<DOC>
[108 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:91367.wais]
S. Hrg. 108-301
PROPOSED UNITED STATES-CHILE AND UNITED STATES-SINGAPORE FREE TRADE
AGREEMENTS
=======================================================================
HEARING
before the
COMMITTEE ON THE JUDICIARY
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
JULY 14, 2003
__________
Serial No. J-108-23
__________
Printed for the use of the Committee on the Judiciary
91-367 U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 2003
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512ÿ091800
Fax: (202) 512ÿ092250 Mail: Stop SSOP, Washington, DC 20402ÿ090001
COMMITTEE ON THE JUDICIARY
ORRIN G. HATCH, Utah, Chairman
CHARLES E. GRASSLEY, Iowa PATRICK J. LEAHY, Vermont
ARLEN SPECTER, Pennsylvania EDWARD M. KENNEDY, Massachusetts
JON KYL, Arizona JOSEPH R. BIDEN, Jr., Delaware
MIKE DeWINE, Ohio HERBERT KOHL, Wisconsin
JEFF SESSIONS, Alabama DIANNE FEINSTEIN, California
LINDSEY O. GRAHAM, South Carolina RUSSELL D. FEINGOLD, Wisconsin
LARRY E. CRAIG, Idaho CHARLES E. SCHUMER, New York
SAXBY CHAMBLISS, Georgia RICHARD J. DURBIN, Illinois
JOHN CORNYN, Texas JOHN EDWARDS, North Carolina
Bruce Artim, Chief Counsel and Staff Director
Bruce A. Cohen, Democratic Chief Counsel and Staff Director
C O N T E N T S
----------
STATEMENTS OF COMMITTEE MEMBERS
Page
Cornyn, Hon. John, a U.S. Senator from the State of Texas........ 6
Feinstein, Hon. Dianne, a U.S. Senator from the State of
California, letter............................................. 4
Graham, Hon. Lindsey O., a U.S. Senator from the State of South
Carolina....................................................... 16
Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah...... 1
prepared statement........................................... 28
Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont,
prepared statement............................................. 38
WITNESSES
Ives, Ralph F., III, Assistant U.S. Trade Representative for
Southeast Asia, the Pacific and APEC, and Lead Negotiator for
the Singapore Free Trade Agreement............................. 8
Vargo, Regina K., Assistant U.S. Trade Representative for the
Americas, and Lead Negotiator for the Chile Free Trade
Agreement...................................................... 6
SUBMISSIONS FOR THE RECORD
Business Week, July 21, 2003, article............................ 23
Congressional Research Service, Ruth Ellen Wasem, Washington,
D.C., report................................................... 25
Ives, Ralph F., III, Assistant U.S. Trade Representative for
Southeast Asia, the Pacific and APEC, and Lead Negotiator for
the Singapore Free Trade Agreement, prepared statement......... 32
Kennedy, Hon. Edward M., Hon. Dianne Feinstein, Hon. Maria
Cantwell, November 5, 2002, joint letter....................... 37
New York Times, May 30, 2003, article............................ 40
Temporary Entry Provisions of the Implementing Legislation for
the Chile and Singapore Free Trade Agreements (FTAs)........... 43
Vargo, Regina K., Assistant U.S. Trade Representative for the
Americas, and Lead Negotiator for the Chile Free Trade
Agreement, prepared statement.................................. 45
Zoellick, Robert B., United States Trade Representative,
Executive Office of the President, Washington, D.C., letter.... 52
PROPOSED UNITED STATES-CHILE AND UNITED STATES-SINGAPORE FREE TRADE
AGREEMENTS
----------
MONDAY, JULY 14, 2003
United States Senate,
Committee on the Judiciary,
Washington, DC.
The Committee met, pursuant to notice, at 4:06 p.m., in
room SD-226, Dirksen Senate Office Building, Hon. Orrin G.
Hatch, Chairman of the Committee, presiding.
Present: Senators Hatch, Graham, Cornyn, and Feinstein.
OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM
THE STATE OF UTAH
Chairman Hatch. Well, we are happy to convene this
Committee hearing. We are here today for the Committee's first
hearing of what I hope will be many on international trade
agreements and implementing language related to those areas in
the agreements that concern matters under the jurisdiction of
the Judiciary Committee.
Specifically, today we will examine some of the provisions
in the proposed bilateral Free Trade Agreements between the
United States and Chile and the United States and Singapore.
I would like to commend the administration in reaching
these agreements with Chile and Singapore. Both Chile and
Singapore are countries that represent economic stability and
growth in their respective regions. The trade agreements will
provide new market access for American products, including
agricultural, manufactured products, telecommunications
equipment, and other high-technology products.
Both of these agreements contain chapters on matters of
longstanding interest to this Committee. These include
immigration, intellectual property, antitrust, e-commerce, and
telecommunications. In all of these areas except immigration,
no changes in any U.S. laws under this Committee's jurisdiction
require amendment.
In many ways, the substance of the negotiations on matters
of Judiciary Committee concern with respect to these two
important treaties has focused on ways to encourage our trading
partners to harmonize their law with current U.S. standards,
and we should be proud of this dynamic.
Today, I expect the Committee will focus its attention on
the provisions in the agreements that relate to legislative
language being drafted to implement the immigration aspects of
the treaties. Key issues include provisions that relate to the
temporary entry of investors, visitors for business, and
temporary professional workers.
As I understand it, over the last several months on six
occasions the Office of the United States Trade Representative
has briefed the Committee on immigration issues related to
these agreements. I want to acknowledge and thank the USTR for
consulting with the Committee. We need to continue this spirit
of cooperation as we move forward on these and other trade
agreements.
In the last week, USTR staff and Committee staff have
worked closely together as the immigration language has been
circulated and revised. Last Wednesday, Committee staff and a
representative from USTR, Ted Posner, met to identify and
attempt to resolve issues related to immigration. Many of us
know and respect Ted from his days as one of Senator Baucus'
trade counsels on the Finance Committee. I should also mention
the good work of Kent Shigetomi on the immigration portions of
these agreements.
In any event, since the Wednesday meeting that walked
through the proposed language, a series of informal staff-level
consultations have occurred. In fact, it was my hope that the
Committee would be able to hold what is known as a mock markup
last Thursday. But as anyone who follows the Judiciary
Committee knows, we spent another 12 hours on asbestos and we
were unable to get to the trade agreements.
My colleagues on the Committee will recall that Senator
Grassley, who, in addition to serving on this Committee, chairs
the Finance Committee, urged us to take up these trade matters
in the hope that the full Senate can adopt these treaties
before the August recess. I wholeheartedly agree with Chairman
Grassley that the full Senate should act on the Chile and
Singapore Free Trade Agreements before we adjourn in August, if
at all possible.
Under the Trade Promotion Act of 2002, implementing
legislation for trade agreements are fast-tracked, which means
that once the administration transmits the language, we can
vote for or against it, but cannot amend it.
The TPA legislation also calls for close consultation
between the administration and Congress. This consultation
takes place in a number of forms. It includes the statutorily
created Congressional Oversight Group on Trade, on which
Senator Leahy, Senator Cornyn and I serve to represent the
interests of our Committee.
The informal staff briefings between USTR and other
agencies and Congressional staff are another type of
constructive interaction. While not statutorily required, the
so-called mock markup is another prudent mode of inter-branch
of Government communication. This amounts to an occasion for
the relevant committees to give the administration their
informal advice in the very formal setting of an executive
business meeting on any implementing language that the
administration is developing for subsequent submission to the
Hill under the fast-track procedures.
Unfortunately, we were unable to reach the mock mark item
on last Thursday's agenda. We have had the benefit of several
more Judiciary Committee staff and USTR staff interactions over
the last several days.
I would suggest that another function of today's hearing
will be for members of this Committee to convey any unresolved
concerns they would have raised on Thursday directly to the
senior USTR officials responsible for negotiating these two
agreements.
I have heard, and to some extent share the concerns that
some members of the Committee, including Senator Feinstein,
have about the truncated schedule we are operating under and
the somewhat fluid nature of the language over the last week.
I do appreciate U.S. Trade Representative Robert Zoellick's
attempt to gain our views and to keep this Committee apprised
of the status of progress on these agreements and the
development of the implementing language that the
administration plans to introduce shortly.
I want to emphasize that members of this Committee will
expect satisfactory answers and resolution to the questions and
concerns that may be raised during today's hearing. If there
are reasons why our input cannot be accommodated, we expect to
know why.
We live in a global economy where free trade is vital to
our Nation. An integral part of this global economy is the
flexibility to move existing personnel from one country to
another in order to provide much needed support of the
companies that conduct business abroad. Further, if we want our
trading partners to allow American citizens to enter their
borders to conduct business, we must also reciprocate by
granting their citizens the same type of privileges.
While I support the principle of free trade and understand
the benefits of agreements such as these to the U.S. economy
and job market, I will never agree to legislation that does not
reflect sound immigration policy, just as I would never agree
to any compromise of national security for the sake of selling
more products overseas. I would never sacrifice the well-being
of hard-working Americans and their families by weakening our
immigration laws.
Prior to today's hearing, members of this Committee raised
several concerns about a variety of immigration issues. These
include the potential for indefinite stay by the foreign
workers and the risk that foreign workers may be brought into
the United States to interfere with labor disputes. Another
concern that I have heard is whether this agreement and
implementing language could be viewed as circumventing the
existing sensitive numerical limits on H1-B professional
workers' visas.
I understand that many of our colleagues on the House
Judiciary Committee have made it clear that trade agreements
may not be the best place to change immigration law and policy.
I want to make sure that our two representatives from USTR
today, Ms. Vargo and Mr. Ives, will go back and give Ambassador
Zoellick a message: Presenting the Judiciary Committee with
implementing language related to particular trade agreements
that raise general issues of immigration policy may not be the
best path to travel in future trade agreements.
Having said that, I wish to emphasize that many on this
Committee have worked together and with USTR to resolve their
concerns with and improve the immigration implementing
legislation.
I am hopeful that when the administration transmits its
formal legislative package, members of the Judiciary Committee
will be satisfied with the outcome with our consultations with
USTR.
Despite the fact that we were unable to hold a mock markup
last Thursday, I hope that today's real hearing can serve that
same type of formal mechanism for the Judiciary Committee to
give the administration our informal comments before the fast-
track procedures are instituted.
With that, I will turn to the distinguished Senator from
California for any remarks she would care to make.
STATEMENT OF HON. DIANNE FEINSTEIN, A U.S. SENATOR FROM THE
STATE OF CALIFORNIA
Senator Feinstein. Thank you very much, Mr. Chairman. I
would like to ask you to submit to the record the statement of
the ranking member, Senator Leahy, on this issue.
Chairman Hatch. Without objection.
Senator Feinstein. I would like to submit some documents
for the record--the Congressional Research Service document
entitled ``Immigration Issues in Free Trade Agreements'';
secondly, temporary entry provisions of the implementing
legislation for the Chile and Singapore Free Trade Agreements;
thirdly, ``Special Visas Used for Tech Workers Is Challenged'';
and, finally, an excellent commentary piece, ``Is a Stealth
Immigration Policy Smart?''
Chairman Hatch. Without objection.
Senator Feinstein. I mention that last one because I think
that is what has happened with respect to this bill, and I very
much regret I cannot support this as it stands right now.
I believe that the USTR has negotiated a whole new
immigration program with no authority of this Congress to do
so. Specifically, the legislation before us would create new
categories of non-immigrants for free trade professionals,
permit the extension or renewal of these visas each year,
require the entry of spouses and children accompanied or
following to join those professionals; require that the United
States submit disputes about whether it should grant certain
individuals entry to an international tribunal. I would never
find that acceptable.
The definition of specialty occupation that is contained in
this legislation is vague and unclear. It will likely be very
broadly interpreted. Such interpretation could make it
difficult to ensure that temporary workers are entering under
the new visa category specifically to fill a skills shortage.
As drafted, visas for the temporary foreign workers could
be indefinitely renewable. This, in effect, could transform
what on paper is a temporary visa entry program into a
permanent visa program. This is unacceptable.
Under this legislation, employers could renew their
employees' visas each and every year with no limits, even while
they are also bringing in new entrants to fill up annual
numerical limits for new visas. This effectively would
hamstring Congress' ability to limit such entries when it is in
the national interest to do so.
The legislative language would weaken the labor
certification attestation process which is now required from
employers under the H1-B program. In fact, it would prohibit
any approval procedures or labor certifications or labor market
tests the Labor Department might ordinarily impose before
approving the entry of foreign workers.
Today, the labor certification process is one of the only
safeguards in the H1-B system for ensuring that employers do
not abuse temporary workers or undermine the U.S. labor market.
This weakening is unacceptable.
Unlike the H1-B visa, the legislation would not require
that employers seeking temporary workers attest that they are
actively trying to recruit U.S. workers for the positions
filled by the foreign workers. Thus, if employers do not like
the more stringent requirements of the H1-B program, they can
simply recruit foreign nationals from Chile and Singapore to
circumvent the H1-B visa program's requirements.
The provisions would not provide the Department of Labor
authority to investigate instances of U.S. worker displacement
and other labor violations pertaining to the entry of foreign
workers. Again, this is unacceptable.
In the last two fiscal years, the Department of Labor
investigated 166 businesses with H1-B violations. As a result
of those investigations, H1-B employers were required to pay
more than $5 million in back pay awards to 678 H1-B workers.
This suggests to me that there is substantial fraud being
practiced in this program.
Finally, I am deeply concerned about a provision in the
trade agreement that would require the United States to submit
to a panel comprised of international arbiters certain cases
when the United States denies a temporary work visa to an
individual. This is unacceptable.
Now, Mr. Chairman, the United States Constitution gives the
Congress plenary power over immigration. The negotiation of
such visa provisions demands Congressional oversight and input,
and public scrutiny, especially during a time when security
issues are of such paramount concern to us all.
I do not believe that this Committee, indeed this Congress,
should relinquish our plenary power over immigration to any
administration or to any panel of international arbiters. I do
not believe that an immigration program belongs in a free trade
bill. So either these immigration provisions come out or I am
certainly not going to support this bill and I will do
everything I can to prevent it from being passed in the Senate.
Thank you very much.
Chairman Hatch. Well, thank you, Senator.
Senator Cornyn is going to conduct this hearing, and so he
would like to make a statement and I am going to turn the Chair
over to you, Senator Cornyn.
Maybe I could just recognize the ambassadors who are here.
I would like to acknowledge the presence of the Chilean
Ambassador, Andres Bianchi, in the back there--Ambassador, we
are so happy to have you here and I apologize for the other day
not being able to make our appointment together; please forgive
me--and Singaporean Ambassador Chen Heng Chee. We welcome them
both. We are pleased to have both of you here with us this
afternoon, and it is my hope and the hope of many that the
ratification of these treaties will strengthen our relationship
between our governments, and more importantly our citizens. In
any event, we are honored with your presence and we appreciate
having both of you here.
Senator Cornyn.
STATEMENT OF HON. JOHN CORNYN, A U.S. SENATOR FROM THE STATE OF
TEXAS
Senator Cornyn [presiding.] Thank you, Mr. Chairman. There
are obviously some substantive concerns that have been raised
about the temporary entry provisions and I think we have
already heard about those, the temporary nature of the visits,
funding for new visa programs, and the protection of American
workers, time limitations for these temporary visas and
numerical limitations.
The draft of the proposed language distributed throughout
the Committee represents the latest negotiations between the
members of both parties on this Committee and the U.S. Trade
Representative.
With regard to the substance of the immigration provisions,
there have been and continue to be concerns, but I believe
there is largely agreement. Indeed, we want to promote trade,
but we want to protect American workers from those who abuse
our immigration laws.
I want to applaud the U.S. Trade Representative's Office
for its effort in reaching these agreements with Chile and
Singapore. The U.S.-Chile Free Trade Agreement will provide
numerous opportunities for United States workers and
manufacturers. U.S. companies currently operate at a
disadvantage because competitors such as Canada, Mexico, and
the European Union have free trade agreements with Chile. Our
lack of an agreement costs American exporters $800 million per
year in sales, affecting approximately 10,000 United States
jobs.
The agreement with Chile will eliminate tariffs immediately
on more than 85 percent of consumer and industrial goods, and
most remaining tariffs will be phased out within the next 4
years. The result will be a $4.2 billion increase in the U.S.
GDP and a $700 million increase in Chile's GDP.
The U.S.-Singapore Free Trade Agreement will have a similar
effect on trade and economic liberalization in Southeast Asia.
Despite its small size, relatively speaking, the economy of
Singapore is robust and highly competitive. Approximately 1,300
American firms have a significant presence in Singapore,
including 330 regional headquarters. The establishment of a
free trade agreement with Singapore will further increase
opportunities for American workers through improved market
access.
We look forward to hearing the testimony of the two
representatives here today from the USTR, Ms. Vargo and Mr.
Ives.
Have you agreed on who should go first?
Mr. Ives. Ladies first.
Ms. Vargo. I guess we just did.
Senator Cornyn. I guess you won the flip of the coin, so we
will be pleased to hear from you.
STATEMENT OF REGINA K. VARGO, ASSISTANT UNITED STATES TRADE
REPRESENTATIVE FOR THE AMERICAS, AND LEAD NEGOTIATOR FOR THE
CHILE FREE TRADE AGREEMENT
Ms. Vargo. Thank you very much. With your permission, I
would like to make a written submission for the record.
Senator Cornyn. Without objection.
Ms. Vargo. Mr. Chairman, Senators Cornyn and Feinstein, and
members of the Committee, I am honored to appear before you
today to discuss the benefits that a U.S.-Chile free trade
agreement will offer American businesses, workers, farmers, and
consumers. At the outset, I want to thank each of you and your
staffs for the suggestions and the support you provided during
the negotiation of this agreement.
The agreement, the result of a long-term bipartisan effort
and an open, transparent negotiating process, makes sound
economic sense for the United States and Chile, and represents
a win-win, state-of-the-art agreement for a modern economy.
This agreement makes sound economic sense for the United
States. Over the past 15 to 20 years, Chile has established a
thriving democracy and an open economy built on trade. It is
one of the world's fastest growing economies and its sound
economic policies are reflected in its investment-grade capital
market ratings, unique in South America.
Last year, our bilateral trade stood at $6.4 billion, with
$2.6 billion in U.S. exports, but we can do better. Chile
already has FTAs with Mexico, Canada, MERCOSUR, and, since
February, the European Union. This has disadvantaged U.S.
exporters.
The National Association of Manufacturers, for example,
estimates the lack of an FTA with Chile as costing the United
States at least $1 billion in lost exports annually. An FTA
with Chile will ensure that we enjoy market access, treatment,
prices, and protection at least as good as our competitors.
Consumers will benefit from lower prices and more choices. The
agreement will also help spur progress in the Free Trade Area
of the Americas, and will send a positive message particularly
in the Western Hemisphere, that we will work in partnership
with those who are committed to free markets.
The U.S.-Chile FTA is truly a bipartisan effort.
Negotiations were launched under the Clinton administration in
December 2000. After 14 rounds, negotiations were concluded
under the Bush administration in December 2002. The agreement
was signed on June 6 in Miami, in an historic ceremony with
Ambassador Zoellick and his Chilean counterpart, Minister
Soledad Alvear.
Let me just add that throughout the negotiations, we
conducted an extensive consultative process of public hearings
and briefings, and frequent consultations with Congressional
staff, private sector advisers, and civil society groups to
develop positions and provide regular updates on progress in
the negotiating rounds.
The result of this process yielded an exemplary agreement.
Four features distinguish the U.S.-Chile FTA from the other 150
or so FTAs that other countries and the EU have concluded.
First, it is comprehensive. All goods will be duty- and
quota-free within 12 years, with 87 percent of bilateral trade
receiving immediate duty-free access. Second, it promotes
transparency. Transparency provisions, both in the transparency
chapter and throughout the agreement, promote open, impartial
procedures and underscore Chile's commitment to a rules-based
global trading system.
Regulatory procedures require advance notice, comment
periods, and publication of all regulations, similar to our
Administrative Procedures Act. There is an explicit provision
that requires bribery in government procurement to be treated
as a criminal offense. Dispute settlement provisions, both
state-to-state and investor-state, provide for open hearings,
public release of submissions, and the opportunity for
interested third parties to submit views and objectives that
the United States has long sought in the WTO.
Third, it is modern. Strengthened protection for
intellectual property rights in investment, the broad scope of
services obligations, and new provisions on telecommunications,
electronic commerce, express delivery, and professional
services recognize the digital age and the emergence of new
industries.
Finally, in keeping with TPA mandates, it uses an
innovative approach that supports and promotes respect for the
environment and workers' rights, with enforceable obligations
in the agreement subject to effective dispute settlement
designed to encourage compliance.
The conclusion of a Chile FTA has provided momentum to
other hemispheric and global trade liberalization efforts by
breaking new ground on new issues and demonstrating what a 21st
century trade agreement should be.
Thank you, and I would be happy to answer any questions you
may have.
[The prepared statement of Ms. Vargo appears as a
submission for the record.]
Senator Cornyn. Thank you, Ms. Vargo.
Mr. Ives.
STATEMENT OF RALPH F. IVES, III, ASSISTANT UNITED STATES TRADE
REPRESENTATIVE FOR SOUTHEAST ASIA, THE PACIFIC AND APEC, AND
LEAD NEGOTIATOR FOR THE SINGAPORE FREE TRADE AGREEMENT
Mr. Ives. With your permission, I would like my full
statement to be in the record.
Senator Cornyn. Without objection.
Mr. Ives. Thank you, Mr. Chairman, Senator Cornyn, Senator
Feinstein, and other members of this Committee, for inviting me
to testify today on the U.S.-Singapore Free Trade Agreement,
and for this Committee's guidance during the negotiating
process. I welcome this opportunity to review the FTA and
present the administration's request for favorable
consideration of legislation needed to implement the FTA.
The U.S.-Singapore FTA reflects a bipartisan effort to
conclude a trade agreement with a substantial and important
trading partner. The FTA was launched under the Clinton
administration in November 2000 and signed by President Bush
and Singaporean Prime Minister Goh on May 6, 2003.
The U.S.-Singapore FTA will enhance further an already
strong and thriving commercial relationship. Singapore was our
12th largest trading partner last year, with two-way trade
exceeding $40 billion and U.S. investment in Singapore of over
$27 billion.
The comprehensive U.S.-Singapore FTA is the first FTA
President Bush has signed with any country and our first with
any Asian nation. It can serve as a foundation for other
possible FTAs in Southeast Asia, as President Bush envisaged
under his Enterprise for ASEAN Initiative.
Let me summarize some of the highlights of the U.S.-
Singapore FTA, which is comprehensive in scope covering the
full range of areas in an FTA.
Under this FTA, Singapore will provide substantial access
for all types of services, treat U.S. service suppliers as well
as it treats its own, ensure we receive the best treatment as
any other foreign supplier receives, and allow our business
persons temporary entry to engage in business activity. The FTA
uses an approach that ensures the broadest possible trade
liberalization.
This FTA also provides important protection for U.S.
investors by ensuring a secure and predictable legal framework.
The FTA's provision on intellectual property rights provides
strong protection for new and emerging technologies, and
reflects standards of protection similar to those in U.S. law.
Enhanced transparency is another important feature of this
FTA in the form of an entire chapter devoted to transparency
and specific transparency provisions in many other chapters.
The chapter on electronic commerce breaks new ground in its
treatment of digital products, for example, establishing for
the first time explicit guarantees that the principle of non-
discrimination applies to products delivered electronically.
Similarly, the telecommunications chapter covers the full range
of telecommunications issues, while recognizing the U.S. and
Singapore's respective right to regulate these sectors.
The FTA contains a number of provisions to ensure that the
United States and Singapore are the actual beneficiaries of the
agreement. For example, the FTA contains obligations on how
customs procedures are to be conducted to help combat illegal
transshipments.
Finally, the dispute settlement provisions of the FTA
encourage resolution of disputes in a cooperative manner and
provide an effective mechanism should such an approach not
prove to be successful. This FTA commands wide support in our
private sector. The administration looks forward to working
with this Committee and the full Congress in enacting the
legislation necessary to implement this agreement.
Thank you, Mr. Chairman. I would be pleased to respond to
questions.
[The prepared statement of Mr. Ives appears as a submission
for the record.]
Senator Cornyn. Thank you very much, Mr. Ives.
We have heard in both your opening remarks that trade is
positive for the American economy, and I agree. However, I hope
you have gotten the message that you are on shaky ground when
the executive branch makes agreements on immigration matters in
these agreements.
Will you explain for the Committee why it was important to
include immigration provisions in each of these agreements?
As you can tell, there is some concern about infringement
of Congress' plenary powers on immigration matters. Do you
believe you have consulted with the Congress adequately in this
process prior to entering into the agreements with Chile and
Singapore, and can you tell us to what extent you have worked
with members of this Committee, as you undoubtedly have, in
preparing the implementing language for these agreements?
Ms. Vargo, would you respond first, please?
Ms. Vargo. Thank you. I would like to begin by noting that
what we are talking about here is the temporary entry of
business persons and not permanent immigration or employment,
and that both FTAs specifically exclude citizenship, permanent
residence, or employment on a permanent basis.
Temporary entry relates to the ability of business persons
to enter for a temporary period in order to engage in
activities related to business, and American businesses need to
be able to send their employees to other countries to conduct
meetings, negotiate contracts, make sales, establish offices,
provide services, or administer investments. The ability of
U.S. business persons to enter foreign countries quickly and
dependably is directed related to our competitiveness overseas.
Now, with regard to this specific agreement, we provided in
our notice of intent to enter into negotiations with Singapore
and Chile, which we provided to the Congress in October of
2001, I believe, a specific interest in negotiating in this
subject area.
In particular, we said that we would seek appropriate
provisions to ensure--and this was both in Chile and in
Singapore--that we would facilitate the temporary entry of U.S.
business persons into their territories, while ensuring that
any commitments by the United States are limited to temporary
entry provisions and do not require any changes to U.S. laws
and regulations relating to permanent immigration and permanent
employment rights.
Now, over the course of the negotiation we held regular
communications with Congress as we tabled each new provision in
the agreement. But I would particularly note that during the
period between about October and December of 2002, as we were
nearing conclusion, we held about 20 different consultations
with the Congress on this topic of temporary entry.
During those consultations, three particular issues were
brought to our attention as being of keen concern. One of those
was that we would require a labor attestation. And, in fact, we
did provide in the agreement that that can be done, and
indicated in the side letter that it would be modeled off of
the current H1-B labor condition application.
The second important point we heard was that there was a
desire for a numerical limit, and so we negotiated a limit in
both the Chile and the Singapore agreements that were several
multiples of their current use of H1-B, while we managed to
avoid having either country place a limit on the U.S. use of
temporary entry into their markets.
And then, thirdly, there was a concern about a fee, that
the H1-B program provided for a $1,000 fee. It goes largely
into worker retraining, job retraining, and scholarship
programs which we had not contemplated up to that point under
the agreement. And so we made sure to change the language in
the agreement to the broader standard, which was to not unduly
impair or delay trade in goods or services, or the conduct of
investment activities under this agreement.
So we thought that with those three particular areas that
we had, in fact, met the major points of concern that had been
brought to our attention. Obviously, in the last week or two we
have been engaged in much more extensive discussions with the
Judiciary Committees, and under those discussions we identified
more than a half dozen different areas where we think we have
been able to step up and meet virtually every issue that has
been brought to our attention.
If you would like, Senator, I can elaborate on what those
are right now.
Senator Cornyn. Why don't we save those perhaps for follow-
up questions?
Ms. Vargo. Fine. So I think at this point that, yes, we
have heard very much the concern that has been stated by this
Committee that immigration policy is the prerogative of the
Congress. And I think that through the clarifications in the
statement of administrative action and the provisions that we
will be putting forward in the implementing legislation, we
will have narrowed the scope of the activity that we are
talking about here so that it really relates to that which is
part of our international services negotiations, or what is
called Load 4, providing services through people located in the
other person's territory.
Thank you.
Senator Cornyn. Mr. Ives, do you have anything you would
like to add with regard to the question of engaging in
negotiations which would appear to get involved in the
Congress' business on legislating on immigration matters, what
you have done in terms of your consultation and discussion with
the Congress?
Mr. Ives. Thank you, Senator. I think Ms. Vargo answered
the question quite thoroughly. The only additional points I
would like to make are the fact that the text of at least the
Singapore FTA, and I believe the Chile FTA, was available to
Congress in December of last year and we published the
Singapore FTA on the Internet in March and the Chile FTA in
April. So they have been widely available not only just to
members of Congress but the public for quite some time.
Thank you.
Senator Cornyn. Mr. Ives, let me ask you, then, it appears
that the temporary entry provisions are reasonable. Can you
tell us whether Singapore or Chile are currently extending the
similar degree of courtesy and convenience to our professional
workers when they enter their country?
Let me then ask you to also tell us what are the
consequences if we choose not to reciprocate in terms of the
convenience and courtesy that has been negotiated to this point
in these agreements.
Mr. Ives. Well, I can answer with respect to Singapore.
Singapore currently does extend the courtesy of allowing our
professionals and business visitors to enter Singapore and
conduct their business. So we do have that privilege currently
with Singapore.
I wouldn't want to suggest that Singapore would act
otherwise should we not pass this, but the agreement would
provide us greater security that Singapore would continue to
offer this privilege for us.
Senator Cornyn. Ms. Vargo, do you have anything else to add
in that regard?
Ms. Vargo. Yes, thank you. Besides the nature of enjoying
the reciprocal obligations on the part of Chile--and I will
note again that they have no numerical caps on their
professionals--professional services from the very beginning
was one of the major objectives of Chile in our U.S.-Chile FTA.
They regarded very much their ability to come along and
meet us on issues of concern to us, like telecommunications or
financial services or e-commerce, as having a direct bearing on
our ability to be able to address with them new opportunities
for them in the professional services area. So it was a key
area.
Senator Cornyn. Thank you very much.
Senator Feinstein.
Senator Feinstein. Thanks very much. I would like to just
clear something up, if I may.
On November 5 of last year, Senator Kennedy, Senator
Cantwell and I wrote a letter to Mr. Zoellick and we pointed
out in that letter that we believed these proposals may have
far-reaching consequences that would permanently alter U.S.
immigration policy. We named a number of other countries with
whom we believed the administration was seeking to develop
similar agreements.
Then we said, ``We urge you to more effectively communicate
with Members of Congress and other stakeholders, including
worker representatives.'' These proposals have been made
available only recently. Although representatives from your
office for Committee staff on Friday, November 1, the
information that was provided was limited and lacking in
specificity. My staff reports to me that there were indeed
briefings, but either the wrong briefer was present or couldn't
answer the question, or they were, in general, unsatisfactory.
On March 19, we received a response to our letter from Mr.
Zoellick which I would like to place in the record, but it
makes some comments about these consultations and then it
mentions three specific concerns that came up. First, staff
wanted to be able to require a labor attestation similar to the
labor condition application required under the H1-B program;
second, et cetera, and third.
However, the final bill, Annex 14.3, number 3, says this:
``Neither party may, as a condition for temporary entry under
paragraph (1), require prior approval procedures petitions,
labor certification tests, or other procedures of similar
effects''--this is what is before us, this is the bill--``or,
(b), may impose or maintain any numerical restriction relating
to temporary entry under paragraph (1).''
What we have here is a template that will, if carried out--
and I believe the administration intends to carry it out with
other nations--totally undermine the Congress of the United
States with respect to immigration policy. It is a way of
getting around it, clear and simple.
The negotiating objectives that Congress laid out for the
USTR in the Trade Act of 2002 do not include even one word on
temporary entry. There is no specific authority in TPA to
negotiate new visa categories or impose new requirements on our
temporary entry system. Yet, that is exactly what USTR has done
in these two agreements.
So my question is under what authority did the USTR include
immigration law provisions in the trade agreements? I have sat
on the Immigration Subcommittee for 10 years. No one ever
picked up the phone and called me, nor was my staff asked for
any input.
I come and represent the State in the Union that is most
affected by all of this and no one has given me any
opportunity, other than we wrote this letter and still there
was no opportunity.
So my question is under what authority did USTR include
these immigration law provisions in these agreements?
Ms. Vargo. Thank you. While it is true that the TPA
negotiating objectives do not specifically address temporary
entry, there are a number of aspects of the TPA objectives that
are relevant to temporary entry of professionals with respect
to the opening of foreign country markets for U.S. services and
investment.
The TPA Act calls for reduction or elimination of, quote,
``barriers of international trade in services, including
regulatory and other barriers that deny national treatment.''
Senator Feinstein. How does that affect a temporary worker
program which becomes a permanent program?
Ms. Vargo. Well, I would be happy to address separately why
it is not a permanent worker program. It is a temporary--
Senator Feinstein. No. I would really like to know what
your authority is, your legal authority, to negotiate an
immigration program in a trade agreement.
Ms. Vargo. Well, as I began my remarks, we do not believe
that this is a negotiation of immigration policy, since it does
not relate to citizenship, permanent residence, or permanent
employment.
There are two aspects to the TPA objectives--equal access
for small business and reducing barriers to trade in services--
that we feel are relevant, that provisions of temporary entry
are relevant to the ability of U.S. service providers to
conduct business through services that they provide and
professionals that are listed overseas.
I do understand the concern that you have raised about the
idea that through the renewal program that that might suggest
that there would be a possibility of continuing to roll over
the application to stay here for temporary employment.
I think it is worth noting in that regard two things. One,
there is now a provision in the implementing legislation that
says that any time the annual renewal enters into its sixth
year, it will count against the broader numerical limit that is
under the H1-B program.
The second thing that we have done is we have also applied
a higher threshold to these workers. They will have to indicate
that they are here in the United States, that their stay is
temporary, that they are not seeking permanent employment here,
and that, in fact, they have a permanent residence overseas.
That is a higher threshold than is required on a routine basis
off of the H1-B program.
Senator Feinstein. I would counter that by saying these
agreements do govern the entry of foreign nationals, and that
is a power that has been reserved for the Congress.
I would like to mention a GAO report which was issued on
immigration benefit fraud, and the report detailed ongoing
vulnerabilities of the H1-B visa program and reported that
there was widespread fraud within the L1 visa programs.
The former Immigration and Naturalization Service's
California Service Center found through a series of
investigations and analyses widespread L1 visa fraud by foreign
companies, particularly in the Los Angeles area, and identified
this fraud as a growing problem. In one study, an official in
the Operations Branch stated that follow-up analysis of 1,500
L1 visa petitions found only 1 petition that was not
fraudulent.
I would like to ask this question: What was the rationale
to submit any denial of a worker's permit to an international
tribunal? What was the rationale for that?
Ms. Vargo. If I could address the first concern you raised
about the investigative authority, because clearly this is an
important issue, it was not included directly in the free trade
agreement because that investigative authority was set to
sunset and we did not want to be placing obligations on our
trading partners that were more onerous than those countries
might bear who did not have free trade agreements with us.
There will be a clarification in the statement of
administrative action that if Congress reauthorizes any of the
expiring H1-B program provisions, it may apply them to the H1-
B(1) visas as long as they are consistent with U.S. obligations
under the agreement, and this investigative authority certainly
would be consistent.
With regard to your second question, Senator, since these
are provisions relating to the temporary entry of business
persons, which we see as relating to the way international
services are negotiated--it is part of our broad GATS
structure--these obligations are subject to dispute settlement
under the agreement, which could mean an independent panel
would rule on them. But I want to make it quite clear that any
independent--
Senator Feinstein. Independent international panel.
Ms. Vargo. No. It would be a panel that would be a roster
of people selected by the United States and Chile. So it is not
the same thing as going to any international panel. It would be
a bi-national panel, people that each of us had selected.
Senator Feinstein. So in other words, the sovereignty of
the United States and the elected representatives of the United
States would be subject to an international panel?
Ms. Vargo. They could rule on the issue, but they could not
require us to implement their ruling. That would be our own
choice, so we do not lose our sovereignty in that area. If we
chose not to implement, they would be entitled to take steps
that would rebalance the obligations in the agreement, but they
could not force us in any way to implement the ruling.
Mr. Ives. Senator, may I expand on the dispute settlement
issue?
Senator Feinstein. Yes.
Mr. Ives. One of the concerns that I heard you raise is
that individual cases could be brought to a dispute settlement
panel. The FTA makes clear that it is not individual cases, but
it has to be a pattern of practices that are not in compliance,
and also that the business person has exhausted the available
administrative remedies regarding the particular issue. So it
is not individual cases. There has to be a pattern before any
panel would consider this.
Senator Feinstein. Then I don't know why the panel is even
there if it is not meaningful. I don't know what game is being
played by putting a panel in that makes a decision that the
United States doesn't have to abide by in a trade bill. It
doesn't seem to make much sense to me.
I am curious about another thing. Why isn't the H1-B
program sufficient? Why can't people come in under an H1-B
program as opposed to the L program?
Mr. Ives. Well, in the case of Singapore I think it is
worthwhile to point out that currently, as we understand it,
approximately 660 Singaporeans currently use the H1-B program.
So it is not a large number from Singapore. The purpose of the
agreement is to provide a certain degree of security for our
trading partners, just as we hope to receive a certain degree
of security from them by putting it in a trade agreement.
Senator Feinstein. Well, how would that provide security?
Mr. Ives. Well, in the sense that because the provision is
subject to dispute under the agreement, if there is a pattern
or practice, then, as Regina Vargo indicated, there would have
to be a rebalancing if we did not have a pattern or practice of
providing professional Singaporeans entry into the United
States.
Senator Feinstein. It wouldn't be because the company
doesn't have to even look for an American worker before they
hire a foreign worker first? It couldn't be because this
entitles the individuals to bring their families in, and it
couldn't be that the way it is set up it can easily become a
permanent immigration program?
Mr. Ives. Well, again, we did not see it as that when we
negotiated the agreement.
Senator Feinstein. Mr. Chairman, the bottom line is I think
the immigration section should be removed from the bill and
that this should just be a trade agreement. I suspect that when
you actually read the agreement, there is going to be
substantial objection on our side because the Business Week
commentary clearly establishes that this is some form of
prototype for future trade programs which also incorporate
immigration programs.
Perhaps we erred in not really airing a lot of this when
the North American Free Trade Agreement came through. But now
this is a small program, it is true, but if you read this,
``The administration hopes to use the new visa idea as a
template for continuing trade talks with Australia, Morocco,
and countries in Central America. At the same time, developing
nations, led by India and China, are clamoring to make the new
visa provisions available to all 146 nations in the World Trade
Organization. The result could be a vast influx of foreign
professionals from many low-wage nations competing with
American citizens for high-paying jobs.''
My State has a 7-percent unemployment rate. Very shortly,
people are going to exhaust unemployment compensation in large
numbers, over a million of them. And yet we will be absorbing
tens of thousands of L visas and H1-B visas. It doesn't make
sense.
Thank you, Mr. Chairman.
Senator Cornyn. Senator Graham, do you have questions you
would like to ask at this time?
STATEMENT OF HON. LINDSEY O. GRAHAM, A U.S. SENATOR FROM THE
STATE OF SOUTH CAROLINA
Senator Graham. I know this is not really on point in terms
of the country we are talking about, but I was coming in today
and I represent what is left of the textile industry in the
South. A good part of it is in South Carolina.
I know we are here talking about immigration, but generally
speaking two out of three textile jobs will be lost to overseas
competition in some form, and that very much disturbs me
because those are jobs that provide health benefits and a
decent place to work and a decent wage to many people in South
Carolina and throughout the South traditionally.
One thing that struck me coming over today was the infusion
of engineers that are coming our way from India. Apparently,
India in any particular year produces as many computer
engineers as the world combined and it is having an effect on
our market in the sense that companies are outsourcing
dramatically computer services that were originally based in
this country to India.
When you combine that outsourcing with the ability in trade
agreements for companies to bring in highly skilled workers, I
just wonder where this takes us. You know, 10 years down the
road when you have labor forces being such that you can take a
very high-skilled or medium-skilled job and perform it
elsewhere outside this country because there are no
environmental laws to worry about, there is no minimum wage,
there is certainly not nearly as complex tax treatment, where
do you see this going in terms of, as she has mentioned, the
immigration aspect of trade?
What impact will that have on our economy in terms of
people coming from Singapore and Chile to compete with
Americans or to outsource? What ability do we have in Congress
to look into this? What have you done in terms of fashioning
these agreements to look at the consequences to a more liberal
policy of allowing people to flow back and forth in terms of
job markets?
We will start with Singapore.
Mr. Ives. Senator, in terms of Singapore, as I indicated,
the number of Singaporeans using this provision is likely to be
relatively small. Currently, as I said, only 660 Singaporeans
used the H1-B program. In response to Congressional concerns,
we put a total cap on Singaporeans using the professionals
category of 5,400. So the impact of Singaporeans coming in
should be quite modest.
At the same time, the United States has investments of
over--
Senator Graham. But we agree the reason we are putting in
these caps is what?
Mr. Ives. In response to Congressional concerns.
Senator Graham. Do you share those concerns?
Mr. Ives. After listening to this Committee, and we also
had the opportunity to listen to members of the House
Committee, we share those concerns.
Senator Graham. Based on your knowledge of just immigration
and trade, in general, do you see this concern being just as
real in a situation with India or China or other large nations?
Mr. Ives. Well, I can really only speak regarding
Singapore, and given the relative size, I would assume the
concerns would be greater with larger countries.
Senator Graham. What about Chile?
Ms. Vargo. Well, first, I think I would say that there is
nothing in the FTA that directs itself to outsourcing. But with
regard to aliens coming into the United States, certainly one
of the important provisions is that they must be paid the
prevailing wage.
We kept the four basic core elements of the H1-B that there
be no strike or lockout, that they have safe working
conditions, that they get the prevailing wage, and I am trying
to think for a moment what the fourth one is.
Senator Graham. Would that apply to professionals?
Ms. Vargo. Pardon me?
Senator Graham. Would that apply to professionals?
Ms. Vargo. That specifically applies to professionals.
The second point I would make is, again, the numbers for
Chile here are small, 1,400. And in our consultations with
Congress, hearing of the concerns that you have in this area,
we have indicated that those limits for Chile and Singapore
will now count under the total H1-B cap, and that after 5 years
renewals under those temporary entry applications will count
against the total cap.
Senator Graham. What kind of worker are we talking about
coming in, generally speaking, from Chile? What type?
Ms. Vargo. An engineer, an accountant, a lawyer, computer
programmer.
Senator Graham. The same in Singapore?
Mr. Ives. Yes.
Ms. Vargo. The basic definition is still the same as the
H1-B, a bachelor's degree--
Senator Graham. Is there a shortage of lawyers in America?
Senator Cornyn. I wasn't worried until I heard about that.
Ms. Vargo. Well, if you wanted to interpret the provisions
of this agreement and you wanted to now how it would rest under
Chilean law, you might want a Chilean lawyer to come up here
for a little while to advise you.
Senator Graham. That is true. That is a good point, but
primarily that is what you are talking about, expertise related
to trade?
Ms. Vargo. Yes.
Senator Graham. But it is not limited to that, is it?
Ms. Vargo. Well, I don't want to say expertise related to
trade. It is trade in services. I mean, when you say trade, I
heard just trade in goods. Trade in services, which is very big
for the United States; two-thirds of our economy is services,
80 percent of our employment is services.
Senator Graham. What would be the average difference in pay
between an engineering graduate in Chile and the United States?
Ms. Vargo. I don't know the answer to that question, but if
he came up to the United States, he would have to be paid the
prevailing U.S. wage or higher under this temporary entry
procedure.
Senator Graham. That is true of every category?
Ms. Vargo. Yes.
Senator Graham. Thank you.
Ms. Vargo. True of every professional category. I don't
know as much about the traders, investors, business visitors,
but some of those categories are just different. Visitors can't
even earn an income here.
Senator Cornyn. Ms. Vargo, in attempting to distinguish the
temporary entry provisions under these agreements, you
attempted to distinguish them from traditional matters that
immigration laws deal with--legal permanent residency,
citizenship.
Remind us, what is the term of the temporary entry that
would be provided for under these agreements.
Ms. Vargo. It is a 1-year term. It is renewable each year.
As I mentioned, we have added a higher threshold now in that
renewal to have to establish that it is temporary, that they
are not seeking permanent employment. I think this is what is
called the presumption of immigrant intent; that the work is
temporary, that 1 day they will leave. They have a permanent
residence abroad.
And then as I mentioned, after 5 years now, a renewal will
count against the cap the same as the initial application in
each year, which is a point that Senator Feinstein made as a
concern.
Senator Cornyn. So it is an annual period renewable for a
period up to 5 years?
Ms. Vargo. No, it has no limit as to how long it can be,
but in the sixth year it will begin to count against the cap.
Senator Cornyn. I believe Senator Feinstein was asking
about consultations with the Committee, and I just would like
for you to confirm for the record that consultations with the
Committee staff--and that would be on a bipartisan basis--
occurred on November 1, 2002, November 25, 2002, December 12,
2002, and January 24, 2003.
There was a conference call. I assume that was in the
nature of a briefing or interaction--and if you have more
information, I will ask you to provide confirmation that it
occurred on April 28, 2003. And then there was a briefing on
July 9, 2003, with staff.
Can you confirm those consultations and what process was
involved in consulting with the Congress, and specifically this
Committee and its staff?
Mr. Ives. Senator, I am not sure of these exact dates, but
we will go back and confirm that these were the dates. We know
we consulted extensively with this Committee, as we did on the
House side, but we can confirm these exact dates as soon as we
get back to USTR.
Senator Cornyn. Thank you. If you would do that, I would
appreciate it very much.
Ms. Vargo. It is my understanding, Senator, that those
dates are correct.
Senator Cornyn. One of the concerns for various members of
this Committee, obviously, is the protection of American
workers and their families. In the agreement language for both
of these countries, it appears there is room to provide
adequate labor protection for the American workers in your
implementing language.
Can you explain to what extent you intend to provide labor
protection in the implementing language, Ms. Vargo?
Ms. Vargo. Well, when we say labor protections, I would
imagine you are talking about the kind of attestation
requirements that are contained in the current labor condition
application under the H1-B.
Senator Cornyn. Could you explain--
Ms. Vargo. What that is?
Senator Cornyn. --what that is, please?
Ms. Vargo. Yes. First of all, a U.S. company is required to
make this labor attestation. That company would have to certify
that it is going to pay the temporary entrant the prevailing
U.S. wage or higher, that there is not currently a strike or a
lockout at the workplace, that the workplace is a safe
workplace that meets U.S. workplace requirements. I presume
that is OSHA and other things. Lastly, they also have to notify
the other workers in the workplace of their intent to hire a
foreign worker.
Senator Cornyn. I understand, after hearing Senator
Feinstein explain her concerns, why she is concerned about
these agreements perhaps providing a template for further
agreements which would appear to encroach on Congress' plenary
authority to legislate in immigration matters. I can tell that
it will be a concern not only of Senator Feinstein, but other
members of the Committee as well.
Can you speak to that concern about to what extent the
agreements that you have negotiated here for these two
countries, which in and of themselves involve rather limited
numbers of temporary entrants into the country--in the case of
Singapore, 5,400, I believe the figure was, and in the case it
was 1,400. Obviously, if this template is going to be extended
to other countries, those numbers could increase significantly.
Could you address that, please?
Mr. Ives. I can only authoritatively speak regarding the
Singapore FTA, but I can assure you, Senator, in working with
this Committee for the past several months on the temporary
entry provisions, USTR has heard very clearly and understands
the strong concerns of this Committee and other Members of
Congress regarding the provisions of the temporary entry
provisions in this FTA and regarding the concerns about
including that in future FTAs. Those concerns are very
important to us and we will examine those concerns in terms of
how we proceed for future FTAs.
Senator Cornyn. Well, I think what threatens American
workers and a concern I would have specifically is not the
arrival of temporary professional workers, but exploitation by
some employers of foreign workers by offering them wages below
the prevailing wage rate.
I think that legitimate American businesses have no
incentive to hire a foreign worker over an identically
qualified American. In fact, what our free market system
thrives on is the competition on a level playing field and I
don't see how this would be undermined.
I do still have the concern, I must say, that Senator
Feinstein raised, and we will look forward to continued
discussion both here and perhaps on the floor on that subject.
But in the end, I think even with the ease of the application
process provided in this agreement, I would imagine that it is
administratively much easier for an American employer to hire
an identically qualified American worker than it would be to
hire someone from abroad.
So I don't know to what extent it is a concern, and I am
glad to hear that you have provided for protection against
exploitation at sub-standard wages of these temporary workers.
Senator Feinstein, if you have other questions, we will
turn to you.
Senator Feinstein. Well, I do, and I have a number I would
like to send in writing, but let me ask a question on the caps.
USTR originally sought to create the new Singapore and
Chile visa categories without any numerical caps, until Members
of Congress raised strenuous objections. Now, both agreements
include caps on the number of professionals, the 1,400 for
Chile and 1,500 for Singapore, that are separate from and in
addition to the global H1-B cap.
The USTR seems to want to reject part of the amendment they
agreed to from the House Judiciary Committee on this issue and
would like to allow workers to still come in under the
Singapore and Chile caps even if the global H1-B cap has been
filled. This would upset the balance reached in determining the
appropriate caps for H1-B workers.
Why do you believe your office was justified in
establishing new visa programs that allow employers to
circumvent the H1-B cap established by Congress?
Mr. Ives. Well, Senator, first of all, when we initially
negotiated the agreement, we recognized we were, in the case
of, I think, both Singapore and Chile, dealing with countries
that had highly qualified professionals and there would
probably not be a large use of this program. I indicated the
number of Singaporeans currently using this program.
When Congress expressed a concern about this, we did
establish caps that are in the agreements themselves, and that
was an attempt to be responsive to Congressional concerns. In
addition, in recent consultations with Congress we agreed that
those caps would be part of the H1-B program. So, again, we are
trying to be responsive to the concerns of Congress.
Finally, an additional attempt to be responsive is, as Ms.
Vargo indicated, after 5 years those Singaporean and Chilean
H1-B visas would be part of the overall H1-B global limit. So
we have attempted to address Congressional concerns regarding
this issue.
Senator Feinstein. Okay, thank you. I want to ask you this.
You keep going to the point that this is a temporary work
program, and yet as I understand it, it can be extended,
renewed, every year, for infinity. Additionally, workers can
bring their families. Therefore, to me, it is a permanent
program.
The indefinite renewability of 1-year visas increases the
power of employers to intimidate guest workers and resist their
demands for better wages or benefits. Under the H1-B program,
by contrast, workers are granted a 3-year visa that can be
renewed only once, for a total of 6 years.
So my own view of reading this thing is that you have
decided a way of getting around the H1-B program, and you have
done these L visas and they form a permanent foreign worker
program. That is really of deep concern to me. Now, tell me why
I shouldn't believe that if you can renew them every year for
any number of years.
Mr. Ives. Well, again, Senator, if the number of
Singaporean and Chilean professionals comes in under the
overall H1-B cap, then the total number of H1-B visas is
capped.
Senator Feinstein. But that is a product of the House,
right? The original intent of USTR was to establish this.
Mr. Ives. Well, again, we didn't know the concerns of the
Congress until fairly recently in terms of that particular
aspect and we addressed them as soon as we understood the
concerns.
Senator Feinstein. There is a Labor Advisory Board. Did you
consult with the Labor Advisory Board in developing this
agreement?
Mr. Ives. I believe we consulted with all the committees in
developing this agreement.
Senator Feinstein. Is the answer you did consult with them?
Mr. Ives. Yes. We consulted with all the--there are 31, I
believe, advisory committees. We consulted with all 31
committees.
Senator Feinstein. Is that the same thing as the briefings
you gave our staff?
Mr. Ives. I am not sure.
Senator Feinstein. The thing that bothers me about this--
and I will be very candid--in my history, I have always had a
relationship with USTR where either the head or the second hear
would pick up the phone and call me and say there is something
you should know in an agreement. I really appreciated that and
I guess I forgot how much I appreciated it until this
administration.
I don't think consultation is having a staff briefing.
Consultation is talking with the member. The staff doesn't
vote; the member votes. The member makes the decision; at least
I make my own decisions. So because you had my staff to a
briefing doesn't mean that you have talked with me about it,
and I am really surprised on something that sets as big a
precedent as this agreement does. Now, perhaps you have talked
with other members, but I certainly wasn't one of them.
Mr. Chairman, rather than take your time, I have a number
of questions I would like to submit in writing and hopefully
can get a response to them before this matter comes before the
Committee for markup.
Senator Cornyn. Certainly, and I know the witnesses will
respond promptly to those written questions by Senator
Feinstein or any other member of the Committee who may have had
a conflict and is not here or any of those of us who are
present.
Senator Graham, do you have anything?
Senator Graham. Just one last question, basically, trying
to find out the forces that pushed this. When it came time to
talk about this trade agreement, what were the forces that were
pushing the liberalization or the ability to get workers from
Chile and Singapore in professional categories to come to the
United States? What are those forces? Why do we need this? Why
is this essential to the trade agreement?
Ms. Vargo. I think our service providers, in particular,
are concerned that they would have easy access or sufficient
access to the Chilean market to be able to conduct their
business. In the course of the negotiations that we had here,
Chile did some things, such as liberalize. They had a
particular provision that required that 85 percent of any
business start-up had to be nationals, which they modified in
the course of the agreement, a few things that our businessmen
felt made it easier for them to do business in Chile.
As I mentioned, from Chile's position, they are a very
small country and one of their key areas of interest was
professional services. They felt that this particular area
would have a lot to do with whether or not they would be able
to engage in this area to the full extent possible, especially
given the distance that Chile is from the U.S.
Senator Graham. So are we responding to Chile or are we
responding to American companies?
Ms. Vargo. No. I think at the first order, we are
responding to the concerns raised by U.S. companies about being
able to get into these other markets. But I wanted to make the
additional point that in this particular negotiation, which is
not necessarily true of all negotiations, this was a matter of
considerable interest to Chile as well. And our ability to
address that, I think, also increased our ability to get Chile
to seriously entertain obligations in areas like e-commerce and
telecommunications and financial services and other areas that
they saw were basically of interest to the U.S.
Senator Feinstein. Would you yield for a moment?
Senator Graham. Absolutely.
Senator Feinstein. I just met with the Chilean ambassador,
who is in this room now, and that is not what he told me.
Senator Graham. Well, I didn't mean to create a problem,
but I was curious. I will let you all work that out.
Singapore?
Mr. Ives. Well, in terms of Singapore, I think it was first
and foremost a question of U.S. service providers indicating
that the ability to go in and out of Singapore, while currently
available, they would like that assurance in the agreement. So
in the first instance, we were addressing the concerns and
requests of U.S. businessmen.
Senator Graham. To expand the professional category of
immigrants?
Mr. Ives. I am not sure they were that specific. They just
thought the professional category should be more flexible than
it is in the NAFTA, which has very specific categories of
professionals. This is a little bit more flexible, but still
requires a high degree of professional expertise.
Senator Graham. Has Singapore suggested that this is
important to them that we expand the number of professional
workers that can come here?
Mr. Ives. I think Singapore was satisfied with the
conditions as they were negotiated. It was not a huge issue
with Singapore, but it was important for the overall package.
Senator Graham. Thank you.
Senator Cornyn. Senator Feinstein, do you have anything
further?
Senator Feinstein. No, Mr. Chairman.
Senator Cornyn. Well, thank you very much for appearing
here today to answer the questions we have. I think the
concerns are obvious and will be explored further.
With that, this hearing of the Senate Judiciary is now
adjourned.
[Whereupon, at 5:27 p.m., the Committee was adjourned.]
[Submissions for the record follow.]
[GRAPHIC] [TIFF OMITTED] T1367.001
[GRAPHIC] [TIFF OMITTED] T1367.002
[GRAPHIC] [TIFF OMITTED] T1367.003
[GRAPHIC] [TIFF OMITTED] T1367.004
[GRAPHIC] [TIFF OMITTED] T1367.005
[GRAPHIC] [TIFF OMITTED] T1367.006
[GRAPHIC] [TIFF OMITTED] T1367.007
[GRAPHIC] [TIFF OMITTED] T1367.008
[GRAPHIC] [TIFF OMITTED] T1367.009
[GRAPHIC] [TIFF OMITTED] T1367.010
[GRAPHIC] [TIFF OMITTED] T1367.011
[GRAPHIC] [TIFF OMITTED] T1367.012
[GRAPHIC] [TIFF OMITTED] T1367.013
[GRAPHIC] [TIFF OMITTED] T1367.014
[GRAPHIC] [TIFF OMITTED] T1367.015
[GRAPHIC] [TIFF OMITTED] T1367.016
[GRAPHIC] [TIFF OMITTED] T1367.017
[GRAPHIC] [TIFF OMITTED] T1367.018
[GRAPHIC] [TIFF OMITTED] T1367.019
[GRAPHIC] [TIFF OMITTED] T1367.020
[GRAPHIC] [TIFF OMITTED] T1367.021
[GRAPHIC] [TIFF OMITTED] T1367.022
[GRAPHIC] [TIFF OMITTED] T1367.023
[GRAPHIC] [TIFF OMITTED] T1367.024
[GRAPHIC] [TIFF OMITTED] T1367.025
[GRAPHIC] [TIFF OMITTED] T1367.026
[GRAPHIC] [TIFF OMITTED] T1367.027
[GRAPHIC] [TIFF OMITTED] T1367.028
[GRAPHIC] [TIFF OMITTED] T1367.029
[GRAPHIC] [TIFF OMITTED] T1367.030
[GRAPHIC] [TIFF OMITTED] T1367.031