consumer prices, and that
is one of the reasons that we may bring a dispute at the WTO or
under one of these other forums. But the flip side that I will
offer is, fundamentally, we are trying to enforce the rules,
and the tool that we have to enforce the rules is tariffs,
right.
So, if we win a case at the WTO or win a case under USMCA
or any of our other FTAs, the reward that we get is the ability
to impose retaliation until that country eventually complies.
And there are sometimes impacts on consumer prices because
tariffs are the tool that we use for that purpose. But
fundamentally, in thinking about the effectiveness of dispute
settlement, it should be, are we getting a result, are we
putting pressure on the other party, and how quickly are we
able to give relief to our producers. So those are the types of
things that you think about in terms of bringing a dispute.
Thank you.
Mrs. MILLER. Thank you.
Mr. Sullivan, I was glad to hear your testimony regarding
the U.S.-based small- and medium-sized enterprises, such as
your own, dominating the COVID-19 response in the
biopharmaceutical industry. We have long been aware of the
capabilities of our American entrepreneurs and small business
owners to enact global change. We have a deep responsibility to
protect them from bad actors. And I am extremely concerned that
our own administration isn't doing enough to protect our
intellectual property protections.
Apparently, it is looking at possibly expanding the TRIPS
waiver to diagnostics and therapeutics. Can you explain how
this action might impact the ability of U.S.-based companies to
invest in further development of lifesaving cures without the
certainty that your IP is protected, and how this action might
actually impact the ability of U.S.-based biopharmaceutical
companies to collaborate with domestic and international
partners in the development of lifesaving products and cures?
Mr. SULLIVAN. Thank you for the question. I think this is
such a critical issue when it comes to how innovation is done
and why the U.S. leads the world in innovation and in
biotechnology and other industries. It is because we have
always stood for strong intellectual property protections.
You know, I work with brilliant scientists all over the
world, and so when we talk about some of those that are in
favor of these kind of intellectual property waivers, like
China, India, and South Africa, they have absolutely brilliant
scientists as well, many of whom I have had the opportunity to
work with, both in their country, as well as those that have
come to the U.S. to work alongside of us.
And I have often wondered, why is it that innovation is so
powerful here in the U.S., and it is because we have always
stood for strong intellectual property rights for people to be
incentivized to own what they have invented, and that also
translates into being able to find funding associated with
those.
And so, it is a delicate ecosystem that we have created in
this country that has allowed us to be the world leader in
innovation in these kinds of industries, in high-tech
industries and in biotechnology, in medicines and developing
these things. And we saw it displayed during COVID where
companies all over the U.S. stood up and said, ``We want to
help find solutions.'' And so, it is important to understand
that this is what keeps us as the innovative leader of the
world, and we should not weaken that by agreeing to TRIPS
waivers.
Mrs. MILLER. Thank you. I yield back.
Chairman SMITH. Thank you.
Now, pursuant to committee practices, we will go two to
one. I will next recognize from Pennsylvania, Mr. Smucker, for
5 minutes.
Mr. SMUCKER. Thank you, Chairman Smith, for providing this
opportunity to share with the administration and with our
counterparts around the world what our congressional trade
priorities are in regard to MC13. And I just want to sort of
associate myself with the remarks of the last two questioners
on this side regarding the proposed TRIPS--waiving of the
proposed TRIPS protections for the COVID-19 treatments, and now
diagnostics.
You know, we have already seen this waiver expanded since
the initial proposal focused on vaccines, and I think it just
sends a really, really bad sign to the industry, and perhaps
every industry that cares about protecting personal property,
and I think it will have a dampening effect on companies'
willingness to innovate and to invest.
And Mr. Sullivan, you just said that very, very well.
And so, you know, if we have a future pandemic, if we are
just giving away the intellectual property, I don't think we
would have quite the impact or quite the investment in
innovation that we saw here. But I am also concerned, would
this set a precedent? And anyone can address this, or is anyone
worried about the precedent that would set if we do this? Like
we have other national initiatives, you know, green technology,
AI, electric vehicles, whatever it may be, you know, if we are
giving away intellectual property, I think we are also giving
away that American leadership.
So, Mr. Shea.
Mr. SHEA. Yeah, I just want to echo the point that Chairman
Smith made. The current director general at the WTO earlier,
sometime last year, suggested that there could be a TRIPS
waiver for green technology, and apparently, the U.N. General
Secretary agreed with that position in this conversation. It
was a press report. So I agree, I am glad the chairman brought
that up, and setting the precedent, a bad precedent, is a
really important point to make.
Mr. SMUCKER. I think it goes against the very system that
our economy is based on, why we see innovation here in America
in so many different sectors. And so, I think this is really,
really an important issue beyond just the pandemic and
healthcare-related innovations.
We also know--and I will open this to anyone. Certainly, as
we are updating systems at the WTO to better address modern
challenges that we are faced with, the U.S. has an important
and an influential role. And with 65 percent of U.S. trade
covered by WTO rules, what role can we play in the U.S., how
can we best position ourselves, and what role maybe can
Congress play to support our efforts to make necessary changes
at WTO? And I will open that up to anyone. And I will call on
Ms. Shaw, if--go ahead.
Ms. SHAW. I was just about to call on Ambassador Shea.
Mr. SMUCKER. I will drag you into it if you need, yeah.
Ms. SHAW. Sure. Right. So the first step is, you know,
coming up with a vision for what we want the 21st century World
Trade Organization to look like. And in my testimony, I have
extensively outlined some of the challenges that we are facing,
in part because I am a lawyer, and I am used to being a wet
blanket, but also because I care a lot about the system and I
want to see it survive and thrive. And I just don't think, in
its current permutation, it is equipped to do that.
So some of the issues that we have been spending a lot of
time talking about within the committee, as well as with the
administration, are issues related to China's unfair trade
practices, the challenges of state-directed economic activity,
forced technology transfer, and some of the issues related to
supply chains, industrial policies, and the other challenges
that we are facing with labor and environmental concerns.
Those are the types of issues that the WTO should be
addressing. We shouldn't be spending our time talking about
whether or not we are going to update committee minutes in
time, which is actually one of the agenda items for this
ministerial. The WTO is just completely divorced from what is
actually happening on the ground and what is impacting everyday
Americans.
And so, from that perspective, we need an ambitious
negotiating agenda, and that is not going to happen among 164,
soon to be 166, members. While I wish it were, that is not
possible in a consensus-based system. So we need to find like-
minded allies who want to undertake that exercise with us.
And negotiations take a very long time. It was 50 years,
between 1947 and the time that the WTO was established after
eight successive negotiating rounds. This is not a small
endeavor. It is a significant one that I am recommending.
Nevertheless, I think it is the next step, and it is the only
way that the WTO survives.
Mr. SMUCKER. Thank you.
Mr. Shea, in 20 seconds, anything to add, how can Congress
influence----
Mr. SHEA. Well, I think we need to have very low
expectations for the WTO. Two-thirds of the members don't have
to abide by the rules, LBC, self-declared developing countries.
And then, the Chinese system, the largest trader in the world,
second largest economy in the world, their system is
fundamentally at odds with WTO norms, so that is the WTO.
Mr. SMUCKER. Thank you.
Chairman SMITH. Thank you.
I now recognize from Virginia, Mr. Beyer, for 5 minutes.
Mr. BEYER. Mr. Chairman, thank you very much.
And thank you very much for being here with us today.
Mr. Hirsh, you mentioned that--you talked about the dispute
over whether the WTO panels can second guess a member's
decision to take a measure for national security purposes.
Clearly, this happened in the Donald--President Trump's
administration. This administration has held fast the position
that national security concerns remain sacrosanct and out of
bounds for multilateral body to consider.
You suggest maybe there is a way to formalize this, but
have we created this huge hole in the WTO rules? What is to
prevent self-attestation from any given country to choose any
given thing? For example, to Mr. Hanks' concern, why couldn't
India say that they have a national security exemption for
rice?
Mr. HIRSH. You know, that is an excellent question. And,
you know, there is clearly attention between treating national
security issues and self-judging and the potential for a big
loophole. But this has been the case since 1947. This has been
on the books since 1947. The U.S. has taken this position since
1947. And what held it back, really, from becoming this kind of
loophole was this mutual recognition, this norm that it should
not be overused.
Now, you know, we are in a situation where it is
increasingly being used. So what can we do? For one thing, the
U.S. has never denied that when a member invokes national
security that another member is entitled to retaliate. This is
frankly the end point of any dispute.
So what the U.S. really has done in the past is just skip
over the middle, skip over the notion that trade experts can
sit in judgment on a member's national security decisions, and
just cut right to the chase and say, Okay, you want to
retaliate, this was the impact of our measure, you may
retaliate up to that point. And so, when I talk about
formalizing that process, that is what I am referring to. You
know, that ability to retaliate should serve as some
disincentive, but----
Mr. BEYER. Let me interrupt for one second.
Mr. HIRSH. Yeah.
Mr. BEYER. Do you consider the Trump/Biden use of this
exemption for steel and aluminum an overuse?
Mr. HIRSH. You know, I don't want to, you know, opine on
that. I mean, I think that this problem--the problem of over-
capacity in steel and China's contribution to that, you know,
has been going on for an extended period of time. And there
have been many, many, many international discussions on this
issue that simply we are getting nowhere. You know, this is,
you know--again, the judgment we have made is that it is a
national security issue, and at the end of the day, that has to
be respected by virtue of the way the disciplines at the WTO
are set up.
Mr. BEYER. Thank you very much.
Ms. Shaw, I was fascinated by your testimony. I am very
impressed by it. To quickly quote, ``It is fair for the
committee to ask what exactly is the point of continuing to
invest in a multilateral system when the only issues on the
table are largely defensive, don't advance U.S. interests, have
little relevance for today's economy, and would largely make
Americans worse off.'' You move on to say, ``We should put real
resources into renegotiating and rebuilding an MFN multilateral
framework.''
Mr. Shea, you were a wonderful host for us a couple of
years ago in Geneva. What is your perspective on Ms. Shaw's
recommendation?
Mr. SHEA. I agree. I mean, the--but I am not sure how many
people would come along with us, at least initially. I think
this sort of may be a midterm to longer term. I think that
there is such a wedded nature--so many members, particularly
like the European Union, even Australia, Japan, they are wedded
to the WTO, and they are even--they are very reluctant to take
actions, for example, against China, whose system I believe is
completely incompatible with WTO norms.
So I generally--I definitely agree with the sentiment. I am
a little skeptical that we would get a lot of players joining
us, at least initially. There have been some interesting
commentary, Clyde Prestowitz and Rob Atkinson, for example,
suggest that we create a DATO, a NATO for trade, where like-
minded market economies would join together when they are
attacked through economic policies by China or other places,
and come together and take collective action in response. So
that is an interesting idea that has been on the table for a
few years.
Mr. BEYER. Thank you.
Ms. Shaw, do you have any quick response to Mr. Shea's
skepticism about your fascinating suggestion?
Ms. SHAW. Well, I mean, my honest view is that whether the
United States does anything or not, the WTO is going to wither
off into irrelevance. So this is a last-ditch effort to try to
save the organization, that ultimately, I think, if it works,
is going to be strongly in the interest of the United States.
A purely bilateral strategy where we are just negotiating
one-off with individual countries without a multilateral
framework proved to result in discrimination to U.S. producers,
farmers, exporters. We tried that in the first half of the last
century. That is why we came up with this whole project and
idea in the first place. So as hard as it is going to be, and I
am under no illusions that this is going to be easy, I think it
is our only option.
Mr. BEYER. Thank you very much.
Mr. Chairman, I yield back.
Chairman SMITH. Thank you.
I now recognize from North Carolina, Dr. Murphy, for 5
minutes.
Mr. MURPHY. Thank you, Mr. Chairman.
Thank you all for coming here today.
Ms. Shaw, I liked the phrase of a ``wet blanket.'' I didn't
quite know what that was. I had to--actually, I had to look it
up, and I kind of feel like I am a wet blanket too. But that is
what skeptics do, because sometimes unbridled enthusiasm, as we
have seen with the TRIPS waiver, leads to absolute disaster.
And so we had the Inflation Reduction Act, which was the
pill penalty that now CBO thought it would be one fewer
molecular cut, as far as new medicines, now it has been close
to 200. This is where unbridled enthusiasm had a motion to
overtake reality and a rational thoughts, where we, yeah, want
to share the vaccines with the world. But let's think about--
instead of just feeling better about ourselves, let's think
about the consequence.
I can't think anything more destructive than the TRIPS
waiver for American innovation. I just absolutely can't,
because what are we going to do? What is the next extension
with these types of things that we are going to start giving
our technology away? It is an absolute national security issue.
Yeah, fine, well, we have Chinese spying on us. Hell, they
would get our innovation anyway. Why are we just giving it
away? Next thing we are going to be telling them what the
battle plans are for our Abrams tanks and all this stuff. It is
just--it makes us feel better about ourselves, but it is
destructive to American innovation and American society.
Mr. Sullivan, you know, I am a physician, been one for 30-
plus years, still practice, and I have relied for innovation
throughout the years, seen an absolute explosion in this,
especially in the last decade. So to bring a pandemic, a COVID-
19 therapeutic or diagnostic to market, how much does that
cost?
Mr. SULLIVAN. Well, to just----
Mr. MURPHY. Briefly. I mean, hundreds of millions of
dollars.
Mr. SULLIVAN. It is literally hundreds of millions of
dollars----
Mr. MURPHY. Right.
Mr. SULLIVAN [continuing]. In the neighborhood, even
approaching $1 billion, perhaps.
Mr. MURPHY. Right.
Mr. SULLIVAN. And the reason that that is so daunting is
because we have to remember that not only are we paying for the
successes, but we are also paying for the failures.
Mr. MURPHY. Sure.
Mr. SULLIVAN. And that is the system that we live in to
innovate and find the really good 10 percent that make all the
difference in the world. And we do end up paying for failure--
--
Mr. MURPHY. Sure, because every molecule----
Mr. SULLIVAN [continuing]. And we don't like to talk about
that.
Mr. MURPHY. No. For every molecule, you know, what is it,
10-to-1, at least, or if not, on some things----
Mr. SULLIVAN. That is correct. That is correct.
Mr. MURPHY [continuing]. That is absolutely done. And so,
you know, you have to plan years in advance. These are not just
singular, ``Hey, let's just do this tomorrow.'' It takes years
in advance to do this. And to literally give away American
technology, American investment to make us feel better about
ourselves is absurd, no matter what field that we are dealing
with, no matter what field. It is just beyond me, we have
somebody in the White House and in the administration that just
wants to give America away. It is a national security issue. It
is absolute national security.
I just want to shift to one thing about fishing. Ms. Shaw,
I am going to kind of ask this to you. We are one of the
world's greatest producers in seafood in my district, in North
Carolina. You know, we have to fight the guys from Florida and
so many other places, but we always try to win our best. They
come up to our places to fish. And so, I have the second-most
coastline district in the country.
We saw major breakthroughs in the twelfth ministerial
meeting where countries reached an agreement on some fishing
subsidies. We still have, you know, some of the Asian countries
coming off our coast and doing so much of this. This year, WTO
members are negotiating a second fisheries agreement to cover
the additional unfair practices.
And I want to, Ms. Shaw, in your opinion, do you think this
is going to be a good outcome for the United States? You know,
now what is it, we get 92 percent of our seafood from overseas,
and it is done with slave labor and some of these bad
practices. What do you think is going to happen with this
second agreement?
Ms. SHAW. I think if the agreement landed where the U.S.
wanted it to, it would be a good agreement for America. The
problem is, we are not the only one at the table. And, as of
now, it seems very unlikely that we are going to get any
outcome on overcapacity, overfishing subsidies, which is really
the heart of what the fishery subsidies negotiations were
about. If anything, it looks like we may land on something
related to transparency, effectively just knowing what the
subsidies are. And that is a pretty basic step. While helpful,
in terms of driving negotiations forward, it is not really
going to be a home run in terms of what America takes home.
Mr. MURPHY. Well, I just have a problem, because, you know,
like Trump, no Trump, whatever, it is just the whole deal of
negotiation. We should negotiate in all of our different
industries regardless from a point of strength, not from a
point of weakness. And yes, we want to be fair, et cetera, et
cetera. But when we have China, when we have so many other
countries taking advantage of our weakness, meaning our
empathy, it destroys American innovation, it destroys American
industries.
Thank you, Mr. Chairman. I will yield back.
Chairman SMITH. Thank you. I next recognize from Florida,
Mr. Steube.
Mr. STEUBE. Thank you, Mr. Chairman.
I have been in here almost the entire hearing, and I had
some planned remarks, but I kind of want to go a different
direction. Each of you did not speak positively of the WTO. I
can guarantee the people in southwest Florida don't think we
should be a part of the WTO. If I polled my district, they
would think why are we wasting millions of dollars. I just had
my staff look up the numbers. So, in 2022, U.S. gave $23
million, which was about 12 percent of the budget; China gave
10 percent of the budget; Germany 7 percent of the budget;
everybody else is less than 4 percent. So we basically are the
large--correct me if I'm wrong, these are numbers that I was
given, we give the most money. Yet, each of you say we
basically--even the Democratic witness is like, we don't have
the best of results.
Mr. Hanks, the rice farmers, we are getting stuck by China
and India and some of these other people who aren't following.
Mr. Shea, you say two-thirds of the people don't even have
to follow the rules that are part of the WTO. I mean, that is
very fascinating to be part of an organization that you don't
have to follow the rules for.
Ms. Shaw, I follow your line of thinking, but my question
to you--and I am going to, like, give you the platform, and I
want to start with Ms. Shaw and then Mr. Shea--explain to me
how I should explain to the farmers in my district, and I used
to have one of the largest ag districts; after redistricting, I
don't have as much ag, but citrus is--I am from Florida, so
citrus is huge, beef cattle, dairy.
Explain to me how I should explain to my farmers why we
should even be part of an organization where we spend the most
money and get absolutely nothing back when we can go and have
the USMCA and have--like we just passed part of a Taiwan tax
deal in the last tax bill that we just passed. There are all
these different things that we can unilaterally do with other
countries that aren't China and competing with us and agree
with us on the way that we approach policy and economic
interests and trade and want to help each other and be
successful. So help--I guess, argue to me why the United States
should still be an active partner when just about every one of
you have said that it is pointless.
Like, Mr. Hanks, you said that you won. You beat--and then
it goes into this--you described it as a void. So like, what
are we doing? I mean, like, why are we doing this when we can
go out--we are the United States; we can go out and negotiate
with whoever we want to negotiate with for trade deals. So
explain to me why we should still be a part of it and give them
millions of dollars?
I will start with Ms. Shaw, and then I will go to Mr. Shea.
Ms. SHAW. Thank you. Well, first of all, I think it is a
fair question, right. I mean, you have heard for----
Mr. STEUBE. And explain it to the farmer, like you are
talking to a farmer in my district who grows citrus. Try to
explain to his level.
Ms. SHAW. Absolutely. Well, first of all, 96 percent of the
world's consumers live outside the United States, so your
farmer needs an export market, right. We need markets to sell
our agricultural products into. But part of the problem with
just doing bilateral deals, if we do a deal with Brazil, we do
a deal with Argentina, we do a deal with the EU, is that
nothing prevents them from giving another country an even
better deal.
So after we have finished negotiating that deal with the
European Union, if they cut Brazil a better market access rate,
U.S. producers are immediately disadvantaged. That is why we
came up with this multilateral system in the first place.
Mr. STEUBE. That is not working.
Ms. SHAW. Not working, okay. Well, we need the markets. The
WTO is fundamentally flawed, but I can--we can do better, and a
multilateral system is the most effective way to give a broader
market to our farmers.
Mr. STEUBE. And you think by doing better is just dumping
more resources in--I mean, my remarks about how horrible the
Biden administration has taken a turn from what Mr. Shea and
Lighthizer and what the Trump administration did on trade. But
like what would that look like, dumping resources in it?
Ms. SHAW. Not as it stands, no. That would be a massive
waste of money. I think we need to have real conversations with
our trading partners about whether they are serious about going
and creating the same project we are. And if they are not, I
agree with you; we are better off on a bilateral route. But I
think we are better off, ultimately, if we can get a group of
like-minded allies, a subset of the WTO, a WTO-plus group, to
go forward with more ambitious rules who really want to see the
system move forward. And, if not, you are right. Let's go the
bilateral route.
Mr. STEUBE. Mr. Shea.
Mr. SHEA. I agree with--it is a great question. I agree
with a lot with what Kelly says. But the WTO is also a place
where members can come together and discuss trade problems
informally, not necessarily in a formal setting. So there is
value in that as well. At the same time, there have been some
good outcomes: The moratorium on customs duties on electronic
transmissions, that has been in place since 1998; the very
limited fish deal in the last ministerial, I think, is a
positive thing. So positive things do come out, but, as I say
in my testimony, I would never outsource U.S. economic security
to this organization. We need to do what we need to do, and
that is just the way it is.
Mr. STEUBE. Mr. Hanks, you have got a couple seconds.
Mr. HANKS. Yeah. I just want to make one comment about the
alternatives, because as Ms. Shaw mentioned before, that, you
know, when you have a victory in the WTO the victory manifests
itself in the form of tariffs, and so, that--you know, nobody
wants to spend more money for goods.
There are other--I get this same question from farmers in
my office all the time: Why are we even engaged in the WTO?
What other options do we have? And I will just use this
opportunity to plug the farm bill. For agriculture that is one
mechanism that we can use that helps offset, to some degree,
the egregious behavior of some of these folks in the WTO.
Mr. STEUBE. Yeah, but if somebody like China can obfuscate
tariffs and just dump rice into Brazil or Puerto Rico, and then
go around the tariffs that are in place, there is no teeth in
that, right?
Mr. HANKS. That is correct. And we fight it day in and day
out, and we are looking for help from you folks to solve this
problem.
Mr. STEUBE. I yield back.
Chairman SMITH. Thank you. We currently have votes on the
House floor, so we will stand in recess and reconvene
immediately after the last vote.
[Recess.]
Chairman SMITH. The committee will come back into order.
Appreciate the patience of our panel as House votes were
called.
Without objection, I would like to submit Ms. Sewell's
statement for the record.
[The statement of Ms. Sewell follows:]
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Chairman SMITH. And with that, I will recognize from
Illinois, Mr. Schneider, for 5 minutes.
Mr. SCHNEIDER. Thank you. And first, let me thank the
chairman for recognizing me, but also the witnesses for your
patience and also your insights and sharing your perspectives.
A point of personal privilege, as the newest member of the
subcommittee, I am grateful to be here, and I look forward to
working together. I have worked on a lot of these issues as a
telegraph in particular with TRIPS, so I may be asking you
about TRIPS in particular, but I am excited to be a part of the
committee.
I want to thank the chair and ranking member for hosting
this hearing, and the witnesses for being here. The wealth of
knowledge that you share from the executive branch to
experience in industry has been very helpful and helps inform
our decision-making.
Regardless of our party, Republican, Democrat, in this
Chamber, specifically Ways and Means, we have historically
agreed on the importance of U.S. leadership in global trade. I
have always said the world is safer and more prosperous when
America leads, and the need for America and American leadership
is no greater at this moment than I can think of, certainly any
time in my lifetime, and probably any time going back to the
last world war.
Our economy has been through the wringer the last number of
years with the pandemic, but thanks in part to the fast action
of Congress and other decisions, we were able to weather that
storm to stimulate demand, and the United States economy
proudly is the economy others are looking to see who can
recover or how to recover.
We addressed a lot of challenges from the supply chain to
the infrastructure bill. We have passed some successful
legislation with the CHIPS and Science Act, the infrastructure
bill, and inflation has now cooled, so things are looking up.
But the world continues to see broad systemic challenges as the
rules-based international order is increasingly contested and
undermined by our strategic adversaries, as we have talked
about today.
The WTO was intended as a pillar of the order, and America
has to lead in strengthening and reforming--I believe, in
strengthening and reforming the WTO to address the challenges
of the 21st century. We have talked about a number of things,
from the ascension of Comoros and Timor-Leste, and their
interest shows that the WTO remains important. But to keep it
important, to succeed and to achieve American goals, protect
American interests, we need to reform the WTO, and take a lot
of steps. So, as we look to the MC13--I will open up to the
panel--we have talked about some of the challenges, I
appreciate in the testimony the what to do, what not to do, but
measuring expectations or metering expectations to this is not
going to be a crossroads.
What do you think we can do best to make sure that American
interests are at least advanced in this ministerial and set us
up for where we need to go in the future? And maybe I will go
right to left. So, Mr. Hirsh, start with you.
Mr. HIRSH. Thank you very much. I think that what we can do
is largely what we are trying to do. Ambassador Pagan referred
to below-the-radar screen conversations, and a lot of what is
going to be accomplished at this ministerial will be in
bilaterals and in small groups, and we won't see it. But
hopefully it will result in real reforms that come through, and
ones that will make the organization operate more effectively,
and create an organization where we can get things done. So I
think those conversations, again, will be hard to gauge after
it is done, but hopefully they will be successful.
Mr. SCHNEIDER. Mr. Sullivan, first, let me say, I have
worked with my colleagues on both sides of the aisle expressing
our thoughts to the administration on TRIPS. I am proud of the
fact that as the world looks for inoculation to vaccines for
COVID, it is the U.S. who led that way; and as the world looks
for treatments, it is the U.S. who continues that way, and it
is our intellectual property system. But to have success, what
are the things you would suggest that we focus on?
Mr. SULLIVAN. And I think it is important to recognize,
first of all, that all of us have the interest of solving
issues when pandemics hit. That is absolutely first and
foremost.
Mr. SCHNEIDER. You saw that in the actions----
Mr. SULLIVAN. And we saw that. And industry stepped up to
really be able to solve what could have been a serious issue,
and quite frankly, I believe, saved millions of lives. But we
have to continue to focus on the things that prevent medicines
from getting to people. And, you know, it certainly is my
belief, and certainly the belief of what I have seen from
bodies like the USITC that intellectual property is not the
issue, and so focusing on the issues that really matter first,
and that is what we need to do.
Mr. SCHNEIDER. And I am at the end of time, so I apologize,
but I don't want to keep you late, but I will finish with two
thoughts. Mr. Sullivan, you said innovation 90 percent of the
time fails. I always quote Thomas Edison: ``I didn't fail 90
percent of the time. I learned new ways how not to, and that is
equally important.''
And, Ms. Shaw, your remarks are the last thing we need to
do is a race to the bottom, so whatever approach we take in
approaching trade and working with our allies' data, whatever
we call it, has to be a way that lifts up the United States and
with 96 percent of consumers outside the United States lifts up
the world.
And with that, I yield back.
Chairman SMITH. Thank you.
I now recognize from Minnesota, Mrs. Fischbach.
Mrs. FISCHBACH. Thank you very much. I appreciate it.
And thank you, guys, for hanging in there. I appreciate
that. But, you know, I just--I want to let you know, I am an
agriculture district, heavy agriculture, mostly rural district,
so trade is obviously very important to us, and as with many of
the members of the Ways and Means Committee. And so, I really
appreciate that this is part of this conversation.
And, you know, I just want to--I appreciated Mr. Steube's
discussion about, you know, what do we tell our farmer, you
know, what is really the value to them of the WTO. And I will
start with Mr. Hanks, and maybe if anybody else wants to jump
in, because this is going to be your last chance, guys, to say
anything that you want to say, and I bet there won't be any
objection if we go a little bit over.
But with the lack of ability to adequately enforce and
pursue trade objectives through the WTO, countries, including
our own, have pursued these goals through bilateral and
multilateral agreements amongst themselves. From a farmer's
perspective, do you believe these agreements could ever replace
the value of the functional WTO, or are they supplemental to
the WTO as an enforcement negotiation dispute settlement body,
or are they just preferred over anything with the WTO?
And so, I threw a lot out there, and I think it goes a
little further than Mr. Steube was talking about, but, Mr.
Hanks, if you want to start.
Mr. HANKS. Sure. I think, you know, we've had many
successful bilateral and multilateral agreements that have
benefited agriculture, rice in particular, USMCA obviously
being renegotiated. We do a lot of trade with Mexico and Canada
and rice, but also CAFTA-DR has done a really good job of
opening up markets for our farmers.
These bilateral and multilateral trade agreements do
provide market access, but, I think, to Ms. Shaw's earlier
comments, it doesn't address the subsidies that are impacting.
So, for example, what India does, what China does in their
dumping of rice into certain markets, a bilateral or
multilateral trade agreement won't address that. So the WTO is
necessary to focus on those aspects of trade and how they
distort trade, but, you know, having another mechanism to do
that would certainly be welcomed by agriculture.
Mrs. FISCHBACH. So potentially, you could see, as a
marriage, you know, you have got NAFTA, you have got WTO, you
have got whatever--you know, and I use NAFTA as an example. But
you see it more of working hand-in-hand, enhancing potentially?
Mr. HANKS. I do, because, you know, there is lots of trade
agreements that are being proposed at the moment, but still,
none of them that I am aware of would address some of the
challenges that we are experiencing, and particularly in rice,
and so, therefore, the WTO would be the mechanism where we need
to address this.
Mrs. FISCHBACH. Thank you.
And I think Mr. Shea was----
Mr. SHEA. Yeah, thank you, Congresswoman. One of the key
functions of the WTO is monitoring the activities of WTO
members. Unfortunately, that monitoring pillar is not working
as it should, but the WTO does serve as a function for greater
transparency if it were working the way it should be, as a way
of greater transparency, knowing what our trading partners are
doing in terms of subsidies and market access.
When I was the representative there under the Trump
administration, we filed several counter notifications dealing
with India's subsidies and trade practices, I think for rice
was one of the products we covered, and also, highlighting
their way of calculating domestic support was inaccurate and
understated the level of domestic support. So the WTO provided
a forum for the provision of that type of information, and
dissemination among other countries who share our interests.
Mrs. FISCHBACH. Thank you.
And, Ms. Shaw.
Ms. SHAW. Thank you for the question. And I appreciate the
sentiment, along with your colleagues, about the interest of
U.S. agriculture. And just to say, you know, what is in the
first interest of our agricultural producers, farmers,
ranchers, is for a functioning WTO or WTO-plus system. Now, shy
of that, we can look at alternatives.
But if the United States were to leave the WTO today and to
just say, we are just not going to deal with, it is not working
well, it would present a huge vacuum that China and other
countries who are massive subsidizers would fill. It would
create rules around us that would severely prejudice the United
States, not just in terms of our interactions with third
countries but even our own trading partners, who would feel
pressure from those markets to get preferential access to China
and others.
There is also a lot of technical work that happens. And we
talked sort of about the big sexy issues here, like what is on
the negotiating agenda. But as Dennis pointed out, there is a
tremendous amount of value in some of the technical discussions
that happen every day between our SPS experts, our USDA experts
and their counterparts to try to resolve issues and head them
off before they become discriminatory policies against our
farmers.
So there are a couple of different things happening from
that respect. But what I would say is we need to demand more.
The United States needs to express leadership, we need to have
an agenda fit for the 21st century, and we need to work with
strong allies within the context of the WTO if possible to
advance these rules, to stop the cheaters from cheating, and if
not, then we will look at alternative formats. Thank you.
Chairman SMITH. Thank you.
Mr. Sullivan.
Mr. SULLIVAN. Yeah, I just want to mention one important
point, and it is how the technologies behind everything that we
do in building biotechnology and innovations in healthcare also
relate to agriculture and the environment, because it is--you
know, I am a member of the Biotechnology Innovation
Organization. I sit on the board, and I am a former member of
actually the agriculture and environmental section of BIO, and
it is because many of the technologies that we use to develop
drugs are also important in agriculture, also important in
green energy, all of these types of things. So these issues are
absolutely related, and we protect American interests and
innovation by supporting strong intellectual property. Thank
you.
Mrs. FISCHBACH. I appreciate that.
And, Mr. Hirsh, I guess you get the last word. Look at
that.
Mr. HIRSH. Thank you very much.
Well, I mean, I think we have all been discussing today,
you know, the challenges in developing new disciplines.
Everyone has spoken to that. And we certainly hope that we will
be able to move the organization in a direction where they can
start developing new initiatives, but we can't lose sight of
the existing rule book and the importance of that existing rule
book.
You know, the WTO agreement is extensive, and the
disciplines in that agreement, for example, on SPS are really
the basis of every one of our bilaterals. We don't generally go
beyond the WTO. Subsidies are--the WTO is the place to deal
with it, and while we needn't do disciplines, the existing ones
are important.
So I would just, you know, recall--it is important to
recall, as we are talking about the challenges of developing
new disciplines, to remember the ones that are currently
providing a lot of stability to international trade and for our
farmers.
Mrs. FISCHBACH. And, Mr. Hanks----
Mr. HANKS. Just one quick follow-up.
Mrs. FISCHBACH. Thank you.
And, Mr. Chair, thank you for your indulgence.
Mr. Hanks.
Mr. HANKS. Sorry. One quick follow-up.
I think another important point is that we need to be going
on the offensive. We spend a lot of time being on the defense,
watching other countries, all these other bad actors, subsidize
and violate their WTO commitments.
I think we need--the USITC updated study for rice is a good
first start to do that, but we need to do more of that where we
are on the offense and not on the defense.
Mrs. FISCHBACH. Thank you very much.
And thank you very much.
And, with that, Mr. Chair, I yield back, and I appreciate
it.
Again, thank you all for being here.
Chairman SMITH. Thank you.
And thank you, Mrs. Fischbach, for sticking around and
wrapping things up here.
Again, thank you to our panel. I think that the timing of
this issue and this discussion is important heading into the
next ministerial, but even in a broader set of issues, the need
to address our concerns is very acute, and so your perspectives
and insights are especially helpful as we tackle these
difficult issues.
Please be advised that members of the committee have 2
weeks to submit written questions to be answered later in
writing. Those questions and the panel's answers will be made
part of the formal hearing record.
With that, the subcommittee stands adjourned.
[Whereupon, at 11:37 a.m., the subcommittee was adjourned.]
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