[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                    ECONOMIC DANGER ZONE: HOW AMERICA 
                 COMPETES TO WIN THE FUTURE VERSUS CHINA

=======================================================================

                                HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON INNOVATION, DATA, AND 
                                 COMMERCE

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            FEBRUARY 1, 2023

                               __________

                            Serial No. 118-3
                            
                            
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                            


     Published for the use of the Committee on Energy and Commerce

                   govinfo.gov/committee/house-energy
                        energycommerce.house.gov
                        
                              __________

                                
                    U.S. GOVERNMENT PUBLISHING OFFICE                    
51-706 PDF                   WASHINGTON : 2023                    
          
-----------------------------------------------------------------------------------     
                      
                    COMMITTEE ON ENERGY AND COMMERCE

                   CATHY McMORRIS RODGERS, Washington
                                  Chair
MICHAEL C. BURGESS, Texas            FRANK PALLONE, Jr., New Jersey
ROBERT E. LATTA, Ohio                  Ranking Member
BRETT GUTHRIE, Kentucky              ANNA G. ESHOO, California
H. MORGAN GRIFFITH, Virginia         DIANA DeGETTE, Colorado
GUS M. BILIRAKIS, Florida            JAN SCHAKOWSKY, Illinois
BILL JOHNSON, Ohio                   DORIS O. MATSUI, California
LARRY BUCSHON, Indiana               KATHY CASTOR, Florida
RICHARD HUDSON, North Carolina       JOHN P. SARBANES, Maryland
TIM WALBERG, Michigan                PAUL TONKO, New York
EARL L. ``BUDDY'' CARTER, Georgia    YVETTE D. CLARKE, New York
JEFF DUNCAN, South Carolina          TONY CARDENAS, California
GARY J. PALMER, Alabama              RAUL RUIZ, California
NEAL P. DUNN, Florida                SCOTT H. PETERS, California
JOHN R. CURTIS, Utah                 DEBBIE DINGELL, Michigan
DEBBBIE LESKO, Arizona               MARC A. VEASEY, Texas
GREG PENCE, Indiana                  ANN M. KUSTER, New Hampshire
DAN CRENSHAW, Texas                  ROBIN L. KELLY, Illinois
JOHN JOYCE, Pennsylvania             NANETTE DIAZ BARRAGAN, California
KELLY ARMSTRONG, North Dakota, Vice  LISA BLUNT ROCHESTER, Delaware
    Chair                            DARREN SOTO, Florida
RANDY K. WEBER, Sr., Texas           ANGIE CRAIG, Minnesota
RICK W. ALLEN, Georgia               KIM SCHRIER, Washington
TROY BALDERSON, Ohio                 LORI TRAHAN, Massachusetts
RUSS FULCHER, Idaho                  LIZZIE FLETCHER, Texas
AUGUST PFLUGER, Texas
DIANA HARSHBARGER, Tennessee
MARIANNETTE MILLER-MEEKS, Iowa
KAT CAMMACK, Florida
JAY OBERNOLTE, California
                                 ------                                

                           Professional Staff

                      NATE HODSON, Staff Director
                   SARAH BURKE, Deputy Staff Director
               TIFFANY GUARASCIO, Minority Staff Director
             Subcommittee on Innovation, Data, and Commerce

                       GUS M. BILIRAKIS, Florida
                                 Chairman
LARRY BUCSHON, Indiana               JAN SCHAKOWSKY, Illinois
TIM WALBERG, Michigan, Vice Chair      Ranking Member
JEFF DUNCAN, South Carolina          KATHY CASTOR, Florida
NEAL P. DUNN, Florida                DEBBIE DINGELL, Michigan
DEBBIE LESKO, Arizona                ROBIN L. KELLY, Illinois
GREG PENCE, Indiana                  LISA BLUNT ROCHESTER, Delaware
KELLY ARMSTRONG, North Dakota        DARREN SOTO, Florida
RICK W. ALLEN, Georgia               LORI TRAHAN, Massachusetts
RUSS FULCHER, Idaho                  YVETTE D. CLARKE, New York
DIANA HARSHBARGER, Tennessee         FRANK PALLONE, Jr., New Jersey (ex 
KAT CAMMACK, Florida                     officio)
CATHY McMORRIS RODGERS, Washington 
    (ex officio)
                             
                             
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Gus M. Bilirakis, a Representative in Congress from the 
  State of Florida, opening statement............................     1
    Prepared statement...........................................     4
Hon. Jan Schakowsky, a Representative in Congress from the State 
  of Illinois, opening statement.................................     7
    Prepared statement...........................................     8
Hon. Cathy McMorris Rodgers, a Representative in Congress from 
  the State of Washington, opening statement.....................     9
    Prepared statement...........................................    11
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................    16
    Prepared statement...........................................    18

                               Witnesses

Jeff Farrah, Executive Director, Autonomous Vehicle Industry 
  Association....................................................    20
    Prepared statement...........................................    23
    Answers to submitted questions...............................   177
Marc Jarsulic, Senior Fellow and Chief Economist, Center for 
  American Progress..............................................    42
    Prepared statement...........................................    44
    Answers to submitted questions...............................   180
Samm Sacks, Cyber Policy Fellow, International Security Program, 
  New America....................................................    55
    Prepared statement...........................................    57
    Answers to submitted questions...............................   182
Brandon J. Pugh, Policy Director and Resident Senior Fellow, 
  Cybersecurity and Emerging Threats, R Street Institute.........    66
    Prepared statement...........................................    68
    Answers to submitted questions...............................   186

                           Submitted Material

Inclusion of the following was approved by unanimous consent.
Letter of February 1, 2023, from John Bozzella, President and 
  Chief Executive Officer, Alliance for Automotive Innovation....   112
Report of the Alliance for Automotive Innovation, ``Ready to 
  Launch--Autonomous Vehicles in the U.S.: Tracking the current 
  (and future) AV landscape,'' December 2022.....................   115
Report of the Alliance for Automotive Innovation, ``Policy 
  Roadmap to Advance Automated Vehicle Innovation: A Four-Year 
  Plan to Revolutionize Transportation,''........................   129
Letter of September 9, 2021, from Mrs. Rodgers, et al., to 
  Secretary Pete Buttigieg, Department of Transportation.........   142
Report of the China Task Force, House of Representatives, 
  September 2020\1\
Amendment to Rules Committee Print 117-8.........................   147
Letter of June 28, 2021, from Mark A. Riccobono, President, 
  National Federation of the Blind, to Chair Jim McGovern and 
  Ranking Member Tom Cole, House Committee on Rules..............   150

----------

\1\ The report has been retained in committee files and is available at 
https://docs.house.gov/meetings/IF/IF17/20230201/115346/HHRG-118-IF17-
20230201-SD008.pdf.
Press release of April 2, 2020, ``JTA, Beep & NAVYA AVs Help 
  Transport COVID-19 Tests Collected at Mayo Clinic Drive-Thru,'' 
  Jacksonville Transportation Authority..........................   152
Commentary of July 30, 2021, ``Tuya may be the China threat that 
  beats Russia's ransomware attacks,'' by Hal Brands and Klon 
  Kitchen, The Hill..............................................   155
Letter of February 1, 2023, from the Competitive Carriers 
  Association, et al., to Mr. Bilirakis, et al...................   158
Letter of January 31, 2023, from the Consumer Brands Association 
  and the Information Technology Industry Council to Mr. 
  Bilirakis and Ms. Schakowsky...................................   160
Letter of January 31, 2023, from Catherine Chase, President, 
  Advocates for Highway and Auto Safety, to Mr. Bilirakis and Ms. 
  Schakowsky.....................................................   165
Report of the Center for Strategic and International Studies, 
  ``Empty Bins in a Wartime Environment: The Challenge to the 
  U.S. Defense Industrial Base,'' by Seth G. Jones, January 
  2023\2\
Letter of February 1, 2023, from Aric Newhouse, Senior Vice 
  President, Policy and Government Relations, National 
  Association of Manufacturers, to Mr. Bilirakis and Ms. 
  Schakowsky.....................................................   171
Article of January 26, 2023, ``Intel's horrible quarter revealed 
  an inventory glut and underused factories,'' by Kif Leswing, 
  CNBC...........................................................   174

----------

\2\ The report has been retained in committee files and is available at 
https://docs.house.gov/meetings/IF/IF17/20230201/115346/HHRG-118-IF17-
20230201-SD024.pdf.

 
  ECONOMIC DANGER ZONE: HOW AMERICA COMPETES TO WIN THE FUTURE VERSUS 
                                 CHINA

                              ----------                              


                      WEDNESDAY, FEBRUARY 1, 2023

                  House of Representatives,
    Subcommittee on Innovation, Data, and Commerce,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:32 a.m. in 
2322 of the Rayburn House Office Building, Hon. Gus M. 
Bilirakis (chairman of the subcommittee), presiding.
    Members present: Representatives Bilirakis, Bucshon, 
Walberg, Duncan, Dunn, Lesko, Armstrong, Allen, Harshbarger, 
Cammack, Rodgers (ex officio), Schakowsky (subcommittee ranking 
member), Castor, Dingell, Kelly, Blunt Rochester, Soto, Trahan, 
Clarke, and Pallone (ex officio).
    Staff present: Michael Cameron, Professional Staff Member, 
Innovation, Data, and Commerce; Jack Heretik, Press Secretary; 
Jessica Herron, Clerk, Innovation, Data, and Commerce; Peter 
Kielty, General Counsel; Emily King, Member Services Director; 
Tim Kurth, Chief Counsel, Innovation, Data, and Commerce; 
Brannon Rains, Professional Staff Member, Innovation, Data, and 
Commerce; Lacey Strahm, Fellow, Innovation, Data, and Commerce; 
Teddy Tanzer, Senior Counsel, Innovation, Data, and Commerce; 
Hannah Anton, Minority Staff Assistant; Ian Barlow, Minority 
FTC Detailee; Waverly Gordon, Minority Deputy Staff Director 
and General Counsel; Daniel Greene, Minority Professional Staff 
Member; Tiffany Guarascio, Minority Staff Director; Lisa Hone, 
Minority Chief Counsel, Innovation, Data, and Commerce; Joe 
Orlando, Minority Senior Policy Analyst; and C.J. Young, 
Minority Deputy Communications Director.
    Mr. Bilirakis. The Subcommittee on Innovation, Data, and 
Commerce will come to order.
    The Chair recognizes himself for 5 minutes for an opening 
statement.

OPENING STATEMENT OF HON. GUS M. BILIRAKIS, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF FLORIDA

    Good morning, everyone. It is great to be here. Welcome to 
the first hearing for the Innovation, Data, and Commerce 
Subcommittee for the 118th Congress. I would like to thank the 
chair of the full committee for selecting me to chair this 
important panel, and I would also like to congratulate, again, 
Cathy McMorris Rodgers for being the first woman to serve as 
the chair of the powerful Committee on Energy and Commerce, the 
best committee in Congress. It really is. There is no question.
    OK. I also want to identify our new members, our new 
Republican members of the subcommittee: Mr. Allen from the 
State of Georgia; Mr. Fulcher from Idaho; Ms. Harshbarger from 
the State of Tennessee; and then, of course, Mr. Duncan.
    And I am glad to see you are back on the subcommittee from 
the great State of South Carolina.
    And then we also have, of course, the great friend of mine, 
Kat Cammack, from the great State of Florida, and she 
represents Gator Nation.
    Finally, I want to thank my esteemed colleague, Tim Walberg 
from the great State of Michigan, for serving as vice chair of 
the committee. I am greatly looking forward to working with Mr. 
Walberg, and I appreciate his partnership. We are going to do 
great things in this committee.
    So Ranking Member Schakowsky, who did an outstanding job as 
the chair in the previous Congress, I am glad to see you are 
leading the subcommittee again.
    And for our friends across the aisle, we worked very hard 
together last Congress moving forward very good success, great 
initiatives that went to the President's desk. This included 
legislative wins like the INFORM Consumers Act, which will 
protect consumers from stolen and counterfeit goods online, 
including those coming from China, and my bill, the Ransomware 
Act, which requires the FTC to submit recommendations on how to 
make America more resilient from ransomware and cyber attacks, 
specifically from cross-border foreign threats like China and 
Russia.
    Switching gears, today's hearing focuses on the great 
threat to our country right now: China. So it is fitting that 
to begin the 118th Congress we focus on this threat and discuss 
how to recapture and maintain our global leadership.
    The CCP will stop at nothing to undermine our global 
leadership and weaken our economy. They bought up our 
farmlands, stole our intellectual property, and embedded 
themselves deep within many of our supply chains. Now they are 
turning their attention towards establishing the global 
standards for emerging technologies. We are not going to let it 
happen.
    The CCP has invested heavily in artificial intelligence and 
other emerging technologies. Paired with this investment, China 
is creating favorable environments for their private-sector 
companies and entrepreneurs to deploy and test these 
technologies. This has forced many American companies with 
global footprint and American innovators with cutting-edge 
ideas to consider a hard decision: whether to move their 
operations from American to Chinese shores.
    It is also allowing Chinese companies to invest and expand 
further, potentially endangering our own infrastructure and 
data security. Waiting any further on a national framework is 
weakening our stance by the day, and time is of the essence. I 
can't emphasize that enough: Time is of the essence.
    It is imperative that this committee establishes 
foundational frameworks for developing emerging technologies. 
We came close last Congress when we passed the bipartisan, 
bicameral American Data Privacy and Protection Act. But this 
Congress we need to ensure it gets across the finish line, 
because China is not waiting on us to influence international 
norms and standards.
    And I want to commend the previous chairman, Mr. Pallone, 
and the previous ranking member, Mrs. Rodgers, for getting it 
through committee, which was really incredible, historic. Now 
we have got to get it across the finish line as soon as 
possible.
    I look forward to working again with Chair Rodgers, Ranking 
Members Schakowsky and Pallone, and the members of this 
committee to finish what we started. We need to get this done, 
and it is a priority. It is a priority for the American people. 
We must ensure our Nation remains a leader in global technology 
standards.
    The American people are the most innovative in the world. I 
know you know this. It is our job in Congress to ensure that we 
eliminate bureaucratic red tape that has too often hampered 
innovation in the marketplace. For something like autonomous 
vehicles that will help senior citizens and Americans living 
with disabilities, it means reducing barriers to testing and 
setting the standards for how they will be adopted across the 
world and provide certainty for businesses and consumers.
    America's global leadership depends on its people to be the 
best in class, and we must give them the regulatory certainty--
remember, that is the key--on emerging technologies they need 
in order to live up to their legacy. If we fail, America will 
be left behind and our competitors, like China, will leave us 
in the dust.
    Again, we are not going to let that happen.
    I am eager to hear from our panel of experts today on such 
a critical topic. Thank you again to the witnesses for being 
here today.
    [The prepared statement of Mr. Bilirakis follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Bilirakis. And I yield back. The Chair recognizes 
subcommittee Ranking Member Schakowsky for 5 minutes for an 
opening statement.

 OPENING STATEMENT OF HON. JAN SCHAKOWSKY, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Ms. Schakowsky. Thank you so much, Chairman Bilirakis. I am 
so excited to be back here on this--in the subcommittee, 
working with you and working with our new members and working 
with our returning members on both sides of the aisle.
    You know, we were so successful passing bipartisan 
legislation in the last Congress. There was hardly any 
difference between us. And so I really look forward to 
continuing to do this.
    And I did want to mention--you talked a bit about the 
challenge of competitiveness with China. And I want to 
congratulate you on maintaining our jurisdiction. There is a 
new special committee dealing with China. So thank you for 
making sure that this idea of our competitiveness and our 
ability to compete in a positive way with all of our 
competitors and certainly adversaries--so good work in making 
that happen.
    But I did also want to mention some of the things that we 
did. You mentioned a couple of these bills, but I want to say 
that we were able to pass out of the full committee the 
consumer protection and the--our legislation on--the privacy 
legislation that we were able to get out of the House, the 
American Data Privacy and Protection Act. And I am hoping and 
looking forward to as a priority to try and move that. 
Americans want to do that.
    We passed the Consumer Protection and the Recovery Act. We 
also passed out of the--into law Reese's Law, protecting 
children; the INFORM Consumer Act, which is not only good for 
consumers but for businesses that have been losing money; the 
STURDY Act, protecting children from furniture that falls over 
on them; the Ransomware Act; and the Restoring Brand USA. These 
were two of your bills that I was happy to cosponsor. The 
Manufacturing.gov Act, Safety Sleep for Babies, the FTC 
Collaboration--is that right--Act of 2022; the Carbon Monoxide 
Poisoning Prevention Act. I mean, so many things for consumers, 
for ordinary people that we were able to pass into law.
    But I definitely do want to say that let's make a priority 
of passing our privacy bill. I think this will really put us on 
the right track.
    And let me also say there is--we know that there is a lot 
of work to be done to make our supply chain resilient, and we 
need to work on that. Also--and we face these new challenges 
with the growth of our artificial intelligence that we need to 
address.
    And let me just say in closing now is the time for us to 
come together. We can do this. We have done this. And I really 
look forward to the advances that we are going to make for 
consumers, for business, and for the economy of our country.
    [The prepared statement of Ms. Schakowsky follows:]
    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
    
    Ms. Schakowsky. I yield back.
    Mr. Bilirakis. I thank the ranking member. The Chair 
recognizes the chair of the full committee, Mrs. Rodgers, for 5 
minutes for her opening statement.

      OPENING STATEMENT OF HON. CATHY McMORRIS RODGERS, A 
    REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON

    Mrs. Rodgers. Thank you, Mr. Chairman. Welcome, everyone, 
to the first hearing of the Innovation, Data, and Commerce 
Subcommittee of the 118th Congress. It is great to have 
everyone here, and I would like to congratulate my good friend 
Congressman Gus Bilirakis on becoming the chairman of this 
subcommittee, as well as my friend Mr. Walberg for being the 
vice chair of the committee.
    This committee plays a vital role in advancing American 
competitiveness and global technological leadership, and it is 
critical that we use this panel to ensure that America, not 
China, is setting the rules of the road for technologies of 
tomorrow.
    It is no secret that the Chinese Communist Party wants to 
replace the United States as a global economic and 
technological power. Whether it is artificial intelligence, 
self-driving cars, or smart devices, China wants to dominate 
these new and emerging technologies.
    But China's vision of the future is not one that welcomes 
American values, values like freedom of speech, privacy, 
entrepreneurial enterprise, individual rights, or the rule of 
law. The Chinese Communist Party, on the other hand, spies on 
its citizens and asserts strict government control over 
businesses and the economy. We need to make sure that these 
technologies of the future are developed in an ecosystem that 
promotes American values, not China's. And this is a race that 
we cannot afford to let them win.
    We must work together to cement America's global 
technological leadership. We should start by passing 
comprehensive privacy and data security protections with one 
national standard. We made history last year when we passed the 
bipartisan, bicameral American Data Privacy and Protection Act 
53 to 2 out of this committee, full committee. But our work 
isn't over yet, and we have already fallen behind other 
countries in establishing a national privacy standard.
    I want to thank Mr. Pallone and Ms. Schakowsky and, of 
course, Mr. Bilirakis for his leadership on this. And I am 
eager to continue that work. It is a top priority for 
Americans, and it needs to be achieved this Congress. And we 
can't stop there.
    It is also important that we take action to ensure the 
development and the deployment of self-driving cars. The 
regulatory framework for self-driving cars must be led in the 
United States.
    And again, this comes down to our values versus the Chinese 
Communist Party. America values, the importance of safety for 
our citizens. China does not. We value our workforce and free 
market economies. China does not. We value civil society groups 
and their right to speak freely. China does not.
    To win the future, the United States must lead on self-
driving cars. We must chart a path so the road is one we 
design. And this can be the year we finally push past the 
barriers which have derailed the SELF DRIVE Act and other 
legislation from becoming law.
    And we can also build on the America COMPETES Act 
legislation, which I had sponsored in the 116th Congress and 
worked with then-Chair Ms. Schakowsky to get passed, and it was 
on promoting emerging technologies, which is--was enacted with 
many provisions of--led by members of this committee.
    The best way to beat China is to spur innovation and remove 
unnecessary, burdensome regulatory barriers. We cannot and we 
should not even try to beat China at their game of massive 
government handouts and centralized industrial policy. We won't 
outspend them, and authorizing billions of taxpayer dollars 
without removing burdensome red tape will only lead to waste.
    Instead, we need to encourage innovation, ingenuity, and 
entrepreneurship. That is the backbone of our economy, and that 
can only be achieved with a government that encourages low 
barriers to entry for innovative technologies and startups, and 
the adoption of emerging technologies that will improve 
people's lives.
    Ensuring Federal agencies don't put undue burden on 
businesses and innovators will be a top priority for this 
Congress. Whether it is ensuring people's online information is 
secure, charting an achievable path towards the development and 
the deployment of self-driving cars in the United States, or 
setting the global standards for AI and other emerging 
technologies, this subcommittee is at the center of it.
    You know, the American ingenuity built its first car. 
America built its first car in 1893. And then we went on to 
dominate manufacturing the car for over 100 years. And we must 
secure and win the future in the auto and the tech sector. You 
know, I look forward to working with every Member on this panel 
to preserve our global leadership, strengthen our economic and 
national security, and beat China. My door is always open.
    I want to thank the witnesses for all being here. Your 
testimony is critical in educating all of us.
    [The prepared statement of Mrs. Rodgers follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mrs. Rodgers. And I yield back.
    Mr. Bilirakis. Thank you, Madam Chair, for your testimony. 
I appreciate it.
    Now I will recognize the ranking member of the full 
committee, Mr. Pallone, for 5 minutes.

OPENING STATEMENT OF HON. FRANK PALLONE, Jr., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Chairman, and congratulations again 
on your being made the chairman of the subcommittee.
    America's economic competitiveness has helped cement 
America's technological, political, and national security 
dominance, but our Nation's competitiveness is facing 
unprecedented challenges. For three decades the Institute for 
Management Development designated our Nation's economy as one 
of the five most competitive in the world. Three years ago, 
during the Trump administration, that ranking plummeted to 
10th.
    Globalization, protectionist policies, and extraordinary 
market interventions by our economic rivals are key reasons for 
this drop. The Chinese Government, a frequent purveyor of 
predatory economic practices, has adopted policies to give 
Chinese companies an unfair competitive advantage. This 
includes massive tax breaks and subsidies for Chinese 
companies, stifling restrictions on access to the Chinese 
market, currency manipulation, foreign mergers and 
acquisitions, forced technology transfers, and intellectual 
property theft.
    Their goal is to dominate high-tech industries like 5G, 
supercomputers, artificial intelligence, and advanced 
manufacturing that are essential to economic prosperity and 
military superiority in the 21st century. And as a result, 
American manufacturers, innovators, and workers are operating 
at a competitive disadvantage. Chinese manufacturers' output 
rose by 170 percent between 2008 and 2021. Over that same 
period, the U.S. production only grew by 12 percent.
    Chinese companies now dominate the market for vital 
telecommunications network equipment, smartphones, commercial 
drones, and photovoltaic cells for solar panel production. 
China is also the largest producer of lithium battery cells and 
is making strides in the production of electric vehicles.
    Now, fortunately, these unprecedented challenges to our 
economic prosperity and competitiveness are not going 
unchallenged. Last Congress, congressional Democrats delivered 
by taking bold action to strengthen our manufacturing base, 
help create good-paying jobs for American workers, unleash more 
innovation, and lower costs for consumers.
    The CHIPS and Science Act was one of the major laws that we 
passed last Congress, and it invests $52.7 billion to spur 
American semiconductor production. It will ensure more 
superconductors are produced right here in the United States, 
end our reliance on other countries like China, and lower costs 
for consumers for automobiles, consumer electronics, home 
appliances, and other goods. It also invests 1.5 billion to 
support the deployment of innovative, American-made 
telecommunications equipment to help counter the spread of 
harmful network equipment like China-backed Huawei. The CHIPS 
and Science Act was a major win for our global competitiveness, 
for our economy, for our consumers.
    Based on the title of today's hearing, you would have 
thought congressional Republicans would have been running to 
the floor to vote yes on this bill, but only two Republicans on 
this committee supported it. The other 27 opposed it. While the 
overwhelming majority of Republicans opposed the CHIPS and 
Science Act, we have an opportunity to double down on these 
monumental victories and enact more vital competitiveness 
legislation into law this Congress.
    And I know my--I know that both Chairman Bilirakis and our 
Ranking Member Schakowsky mentioned the American Data Privacy 
and Protection Act, which is the comprehensive privacy 
legislation that myself and Chairwoman Rodgers sponsored last 
Congress, and this bill ensures that consumers, wherever they 
reside in this country, will have meaningful control over their 
personal information, while providing clear and consistent 
rules of the road on privacy and data security to innovators, 
entrepreneurs, and small tech companies.
    And I would also like to see us move the supply chain 
resilience subtitle in the America COMPETES Act, which passed 
out of the House last Congress. This would create a new office 
within the Department of Commerce responsible for leading a 
governmentwide effort to support manufacturing and strengthen 
supply chains critical to the Nation's economic vitality and 
national security.
    We can continue to blaze a path to a more competitive, 
stronger economy by building on the work of the last Congress. 
But one thing we cannot do is dangerously play chicken with the 
debt limit, as House Republicans are threatening to do. House 
Republicans have pledged the Nation's full faith and credit to 
force devastating cuts to Social Security, Medicare, and 
Medicaid. And that is not the way to ensure our Nation leads 
the pack economically.
    So I hope congressional Republicans realize the severe 
economic consequences of this action might have, and I also 
hope we can begin to work on bipartisan solutions to bolster 
our economy and to outcompete the world. And I urge a strategy 
that is bipartisan and that will return to responsible 
governance, working in the interests of all Americans.
    I think all of us have America and our constituents at 
heart, and we can work together as we have in the past to 
achieve bipartisan solutions that deal with this challenge from 
China and other competitors.
    [The prepared statement of Mr. Pallone follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Pallone. So I yield back. Thank you, Mr. Chairman.
    Mr. Bilirakis. I thank the ranking member. We have now 
concluded with Members' opening statements.
    The Chair would like to remind Members that, pursuant to 
the committee rules, all Members' opening statements will be 
part of the record.
    We would like to thank all of our witnesses for being here 
today and taking the time to travel to Washington, DC, to 
testify before the subcommittee. Today's witnesses will have 5 
minutes to provide oral testimony, which will be followed by a 
round of questions from Members.
    Our witness panel for today's hearing will include Mr. Jeff 
Farrah, the executive director of the Autonomous Vehicle 
Industry Association--welcome, sir; Mr. Marc Jarsulic, who is a 
senior fellow and chief economist at the Center for American 
Progress--welcome; Ms. Samm Sacks, cyber policy fellow, 
International Security Program for New America--welcome; Mr. 
Brandon Pugh, policy director and resident senior fellow at R 
Street Institute. We appreciate you being here, as well.
    So, Mr. Farrah, we will begin with you, and you have 5 
minutes. Thank you.
    Mr. Farrah. Thank you.
    Mr. Bilirakis. My pleasure.

   STATEMENT OF JEFF FARRAH, EXECUTIVE DIRECTOR, AUTONOMOUS 
VEHICLE INDUSTRY ASSOCIATION; MARC JARSULIC, SENIOR FELLOW AND 
  CHIEF ECONOMIST, CENTER FOR AMERICAN PROGRESS; SAMM SACKS, 
   CYBER POLICY FELLOW, INTERNATIONAL SECURITY PROGRAM, NEW 
  AMERICA; AND BRANDON J. PUGH, POLICY DIRECTOR AND RESIDENT 
  SENIOR FELLOW, CYBERSECURITY AND EMERGING THREATS, R STREET 
                           INSTITUTE

                    STATEMENT OF JEFF FARRAH

    Mr. Farrah. Chair Rodgers, Ranking Member Pallone, Chairman 
Bilirakis, Ranking Member Schakowsky, distinguished members of 
the committee, it is my honor to be here before you today.
    I am privileged to lead the Autonomous Vehicle Industry 
Association, which is the unified voice of the AV industry and 
represents leading automotive, technology, trucking, and 
transportation companies. Our mission is to advocate for the 
safe and timely deployment of autonomous technology that will 
increase safety, expand mobility, and boost supply chains.
    We appreciate the strong leadership that has come from this 
committee in past Congresses and look forward to working with 
you this year.
    It is important to recognize that autonomous vehicles are 
not science fiction. They are here today. Across the United 
States, autonomous driving technology is being applied to 
passenger vehicles, trucks, delivery vehicles, and shuttles. 
AVs are operating in Arizona, Arkansas, California, Florida, 
Michigan, Texas, Washington State, and more.
    It is key to understand why developers are focused on 
bringing AV technology to market. It is not an exaggeration to 
say that safety motivates everything that the AV industry does, 
and AVs will make Americans safer. After all, AVs don't speed, 
they don't drive drunk, and they don't drive distracted. Sadly, 
human drivers do all of those things, and the Department of 
Transportation has affirmed that human behavior is the 
overwhelming contributor to the 43,000 deaths on American roads 
that we suffered in 2021, which is an 11 percent increase over 
the year before.
    Our industry offers a solution to this tragic problem. 
Autonomous vehicles are safer than human drivers because they 
use advanced technology to develop a real-time three-
dimensional view that informs the automated driving system, 
which is the brain that drives the vehicle without the need for 
human input. AVs are capable of making quicker decisions with 
many more inputs than a human driver.
    Beyond improving safety, AVs have the potential to 
radically improve mobility for the elderly and disability 
communities. AVs are also starting to show how they can ease 
the supply chain crisis and deliver environmental benefits.
    Let's turn to the issue of AV adoption worldwide. American 
AV companies have the most advanced autonomous vehicles, and 
billions of dollars have been invested in innovative companies. 
But unfortunately, the United States is at severe risk of 
falling behind the rest of the world on AV public policy, which 
could deny Americans the technology's lifesaving and mobility 
benefits.
    One competitor is the Chinese Government, which has made AV 
development a top priority and highlighted AVs in its Made in 
China 2025 Strategic Initiative. These measures are producing 
autonomous companies with global aims. China's focus on 
advancement in this space should be alarming, as no American 
policymaker should want to see a world where China dominates 
the AV market. This scenario presents national security 
challenges and would also mean that the U.S. would not see much 
of the job creation from a prosperous AV industry.
    The United States cannot assume it will win the global AV 
race, thereby securing a leadership position in what many 
estimate will be a multitrillion-dollar market opportunity. For 
the United States to win the AV race, we must put in place a 
national policy framework focused on deployment and 
commercialization.
    The time is long past due, as efforts to enact a national 
AV framework have stalled in recent years. Twenty-two States 
have taken action to authorize deployment of autonomous 
vehicles on their roads. State-by-State action is not ideal, 
but it has become important for AV advancement in the absence 
of a Federal framework.
    I detail what a Federal policy framework should look like 
in my written testimony, which includes reforming the vehicle 
exemption process that is harming commercialization and 
completing agency rulemakings that remove barriers to 
deployment. This action would send a strong message that our 
country is determined to be the global leader on the next great 
technological change for our world.
    We are at a crossroads for the American AV industry, and 
frankly, we need your help. Make no mistake: The United States 
can lead the way on autonomous vehicles. But policymakers must 
prioritize AV policy, and do so with urgency.
    Thank you for the opportunity to testify today, and I look 
forward to any questions you may have.
    [The prepared statement of Mr. Farrah follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Bilirakis. Thank you, Mr. Farrah. Now we will recognize 
Mr. Jarsulic.
    You are recognized, sir, for 5 minutes.

                   STATEMENT OF MARC JARSULIC

    Mr. Jarsulic. Thank you, Chairman Bilirakis and Ranking 
Member Schakowsky, for the opportunity to testify at this 
important hearing.
    Today I will focus briefly on three points: the importance 
of a strong manufacturing sector for economic competitiveness 
and national security; the requirements for success in advanced 
manufacturing; and the need for effective industrial policy to 
support that success.
    First on manufacturing--the importance of manufacturing 
competitiveness. Manufacturing has historically been a source 
of productivity growth and high-wage employment. Much of 
manufacturing productivity growth is derived from innovation. 
It is the adoption of new technologies. The ability of many 
U.S. manufacturers to operate at the technical frontier has 
made U.S. manufactured goods competitive internationally. And 
until recently, the U.S. was the largest manufacturing 
exporter.
    While in the aggregate much of U.S. manufacturing 
productivity remains at the frontier, the competitive lead has 
been eroded. For example, in recent decades German 
manufacturing total factory productivity growth, which is 
commonly used as a measure of innovation, has exceeded that of 
the U.S.
    U.S. manufacturing has also been challenged by the rise of 
China as a competitor. China has overtaken the U.S. as the 
world's leading manufacturer--or leader in manufacturing value 
added, and leads the U.S. in manufacturing exports. In 
addition, the Chinese Government is devoting considerable 
resources to move ahead in crucial areas such as artificial 
intelligence, advanced robotics, energy-saving vehicles, 
biopharma.
    These challenges to U.S. leadership in advanced 
manufacturing create both economic and security risks. The 
reduction in domestic auto production over the past 2 years 
caused by semiconductor chip shortages illustrates the economic 
risk posed by disruptions to semiconductor supply chains. 
Security risks are illustrated by the Department of Defense's 
ongoing reliance on Asian producers of microprinted circuit 
boards, which are essential to many national defense electronic 
systems.
    Let me now talk briefly about the requirements for advanced 
manufacturing. Advanced manufacturing success has four basic 
elements: scientific discovery; the ability to translate new 
science into prototypes and new processes; standards and tests 
to control quality; and a well-trained workforce.
    Because private actors can't capture all the benefits of 
investing in these requirements--it is hard, for example, to 
keep scientific ideas secret, or to prevent well-trained 
workers from going elsewhere--the level of investment in each 
of these can be insufficient. When there are public goods 
obstacles of this kind, policy can help to overcome them.
    In the 1990s, for example, SEMATECH, an industry-government 
consortium, helped to develop semiconductor manufacturing 
processes and novel measuring techniques. These collaborations 
helped maintain industry competitiveness.
    Let me now say something about the need for effective 
industrial policy. With the major exceptions of support for 
basic scientific research and defense-related investments by 
DARPA and other agencies, domestic policy has not 
systematically focused on manufacturing in recent decades. 
Given the challenges facing U.S. industry, this neglect has not 
been benign.
    It is, therefore, encouraging that several pieces of 
legislation passed in the last Congress include important 
industrial policy measures. The bipartisan investment--the 
Bipartisan Infrastructure Act is a major step in restoring and 
upgrading basic public infrastructure. The CHIPS Act provides 
substantial new support for basic scientific research in 
strategic areas, public and private partnerships with industry, 
STEM education and workforce training, and standard-setting by 
NIST. The Inflation Reduction Act provides important incentives 
for private investment in clean energy and climate-related 
production over the next decade.
    Taken together, these three bills provide support for 
public goods and create private-sector incentives that will 
strengthen our manufacturing competitiveness and national 
security.
    In conclusion, it is reasonable to say that a competitive 
advanced manufacturing sector delivers important economic and 
security benefits. It is also reasonable to say that U.S. 
manufacturing is more likely to stay on a competitive frontier 
and to minimize economic and security risks if it is supported 
by effective industrial policy. These facts make industrial 
policy a crucial area for future action.
    Thank you for your attention. I would be happy to answer 
any questions you may have.
    [The prepared statement of Mr. Jarsulic follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Bilirakis. Thank you very much. I want to thank the 
witnesses for sticking to the 5 minutes--or under the 5 
minutes. Good timing.
    OK. Now we will recognize Ms. Sacks for her 5 minutes of 
testimony. Thank you.

                    STATEMENT OF SAMM SACKS

    Ms. Sacks. Chairman Bilirakis, Ranking Member Schakowsky, 
thank you for the opportunity to testify today. I am a senior 
fellow at Yale Law School's Paul Tsai China Center and at New 
America. I am also a senior fellow for China with the Cross 
Border Data Forum. And I advise U.S. corporate clients on 
China's technology policies. I have been an analyst and a 
linguist focused on Chinese data and cybersecurity policies for 
over a decade.
    While my expertise focuses on China, my view is that the 
most effective solution for strengthening U.S. competitiveness 
and leadership in governing emerging technologies requires an 
approach that is more comprehensive than our response to any 
single country.
    Passing Federal privacy law that addresses how all 
companies collect, transfer, and process data will enhance 
competition while also addressing harms regardless of where 
that risk originates. U.S. lawmakers have an opportunity here 
to both address transnational threats while also advancing a 
more secure, ethical, and democratic global internet in its own 
right.
    The Chinese leadership has embarked on an ambitious 
national data strategy with the goal of acquiring, collecting, 
and extracting value from large volumes of data. My written 
testimony provides more details on this issue. Beijing could 
use data collected and aggregated from overseas to build 
profiles of individuals with national security clearances or 
those with access to critical infrastructure, enabling the 
manipulation, coercion, and blackmail.
    Now, for most Americans this is probably not going to be a 
top concern. But I do think that the impact on economic 
competition and U.S. global leadership in emerging technologies 
may be far more reaching. Access to data collected abroad 
provides Chinese companies insights into population and 
consumer behavior, risk tolerance, and other preferences. This 
helps to strengthen the competitiveness of Chinese firms by 
enabling them to develop products and services that are better 
tailored to markets beyond China. And it enhances the ability 
of those firms to then compete with U.S. companies. I am 
talking about markets beyond the United States or China, as 
both Beijing and Washington increasingly look to decouple from 
one another's markets.
    The most significant step that U.S. lawmakers can take to 
strengthen U.S. global competitiveness, while also enhancing 
consumer privacy and addressing these pressing national 
security risks, is to pass comprehensive Federal privacy law. 
The goal is to address all harms related to data processing and 
to focus on securing the data itself, rather than a country of 
origin or any single company. Inaction by the United States 
means ceding leadership to Europe and to China in setting these 
global norms and standards.
    In addition, the United States should work with like-minded 
governments to develop a common set of standards that would 
allow data to flow. I would like to note the potential for the 
Global Cross Border Privacy Rules, a data transfer alliance 
that requires companies to certify to common standards for 
privacy protection while enabling cross-border transfers for 
those certified companies.
    What this does is it creates a coalition of allies that are 
sharing data with the United States. The ability of U.S. firms 
to maintain high rates of innovation depends on access to 
global markets, to international data sets, and to talent. If 
U.S. firms cannot send data out of countries in which they 
operate overseas, this directly impacts economic growth and 
innovation and AI that is core to building applications that 
work across a variety of demographics.
    I urge U.S. lawmakers to address national security risks 
and protect Americans' privacy by putting forward an 
affirmative vision for U.S. data governance. ADPPA marks an 
important step in this regard that merits further attention and 
discussion. Inaction will only make the United States less 
secure, less prosperous, less powerful, while allowing more 
space around the world for the CCP to set the rules and norms 
for technologies that will shape the future.
    Thank you.
    [The prepared statement of Ms. Sacks follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Bilirakis. I appreciate it very much. Next is Mr. Pugh.
    You are recognized for 5 minutes, sir. Thank you.

                  STATEMENT OF BRANDON J. PUGH

    Mr. Pugh. Chairman Bilirakis, Ranking Member Schakowsky, 
and members of the subcommittee, thank you for considering my 
testimony and for the invitation to speak at the hearing.
    Let me begin by thanking the subcommittee and the members 
of the entire Energy and Commerce Committee for the time 
dedicated to developing comprehensive Federal data privacy and 
security legislation last Congress.
    We focus on finding consensus on a comprehensive Federal 
data privacy and security law in the United States. One key 
aspect of our ongoing work is the intersection of privacy and 
security, including how national security and data security 
should be key drivers in passing a Federal law. Data privacy 
and security are vital to both consumers and industry. However, 
such a law is vital to national security. This often under-
appreciated aspect is the focus of my testimony. Given the 
topic of today's hearing, I will focus my analysis on China.
    In 2020, the China Task Force found that the Communist 
Chinese Party has a record of using official government 
resources and companies with CCP affiliations to compromise the 
data of people around the world, and that the United States and 
its allies need to join the effort to secure data from the CCP 
surveillance state and other malign entities.
    These concerns are especially prevalent in China itself, 
where advanced technology is used to track and monitor their 
citizens with few, if any, protections. I wish I could say that 
the concerns raised in 2020 are no longer valid. In fact, it is 
the opposite: They are worse.
    Data can reveal everything from your shopping habits to 
sensitive parts of your life, like your health and location. 
This, in the hands of the adversary or malicious actor, can 
have devastating consequences, especially for vulnerable 
populations. As one recent example in the Russia-Ukraine War, 
data can even be amassed to target disinformation campaigns or 
direct even physical violence toward those in conflict. This is 
certainly not an isolated capability, and something that the 
United States should worry about.
    It goes without saying that the United States' rivalry with 
China has taken on a digital nature. And China has been in a 
race with us in terms of technology for years, from artificial 
intelligence to military-specific technology. There are ways to 
help mitigate and reduce these concerns, even though China's 
collection and use of data will likely never end. A national 
data privacy and security law--much like the American Data 
Privacy and Protection Act, also known as ADPPA, last 
Congress--is the most logical next step. I will explore three 
main benefits, and how it could address the data collection 
crisis that my written comments expand on.
    First, acting on privacy legislation makes America more 
competitive. Countries around the world have acted. Even China 
has privacy laws. Unfortunately, those are more likely to be 
disingenuous attempts by the Chinese Government to appear 
concerned about privacy and security than genuine efforts to 
promote privacy. This is especially true given the continued 
surveillance abuses in China and the lack of security for even 
Chinese citizens' data.
    Nevertheless, the United States still lacks a comprehensive 
privacy law and is becoming an outlier, especially as a country 
that leads in trade and is looked to as a norm setter. This has 
led to companies both American and global adopting other 
frameworks as the default. The lack of a privacy law also does 
not obligate most foreign companies to follow specific privacy 
or security rules while operating in the United States. 
Congress has the opportunity to change this by enacting a law 
and clearly conveying the United States' position.
    Second, many aspects of ADPPA would help mitigate data 
privacy and security threats. For example, ADPPA contained data 
minimization principles, which means data should only be 
collected to the extent it is necessary or proportionate to 
provide a product or service. In addition to the value this 
adds to Americans individually in terms of privacy, it helps 
reduce the amount of data collected and available in the first 
place.
    Other beneficial provisions include a requirement for 
privacy policies to alert individuals that their data is 
transferred to select countries like China, and establishing 
strong data security standards. Preemption is also a beneficial 
aspect because it creates one standard which would allow for 
threats from adversaries and bad actors to be dealt with 
consistently.
    Third, data privacy and security legislation has broader 
impacts. TikTok has continued to raise concerns on a bipartisan 
basis. Several options exist to address TikTok. But regardless 
of the path chosen, it is only a partial solution.
    First, TikTok is just one application from one country. Not 
only are there risks from other adversarial countries, there 
are also other current and future applications that will pose 
risks.
    Second, many software and hardware products that pose risks 
like connected devices. While a Federal data privacy and 
security law might not be the full solution to those concerns, 
it would serve as a way to help reduce what information can be 
collected, who to share it with, require security, and provide 
for enforcement, should it be violated.
    Failing to act on Federal legislation would ignore the 
broader risks posed by data, and leave threats from China and 
other malicious actors unmitigated.
    The United States may lag behind other countries by not 
having a Federal data privacy and security law, but the 118th 
Congress has the opportunity to chart a path forward.
    Thank you, and I look forward to your questions.
    [The prepared statement of Mr. Pugh follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Bilirakis. Thank you very much for moving along nicely. 
I want to thank you for your testimony. I appreciate all the 
witnesses. We will now move to the question-and-answer portion 
of the hearing.
    I will begin the questioning and recognize myself for 5 
minutes. I would like to start with Mr. Farrah.
    Congrats again on your new role with AVIA. I hope the broad 
coalition you have assembled demonstrates the imperative of 
breaking the deadlock on this lifesaving technology.
    To me, the mobility benefits are very important. I was 
disappointed that last Congress my amendment was blocked from 
being considered that--it focused specifically on providing a 
path for AVs to serve those living with disabilities, such as 
the visually impaired.
    I also wanted to recognize John Pare--if you could raise 
your hand, sir, I would appreciate that--who is with us today 
from the National Federation of the Blind. Thank you. Welcome, 
sir.
    He and NFB have been tremendous advocates for the living--
those living with disabilities, as well as the great benefits 
that self-driving cars will have--a mode of mobility for the 
community. So very important. I can tell you that we need them 
in my congressional district, that is for sure.
    I would like to request unanimous consent to enter into the 
record the amendment and the letter from NFB in support of the 
amendment I have submitted.
    Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Bilirakis. Mr. Farrah, can you elaborate on the ability 
for China to turn the dials up on testing these technologies in 
contrast with what we have faced here in the United States?
    It seems like the CCP can just flip a switch, tell a 
province they are going to clear it for full AV testing, and 
race past the U.S., while we delay and argue over small 
political differences and regulatory approach. If you could, 
address that.
    And how can we instead show the world that America's 
approach is superior by unleashing American innovation, 
American innovators such as those flourishing in my home State 
of Florida and across the United States, please?
    Mr. Farrah. Mr. Bilirakis, thank you very much. Mr. 
Bilirakis, thank you very much for the question, and thank you 
very much for highlighting the role that John and the National 
Federation for the Blind play. I think that mobility for 
individuals that have physical disadvantages is a key aspect of 
what it is that our industry is trying to achieve. And I have 
been fortunate to work closely with John and his organization 
and hear him talk passionately about the level of independence 
that AVs would deliver to individuals within his organization.
    Relative to your question, sir, I think it is important to 
note here that we obviously have incredibly different systems 
from the People's Republic of China in the United States. And 
while I think it is important to look at China as an important 
example of a country that has aims to be a leader on autonomous 
vehicles, by no means do we need to replicate what it is that 
they are doing in their country.
    We, obviously, have been successful in being global 
innovation leaders for decades in the United States, and we 
have our own American brand of innovation. And so I think that 
you all shining a light on this problem is very important, but 
we also need to make sure we solve this in an American way.
    I think that one thing that I do elaborate on in my written 
testimony is the need for a Federal legislative framework. This 
is something where we are very eager to work with members of 
this committee to determine your priorities, but also to do 
things like address the exemption caps for novel vehicles, 
address issues with the FAST Act, address issues with the 
``make inoperative'' provision, also look at a lot of NHTSA 
rulemakings that are going on. And so these are things we are 
very eager to do, and thank you again for the leadership.
    Mr. Bilirakis. I appreciate it very much. Thank you. I want 
to get to Ms. Sacks.
    You have just heard my concern, of course, Ms. Sacks, about 
how China can decide the future of this technology, God forbid. 
Can you provide some more color and analysis for what happens 
when we fall behind on technology like this, and what it means 
to American jobs and supply chains?
    This seems to--you know, this--we don't want it to happen 
again, what happened with Huawei. So if you could expand on 
your testimony, we would appreciate it very much. And I guess 
you have got about 35 seconds.
    Ms. Sacks. America should lean into our own strengths and 
having open markets, free expression, and use those strengths 
to target investments, incentivize R&D in these areas, as well 
as the governance structures of those. And I am happy to 
provide more color in written form, because I recognize that we 
are close on time.
    Mr. Bilirakis. I now will go to Ms. Schakowsky for her 5 
minutes of testimony--excuse me--questions. But it could be 
testimony, if you like. It is your 5 minutes.
    Ms. Schakowsky. So I am so happy to hear the broad 
discussions about data privacy. And it has certainly helped us 
in the past with American competitiveness, globally. But for 
decades, America--while America did lead the world in 
technological innovation, we are now seeing that there are 
threats by our lack of the--of a comprehensive privacy piece of 
legislation.
    So, according to the first page of Ms. Sacks' written 
testimony, you had a passage about--let's see--about passing--
about the importance of passing a comprehensive Federal privacy 
legislation. And I would just like to--I think, Mr. Pugh, you 
commented on that.
    But I would also ask Mr. Farrah and Mr.--I am sorry, 
pronouncing your name--what do you feel about the--about 
privacy legislation and its importance in the conversation that 
we are having today?
    Mr. Farrah.
    Mr. Farrah. Thank you very much for the question. I think 
that privacy is, obviously, incredibly, incredibly important. 
Our industry does not have a position on the previous 
legislation, but insofar as this subcommittee is active in that 
regard this Congress, we would be eager to work with you and 
share our views.
    Ms. Schakowsky. As we move forward on autonomous vehicles, 
I think privacy is going to be a big issue.
    Yes, sir.
    Mr. Pugh. I would agree that a rational, comprehensive 
approach to privacy is important. Invasions of privacy have 
real significance for individuals and households in the U.S. I 
think that is one of the reasons why the FTC is currently 
considering rulemaking with respect to online privacy. And I 
think, as other testimonies make clear--and I think it is 
pretty well known--that differential access to data within our 
economy and compared, say, to the Chinese economy has 
competitive significance, as well. So I think legislation that 
addresses issues of privacy thoroughly and comprehensively 
could be incredibly valuable.
    Ms. Schakowsky. And I think on this subcommittee we are so 
proud that we were able to get almost unanimous support on both 
sides of the aisle to pass it out of committee. And now we just 
have to go the next step.
    Ms. Sacks, I wanted to ask you--and I think we--and I want 
to hear more from Mr. Pugh, but--on the issue of minimization, 
and why that is so important in your presentation.
    Ms. Sacks. Thank you. You know, I am not a privacy law 
expert, so I will defer to others on how specifically to think 
about that issue. But what I will say is that it is important 
to keep in mind a balance between two important areas.
    One is that the data collected and retained and not secured 
properly will be vulnerable to all bad actors, whether you are 
talking about a sophisticated state actor, a data broker, or 
those that are transferring it openly on the commercial market. 
You know, Equifax's security flaws were well documented, even 
though you had a sophisticated hack from China.
    At the same time, we also have to keep in mind the balance, 
right? Because as I mentioned in my testimony, AI depends on 
access to quality and quantity of data, and U.S. firms need 
access to that in order to innovate in AI. So certain things 
like a flashlight app, does it need to collect location data? I 
would say probably not. And so there need to be guardrails 
around--the purpose that that data is collected.
    In other areas, we need to make sure that we are not being 
overly restrictive because of the need for AI to use quality 
and quantity of data. So how do we strike that balance? I think 
that is an area that very much merits deeper discussion.
    Ms. Schakowsky. Thank you.
    Mr. Pugh, did you want to comment on that, on the 
minimization issue?
    Mr. Pugh. Yes, I would be happy to. So data minimization is 
one of the key reasons why ADPPA or whatever future bill it may 
be is essential to national security. We are essentially 
limiting the data that is available in the first place to--as 
we just heard, we don't want to make it too constrained that we 
don't have the data necessarily for technology, but making sure 
we only have the data that is necessary and proportionate, 
using the bill's language, is so critical, and it helps 
minimize what could potentially fall in the hands of the 
Chinese Government.
    Ms. Schakowsky. Mr. Pugh, your testimony mentioned reports 
of baby cameras spying on children. And I wondered if you would 
comment on that, there right now is no Federal law that would 
stop that, even China doing that. And, you know, I think those 
of us who are parents here and around the country would be very 
concerned about protecting that data. Did you want to comment 
on that?
    Mr. Pugh. I would be happy to. I think, to your example, 
Congresswoman, that is a--baby camera spying on babies is 
definitely a real possibility.
    We also see vacuum cleaners mapping out homes. I think 
those are real concerns that we need to address. And it really 
ties into the benefits of IoT, or Internet of Things, but also 
some of the risks.
    Mr. Bilirakis. Thank you.
    Ms. Schakowsky. My time is up, and I thank you.
    Mr. Bilirakis. I appreciate it very much. Now I will 
recognize the chair of the full committee, Mrs. Rodgers, for 
her 5 minutes.
    Mrs. Rodgers. Thank you, Mr. Chairman.
    Last year Congress passed legislation to encourage the 
building of semiconductor chips in the United States. I believe 
Mr. Pallone references this legislation. And without a doubt, 
it is critical that we are manufacturing semiconductor chips in 
the United States.
    I just wanted to let people know that I raised with 
Secretary Raimondo, legislators, and manufacturers themselves 
that we should be pairing permitting reform with any Federal 
subsidies to semiconductor manufacturers. Unfortunately, that 
seemed to fall deaf--on deaf ears. They--really interested in 
the money.
    So now we have manufacturers that are coming to us looking 
for exemptions from NEPA because the Federal dollars are 
triggering long and erroneous environmental reviews for them. 
Now, I wish that they would have been open to those concerns 
before the legislation passed. So now the largest manufacturers 
may receive exemptions from the President. I am not so sure 
about the startups or others across this Nation, and it just 
highlights the importance.
    And I wanted to add to the record without--add to the 
record an article on Intel's horrible quarter revealed an 
inventory glut and underused factories.
    Mr. Bilirakis. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mrs. Rodgers. So, you know, we--I agree that the NEPA 
process needs serious reforms, and I hope that the 
Semiconductor Manufacturers Administration and members of this 
committee will work with us on bringing commonsense reforms to 
NEPA so that we can get America back into the business of 
building things.
    The number one barrier to building anything in the United 
States is the permitting processes. It is the number one 
barrier to manufacturing, building, doing anything in the 
United States. So we are going to go to work on that too.
    Back to privacy. Back to privacy and the importance of a 
national data security law. And as has been referenced, we 
passed the bill out of committee last year, with ADPPA. I 
believe this is foundational. This is foundational for our 
global leadership and securing personal information for every 
American, especially from foreign threats.
    So to Ms. Sacks, we know that China has stolen our data, 
and we know that they are not going to stop. So how do you--
would you speak to ADPPA in protecting us from future threats, 
while also promoting new technologies?
    Ms. Sacks. The goal that I think this bill achieves is that 
it both manages to address the transnational threat, a range of 
bad actors, but also protects consumers and secures that data 
here at home.
    You know, I have--traditionally, I think that it is not a 
good idea to look at domestic issues always through a China/
national-security-threat lens. And I think skeptics might raise 
that question. This is a position, however, that I have long 
advocated, which is if we want to both address bad foreign 
actors and better enhance privacy protections at home, this is 
the baseline that we need to do it.
    And in terms of fostering innovation, as I have mentioned, 
U.S. firms need access to global data flows. But how do we do 
that in a safe, secure, and ethical way? We establish high 
baselines of--around how the data is collected and transferred 
and retained. And that is the balance that I think U.S. Federal 
privacy law needs to strike.
    Mrs. Rodgers. Thank you. I wanted to--I referenced the 
legislation, the America COMPETES Act, that I had worked on in 
the 116th Congress, and it really was asking--requiring the 
Department of Commerce to drill down on emerging technologies 
and give us some recommendations on how we make sure that we 
are leading on AI, as well as others. Would you--we are still 
waiting on those recommendations, but would you just speak to 
what you believe we need to be doing to safeguard our data, 
while finding a balance to lead on AI?
    Ms. Sacks. You know, I think here we play offense and we 
play defense.
    From an offensive perspective, we probably should not think 
about any single country, but how do we invest and incentivize 
innovation at home, with a focus on digital infrastructure, 
fiber optic networks? How do we create better space for U.S. 
firms to compete overseas?
    And cooperation with allies and partners. The EU-U.S. Tech 
and Trade Council is one area. Working with Japan is another.
    I think it is also important to take what has been referred 
to as a small-yard/high-fence approach. Let's be selective 
about what we are protecting. Not everything is a national 
security issue, and in fact, with AI sometimes there is a 
symbiotic relationship, and it is hard to prevent code from 
crossing borders. So let's be smart, and use a risk-based 
approach.
    Mrs. Rodgers. Mr. Farrah, I understand you worked for the 
National Venture Capital Association. I would love to talk to 
you further and hear more about how you believe the regulatory 
framework is impacting our market leadership. So anyway, but I 
ran out of time.
    I will yield back.
    Mr. Bilirakis. I thank the chair, and I will recognize the 
ranking member of the full committee, Mr. Pallone, for 5 
minutes.
    Mr. Pallone. Thank you, Chairman. I want to echo the 
sentiments of Ranking Member Schakowsky about the need to enact 
the American Data Privacy and Protection Act, which, of course, 
is bipartisan with Chairwoman Rodgers and myself.
    But I also--I am concerned about, as I said in my opening, 
what the Republican leadership is planning on with regard to 
the debt ceiling. You know, they have threatened to leverage 
the debt limit to enact crippling budget cuts to bedrock 
American programs.
    Experts have warned that defaulting on our Nation's debt 
obligations--a debt that was amassed during both Democratic and 
Republican Congresses--could wreak havoc on our financial 
markets, potentially causing the stock market to plummet and 
capital markets to freeze.
    So let me start with Mr. Jarsulic.
    How would defaulting on our national debt affect American 
competitiveness?
    Mr. Jarsulic. So, I think that it is pretty well recognized 
on the basis of the previous incidents in 2011, 2013, where we 
came close to hit a debt limit, that the economic consequences 
can be relatively severe. I think we can expect upward spikes 
in Treasury rates if the default process went on long enough. 
There would be a translation of that, those interest rate 
increases, into mortgages, into consumer credit cost, because 
those interest rates are based off Treasury rates.
    I think we could expect equity market declines. I think we 
can expect hits to consumer confidence, all of which--demand, 
slow the economy at a moment when people have concerns about 
tipping into a recession. That creates a big risk.
    In the slightly longer term, repeated run-ups to debt 
limits and potential of default has already had an effect on 
the way that the world views Treasury securities. S&P 
downgraded us from the highest possible rating for sovereign 
debt, and that downgrade has persisted. If we go through 
another incident--instance where we actually hit the limit, I 
think that there is a possibility that, in the long term, 
foreign investors in Treasury securities will re-evaluate the 
risk, and they will demand more of a risk premium in order to 
[inaudible].
    So I think that the aggregate demand effects, the long-term 
cost effects of a default, are really quite significant.
    Mr. Pallone. Well, thank you. Let me ask Mr. Farrah. Your 
testimony states that we must have a strong capital market to 
``continue to lead on AV development and deployment.'' Now, how 
would defaulting on a national debt and destabilizing the 
financial sector affect your members' ability to develop and 
deploy AVs?
    Mr. Farrah. Ranking Member Pallone, thank you very much for 
the question.
    As I write, the capital markets are incredibly important 
because we have both innovative startup companies that are 
trying to deploy autonomous technology. We also have larger 
companies with experience scaling in the transportation sector 
that are financing a lot of the research that I mentioned and 
testing that is going on. And so certainly, this is something 
that is very important to the health of our industry so that we 
can bring the promise of AVs to your constituents.
    That said, we do not have a position as an industry on the 
default that you mentioned.
    Mr. Pallone. But your testimony also provides several 
recommendations from DOT that could--that they could adopt to 
support the deployment of AVs. Would the DOT be better 
positioned to carry out these recommendations if their budget 
is dramatically cut?
    Mr. Farrah. The Department of Transportation is a very 
important partner to us, obviously. That is something that we 
very much value--the collaboration. We have recommendations 
that we have put forward to DOT in terms of doing things like 
updating the Federal Motor Vehicle Safety Standards, and that 
is an ongoing conversation.
    In terms of overall funding levels, that is something--we, 
obviously, defer to Congress and your judgment as to what those 
funding levels might be.
    Mr. Pallone. All right.
    And, Mr. Jarsulic, how would stringent budget cuts affect 
our Nation's ability to compete?
    Mr. Jarsulic. So really large budget cuts probably will 
affect the ability of the Federal Government to provide things 
that are important for the normal functioning of the economy. 
The Federal expenditure supports healthcare, supports 
infrastructure, supports scientific research and development. 
And if those things are compromised, the functioning of the 
economy is clearly going to be affected.
    In addition, large cuts in expenditures will create an 
immediate shock to demand, and that can have important 
employment and--effects, as well.
    Mr. Pallone. Thank you.
    Thank you, Mr. Chairman.
    Mr. Walberg [presiding]. I thank the ranking member, and 
now I recognize the gentleman from Indiana, Mr. Bucshon.
    Mr. Bucshon. Thank you, Mr. Chairman. I want to 
congratulate Mr. Jarsulic for sticking to his talking points on 
the debt ceiling to help out Chairman Pallone on that 
narrative. But the reality is we have never defaulted, and it 
always gets raised.
    The other thing I want to point out is that the CHIPS Act 
was included in a larger bill. We all know this, right? It had 
many, many policies the Republicans just couldn't support. And, 
you know, it is disingenuous to say we didn't support the 
concept. Look, I understand the politics, and this probably 
won't be the last time we hear that narrative as it goes along 
this year.
    That said, thanks, Chairman Bilirakis, for calling today's 
important hearing. Ensuring American businesses and innovators 
can keep our competitive edge against China is an extremely 
important issue, and we must facilitate U.S. leadership in new 
technologies and ideas.
    One industry in which the U.S. has been a leader but is in 
danger of being passed internationally, particularly by China, 
is that of autonomous vehicles. I strongly believe in the 
potential of this technology. Last Congress, I co-led 
legislation to study crash avoidance systems to help make AVs 
safer for all road users, and I led a letter asking NHTSA to 
update safety standards for AVs, and continue to advocate--
continue advocating for a national regulatory framework for 
AVs.
    So, Ms. Sacks, I have a question for you. I foresee a world 
in which the Federal Government may eventually procure AVs for 
certain types of vehicle fleets, and want to be certain that, 
if that happens, those vehicle fleets are protected from 
Chinese data collection and storage. Do you have any 
recommendations on how we could prevent technological 
vulnerabilities in such AVs or in AVs in general?
    Ms. Sacks. I will defer to my colleague, who is an AV 
expert, but I can speak to the broader question of how we 
protect the broader tech stack, and I think this is an area 
that is bigger than China, right? There are best practices for 
accessing--for assuring hardware security in products, 
regardless of whether you are talking about a counterfeit, 
whether you are talking about a component that is made in 
China. And the same goes for building cybersecurity at the 
software level, where the U.S. Government does have standards 
around that.
    So again, I would encourage the committee to think about 
this in--bigger than any single country, and we need to also 
invest and incentivize it ourselves, and play to our own 
strengths. But I defer to my AV expert colleague for specific--
--
    Mr. Bucshon. Yes, I just want to agree with you real 
quickly--and then we will go on to Mr. Farrah--about not a 
single-country strategy. We want America to be competitive 
against our competitors, some of which don't like us and many 
of which do.
    So, Mr. Farrah, do you want to comment on the AV--the 
cybersecurity and hardware security in AVs?
    Mr. Farrah. I would like to. But first, sir, I would like 
to thank you for your leadership on autonomous vehicles in 
previous Congresses, and look forward to the conversation 
continuing.
    I think, from our perspective, cybersecurity is very 
important. Obviously, our industry is very motivated to make 
sure that the vehicles are kept safe, that those riding in the 
vehicles are also kept safe.
    And so this is something where there are obviously cyber 
threats out there. We support a risk-based approach where we 
can take a comprehensive view and look at how it is that we can 
best protect American equities. This is something where, 
obviously, the AV industry would like to be at the table on 
that. But at the same time, we are not different in many 
respects. I think there are many in the automotive sector, the 
technology sector that need to be at the table so we can kind 
of get a comprehensive approach.
    Mr. Bucshon. Yes, and I would say in the AV space, you 
know, it is not just foreign actors, that, you know, 
cybersecurity is critically important because if you just have 
somebody stand on the side of the road and--hacks into 
someone's--an AV and diverts it off the road, you know, that is 
a problem. So this is--you know, this is an issue that we will 
have to address.
    Another possible area where I have some concern is the 
CCP's improperly accessing America's data through the CCP's new 
Blockchain-based Service Network, or BSN. BSN has been 
advertised as a one-stop shop blockchain foundation which 
others can easily build on top of. While the last few years 
have shown how prevalent scams and frauds are in NFTs and other 
blockchain applications, something our committee must work to 
address, we cannot allow the CCP or other actors or anyone else 
to corrupt America's infrastructure once again.
    So Ms. Sacks, you have written a lot about protecting 
America's privacy information from the CCP. What dangers do you 
see in adopting a CCC-created foundation for blockchains? And 
can we secure America's information if we allow other actors' 
components into our tech stack?
    And we only have a few seconds, so----
    Ms. Sacks. I would be happy to submit some more----
    Mr. Bucshon. That would be great. Thank you very much.
    Mr. Walberg. I thank the gentleman for yielding, and now I 
recognize the gentlelady from Florida, Representative Castor.
    Ms. Castor. Thank you, Mr. Chairman. And thanks to our 
witnesses for your testimony today, and welcome to the new 
members.
    And I do want to say at the outset here at our first 
hearing it is especially important for this subcommittee to get 
to work on comprehensive privacy protections sooner rather than 
later. And I hope this will include the long-overdue 
protections for children and teens online. Their safety is at 
risk. They are being constantly surveilled and targeted with 
ads. It is weighing on them, in addition to all of the 
fundamental security issues that put them at risk.
    But I want to talk a little bit about AVs--EVs, because we 
are also suffering the costly impacts of the climate crisis. It 
is--those costs are weighing on our neighbors back home, on 
farmers, on the Federal budget as extreme events continue to 
escalate.
    But it also provides an important opportunity. The race for 
cleaner, cheaper energy provides opportunities for American 
workers and American businesses. The transportation sector is 
the largest source of greenhouse gas pollution in the United 
States.
    But--and I know Representative Dingell will agree with me 
that electric cars and trucks offer an innovative solution. We 
want American companies and workers to win the race for the 
future, but we are behind right now. That is one of the reasons 
that we devoted so much attention to--in the Inflation 
Reduction Act--new incentives for American-built cars and 
trucks, electric vehicles, and the Bipartisan Infrastructure 
Law. We dedicated about $7.5 billion for electric vehicle 
chargers.
    So, Mr. Farrah, how do you see that investment going so far 
for the electric vehicle charging across America, and what are 
your hopes in that area?
    Mr. Farrah. Thank you very much for the question. I would 
just note that Florida has been a leader nationwide on AV 
deployment, and that is something I would love to discuss in 
greater detail with you.
    Relevant to the Inflation Reduction Act, that is something 
that--our organization was not involved in that legislation, 
does not have a position specifically on the bill.
    I will say, however, that if you look out at the landscape 
of autonomous vehicles, many of them are electric vehicles, and 
that is something that will hopefully lead to a generational 
shift towards electric vehicles. We think we can be of 
assistance in that regard.
    Ms. Castor. Are you plugged in to the charging 
infrastructure, the planning that is going on at DOT and at the 
State level?
    Mr. Farrah. We can give you an industrywide view of that, 
to what degree we are plugged in to that. And that is something 
that I think we value sharing the perspective.
    But the final point I would just make is that, even for 
those AVs that are not electric vehicles, you also have a 
number of environmental benefits in terms of smoother driving, 
less idling, the ability to operate at night, and things of 
that sort.
    Ms. Castor. Well, we have some challenges, because in 2018 
Chinese production accounted for more than half of all lithium 
battery cell manufacturing capacity and nearly half of all 
global EV sales, while the United States, we were--EV sales are 
just really starting to take off.
    Congressional Democrats and the Biden administration have 
really focused on this. And the Inflation Reduction Act is 
going to provide that relief and those incentives to consumers, 
and then to the manufacturers, and to the workers.
    Mr. Jarsulic, why is it important for the United States to 
lead the world when it comes to electric vehicles' design, 
production, and deployment?
    Mr. Jarsulic. You know, I think it is pretty clear that 
because of the risk created by carbon emissions, the world is 
going to move away from internal combustion engines in autos, 
trucks, busses. And if our auto companies are going to remain 
competitive, they are going to have to produce EVs.
    There's a lot of employment and output associated with 
this. The auto industry comprises about 3 percent of GDP. And 
if the U.S. successfully transitions to the manufacturing of 
EVs, that kind of employment and income doesn't vanish.
    I think it is also important to remember that new 
techniques are being developed in the production of EVs. And if 
you want to learn techniques in manufacturing, you have to 
engage in learning by doing. So the sooner we can make the 
transition to producing EVs at scale, the sooner our 
manufacturers can join in that process of learning by doing, 
and push the frontier forward, and improve their competitive 
condition.
    Ms. Castor. We want to win the future. We want to build 
those EVs in America and supply them to the world, and at the 
same time create millions of good-paying jobs all across the 
supply chain. So thank you.
    I will yield back.
    Mr. Walberg. I thank the gentlelady, and I certainly agree. 
We want to lead the world.
    I also want to make sure that it is clear that, as our 
chair indicated, Republicans on this committee are fully 
committed to passing a comprehensive Federal privacy and data 
security standard. We are committed to that.
    Let me also state before I recognize myself for my 5 
minutes that--just to make it clear, and as respectfully as I 
can--Democrats are the only ones anywhere talking about cuts to 
Social Security or Medicare or defaulting on the debt. That is 
clear, what has been stated.
    Let me go to my 5 minutes of questioning, and thank you to 
the panel for being here.
    China is actively using U.S. customer data to better 
develop their artificial intelligence, whether through mining 
and scraping purchasing data or third parties, or through apps 
like TikTok sharing information with the Chinese Communist 
Party.
    Mr. Pugh, at a time when Republicans and Democrats agree 
that AI is a national security economic imperative, shouldn't 
we be more cognizant of the amount of data we are making 
available to our adversaries?
    And secondly, what steps can we take to prevent U.S. data 
from being accessed by the CCP?
    Mr. Pugh. Well, thank you, Congressman. So data in itself 
is essential. We need it for our economy and we need it for 
innovation.
    To your point, the issue is when it falls in the hands of 
adversary nations and malicious actors, which we see happening 
on a second-by-second basis with China, unfortunately. And that 
is something that I really implore this Congress to address. 
And I think the best way to do that is by acting on a 
comprehensive data privacy and security law today.
    Why it would benefit consumers and industry? The security 
nexus cannot be under--you know, overstated. And what I mean by 
that is just one aspect. This contains data security 
provisions. It would require data to be safeguarded. And if 
that actor chose not to follow that, then there could be 
enforcement as a result.
    Mr. Walberg. OK. Thank you.
    Michigan, my State, is the Motor State. Representative 
Dingell and I would certainly agree strongly on that. It is the 
Motor State, and I want it to stay that way--and expand, in 
fact. But China continues to push forward on autonomous vehicle 
development and deployment. I think a roadblock to U.S. 
leadership in this space is consumer comfort, consumer comfort 
with the whole issue.
    I myself have expressed concerns about how autonomous 
vehicles handle the safety of pedestrians, motorcycles. I am a 
motorcyclist. I am very concerned that we do this right, and 
more.
    Mr. Farrah, I noticed you didn't use ``self-driving,'' and 
I thank you. I thank you because there is an auto company, at 
least one, that has used that, sold cars on it, and they don't 
self-drive. Driver-assisted, all of that, we are there, and it 
is working well in most cases. And I think we ought to hold off 
on using that term, ``self driving,'' for a while until we get 
it right.
    How are your members approaching public education about the 
safety of autonomous vehicles so that the United States can 
continue to lead on this important technology?
    Mr. Farrah. Thank you very much, Congressman. I appreciate 
the question. And thank you for your previous leadership on the 
SELF DRIVE Act and the dialogue we have had around some of your 
safety concerns.
    Mr. Walberg. And I hated that title.
    Mr. Farrah. I should note at the outset, though, that we 
acknowledge that public consideration of autonomous vehicles is 
very important, and our industry is doing a considerable amount 
to get out and talk to the American public because your 
constituents are going to increasingly be seeing these vehicles 
on the roads, whether they are delivering groceries, taking 
them to destinations, trucks driving on the highway. It is 
important that people understand why these are safer than the 
alternative. So that is something that we take seriously. We 
have a number of initiatives that we can talk about in further 
detail.
    I think one issue that I want to address, though, that you 
got at here is a lot of the confusion around driver-assist 
technology, as compared to autonomous vehicles.
    Mr. Walberg. Autonomous.
    Mr. Farrah. That is something that is absolutely critical, 
that people who are in the vehicle understand what they need to 
be doing. If they are required to perform any aspect of the 
driving task, they are in a driver-assist vehicle.
    Secretary Buttigieg said it very clearly: ``If you can buy 
it in the showroom today, it is not an autonomous vehicle.'' 
That is important. Our industry is very clear in the language 
that we use, and we appreciate your attention.
    Mr. Walberg. And it will give much more comfort as we keep 
that clear. So thank you.
    Today we have smart phones, smart light bulbs, 
refrigerators, everything. Though these sensors are working to 
a great degree, we still have challenges. While the United 
States has been taking steps to remove Huawei and secure our 
networks that are involved with many of these things, Tuya has 
slid under the radar.
    I have an article by Klon Kitchen and Hal Brands which 
outlines the dangers Tuya poses that I would like unanimous 
consent to enter into the record.
    Hearing none, it will be entered.
    [The information appears at the conclusion of the hearing.]
    Mr. Walberg. Mr. Pugh, how can we secure our network if the 
smart devices we rely on are compromised by design?
    Mr. Pugh. So, Congressman, you are right. This is a 
critical issue. We rely on IoT devices on a daily basis, and 
the number of devices by 2030 are supposed to be 29-plus 
billion.
    The issue is we don't have a baseline for our IoT devices. 
So that is a great starting point, seeing--is there a baseline 
that these device manufacturers should be meeting?
    Secondly, making more of them in America. I have more faith 
in American companies that do privacy- and security-enhancing 
things than I do with a CCP-backed company.
    Mr. Walberg. Thank you. I yield back.
    I recognize now my good friend and colleague from Michigan, 
Representative Dingell.
    Mrs. Dingell. Thank you, Mr. Chairman. As my Democratic 
colleagues have pointed out today, I do believe that we made 
some steps in the last--Democrats made some progress in 
enacting serious and significant legislation to strengthen our 
competitive edge on the world stage. But we all know that there 
is so much work we need to do to solidify our long-term 
economic might and define our national competitive advantage 
with countries like China.
    I associate myself with many of the comments that have been 
already made, and I am very grateful to hear so many people 
talk about autonomous vehicles and the need to do something, 
because we don't always hear that.
    Electric vehicles are also critical in all of this and 
further mitigating risks from U.S. supply chains in bringing 
them back, and I have 5 minutes and could talk for 5 hours or 
more. But let me move to AVs quickly.
    Cutting-edge technologies like autonomous vehicles hold the 
promise of improving safety, expanding mobility, and 
strengthening our economy. At the moment--and it is only at the 
moment, as you and I know--we hold a competitive edge in 
developing and deploying AVs. According to KPMG, the United 
States ranks higher in preparedness for AVs than Japan, 
Germany, and China.
    But here is the reality: We have got to preserve and expand 
this advantage by ensuring that the United States, not 
countries like China, write the rules of the road for this new 
transformative technology. That is why I have spent years 
collaborating with my colleagues and the stakeholders to 
establish that national framework. I know that, under the 
Republican leadership with my--we are going to get it done this 
year, or this Congress. I guess I should be realistic.
    But here is our truth: Autonomous vehicles are here, and 
every day we do not have a Federal framework in place for the 
safe deployment of AVs, we are risking falling behind the rest 
of the world. China gets what is at stake. If the United States 
is going to stay at the forefront of innovation in AV 
technology, keep those jobs here in this country, not cede 
leadership to any other country. We have got to get motivated 
and act.
    So, Mr. Farrah, how can lawmakers and regulators lay the 
foundation for the continued development and deployment of AV 
technology to ensure the future of this technology stays in the 
United States?
    Mr. Farrah. Representative Dingell, thank you very much. 
And I share your passion for AVs, and specifically around the 
safety and mobility benefits that we have spoken about in the 
past. And so this is something that I think--we are talking 
about, literally transforming how it is people and goods move 
around this world, and that is tremendous.
    And so we are very hopeful to work with this subcommittee 
this Congress, hopefully this year, to pass AV legislation that 
would set up that framework. There is also, frankly, work that 
needs to be done at the agencies, as well, in terms of updating 
a system that is many decades old.
    In terms of legislation, there's a number of issues that I 
detail in my written testimony. A few of them that are worth 
flagging here is that we have an outdated process as it relates 
to the exemptions process for so-called novel vehicles, where 
you--this needs to be updated. This is something that the 
committee has addressed before on a bipartisan basis.
    We also need to make sure that certain rulemakings are 
ultimately executed on and finished.
    And so these are things where we are very committed to 
doing this, and certainly appreciate the opportunity to work 
with you and your team.
    Mrs. Dingell. So I have a minute and 30, and I want to get 
to supply chain. But could you very quickly tell the committee 
how the absence of the Federal AV framework affected the 
development--is affecting every single day the development, and 
putting them on the road, of autonomous vehicles?
    Mr. Farrah. Absolutely. I would make two quick points.
    I think the first one is that--and I mentioned before the 
exemptions process. There are U.S. companies that want to be 
manufacturing these vehicles. They want to be deploying these 
vehicles. But right now they are limited under this exemptions 
for novel vehicles to 2,500 vehicles per year for a maximum of 
2 years. That is the wrong message for the Federal Government 
to be sending to companies that want to be producing these 
companies and ultimately benefiting the United States.
    So that is something that I think needs to be addressed, 
and it needs to be addressed very soon. And so that is 
something that we can address in legislation, and I appreciate 
your help.
    Mrs. Dingell. Thank you.
    Mr. Chairman, I am down to 33 seconds, sir. I am going to 
want to put some questions in the record.
    But I do want to focus on strengthening the U.S. supply 
chains. I think most people don't realize how vulnerable we 
left ourselves from both an economic and national security 
issue until the COVID-19 public health crisis hit. And we saw 
that the private sector alone cannot identify, monitor, and 
address supply chain vulnerabilities.
    You know, we are so dependent upon China for the electric 
vehicles that you are talking about. Most people do not 
understand. Lithium has gone up $1,500 in the last 6 months, 
and a battery--EVs are--I mean, we got to develop our supply 
here. We have got to work on that.
    I am a proud author of the Supply Chain Security and 
Resilience Act. I am going to ask you, Mr. Jarsulic, for the 
record--and some other questions--what are some best practices 
to help us improve our Nation's supply chain resilience.
    I am over. You are going to have to write the answers to 
this, what can--there's just so many issues that all of you can 
answer.
    This is the future of our country. Thank you. I yield back 
the seconds I don't have.
    Mr. Walberg. I thank the gentlelady.
    [Audio malfunction.]
    Mr. Walberg. This proves that--I don't know if somebody 
else has a--yes, that would work better.
    So thank you for yielding back. Now I recognize the 
gentleman from South Carolina.
    Mr. Duncan. Thank you. Thank you, Mr. Chairman. I wonder if 
Michigan is the Mitten State or the Motor State. I am confused 
on that, but----
    Mr. Walberg. It is both.
    Mr. Duncan. OK. I want to applaud what is going on in South 
Carolina with BMW, Volvo, and Mercedes, and what they are doing 
with the EVs, along with other vehicle manufacturing.
    [Audio malfunction.]
    Mr. Duncan. And I apologize for this sound.
    But I want to remind my colleagues on the other side of the 
aisle that we are $31 trillion in debt, and we are spending 
money that is borrowed. I say that because what is the role of 
government in subsidizing our funding these type of things? I 
point to government spending on Cash for Clunkers. It was a 
failed program at the initial--on the onset, the Obamacare 
rollout, the problems that it had.
    I believe in innovation at the private-sector level. I 
think myself that we have more machinery of government than is 
necessary, too many parasites living on the labor of the 
industrious.
    A government big enough to supply everything you need is 
big enough to take everything you have. The course of history 
shows that, as the government grows, liberty decreases. That 
was a Founding Father, Thomas Jefferson, that quoted that.
    Liberty is the liberty to innovate and invent, and 
capitalize off the profits of that innovation.
    I am fascinated with AVs. I think the appropriate initial 
step is what I see happening in the trucking industry: point-
to-point delivery, oftimes at night, with commodities, 
distribution center to distribution center, maybe local 
carriers. I think that is a way we can prove that AV works, AV 
is safe, and I would love to see the innovation within the 
trucking industry as the future of AVs before we entrust that 
to the populace to get in an AV that maybe is driverless--I 
know we are not using that term--in the future. But I do see 
that as the wave of the future, both in trucking and passenger 
vehicles.
    So I want to shift gears a little bit, and Ms. Sacks, while 
the U.S. banned Huawei from building 5G infrastructure, Chinese 
state-owned automotive companies like AutoX and Pony.ai 
continue to operate pilot programs in the United States with 
limited oversight. What types of information these companies 
collect that could pose a national security risk if shared with 
the foreign adversaries that could exploit such information?
    Ms. Sacks. So AV companies collect, like, many different 
kinds of data. And Mr. Farrah might be able to comment in more 
depth on what that is. I am not familiar with these specific 
companies.
    I can say, more broadly, from understanding, you know, how 
the industry works from a data security standpoint, I think 
that there is not only potentially information about the 
infrastructure, the mapping, but I would also sort of push back 
and say, you know, are they collecting information about 
mapping and streets that is any different from what you might 
find on Google Maps or that is available openly?
    So there are different kinds of data. And so one question 
might be, what kinds of data are they collecting and what are 
the--who has access to it? And I would ask that not just for 
these particular companies of Chinese ownership but any AV 
company more broadly, and what are the data security practices?
    You know, the point that I have made in this hearing 
repeatedly is that we should focus on--certain kinds of data 
have different levels of sensitivity. Who has access to it, how 
is that being secured, rather than necessarily looking at a 
sort of country of origin or nationality when that data might 
be openly available on the commercial market in other forms.
    Mr. Duncan. Yes, I think that is strong.
    I am not concerned about this, I am just stating this for 
the record: Uber already has--if I use an Uber to go to 
Walmart, they know how many times I went to Walmart or that I 
ate fast food. Now, what--who collects that information, how it 
is shared with others about my traveling habits, my shopping 
habits, my eating habits? And I think that is a concern of many 
Americans, what AVs will collect as you travel around.
    Mr. Farrah, as a follow-up to that question, it has become 
abundantly clear that Chinese-owned companies are testing the 
U.S. and sending information they collect back home. However, 
if an American company were to test their AVs in China, they 
would not be able to send that information back home. Is that 
correct?
    Mr. Farrah. Thank you very much for the question.
    First of all, I note--and thank you for the appreciation 
for AV trucking, which is a very exciting trend line in our 
industry.
    I think that market access overseas is a big concern, 
generally speaking, for our industry. We want to make sure 
that, as these companies scale and grow, that they have access 
to those markets. And so my understanding is that is a huge 
consideration in a place like China, where we don't have that 
same level of reciprocity, and I would certainly be happy to 
dialogue with you and your team further about that.
    Mr. Duncan. Absolutely. There's going to be a lot of 
hearings on this type stuff, and I look forward to that 
conversation.
    And with that I yield back.
    Mr. Bilirakis [presiding]. Thank you. Now the Chair 
recognizes Representative Blunt Rochester for her 5 minutes.
    Ms. Blunt Rochester. Thank you, Mr. Chairman, and 
congratulations, as well. And thank you also to Representative 
Kelly and to the witnesses.
    I agree with my Republican colleagues that U.S. economic 
competition is the issue of the moment. Businesses and working 
people up and down my State of Delaware report severe supply 
chain issues that hamper their businesses and livelihoods. U.S. 
manufacturing has declined in recent decades, and with it so 
has the resilience of critical supply chains. My colleagues 
across the aisle are right: U.S. leadership over standards and 
regulation are important.
    But U.S. leadership is just a means, not an end in itself. 
Ultimately, American families are counting on us to improve 
their economic opportunities. Talk alone will not create good-
paying jobs that American families need. This moment demands 
all of us come together in a comprehensive, credible, and 
resourced strategy.
    This week my colleagues and I will meet the moment by 
introducing comprehensive legislation to build resilient supply 
chains that ensure we can compete with China, Russia, or any 
adversary that intends to undermine our economic and national 
security.
    I hope my Republican and Democratic colleagues will join me 
on these bills. These measures invest in the central pillar of 
the U.S. competitiveness by investing in critical supply 
chains. They are also endorsed by over 150 businesses and trade 
associations, including the Information Technology Industry 
Council, Consumer Brands Association, National Association of 
Manufacturers, and the Motor Equipment Manufacturers 
Association.
    Mr. Chairman, I ask unanimous consent to insert a letter 
and its appendix into the record.
    Mr. Bilirakis. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Ms. Blunt Rochester. This is a transformational policy. And 
as we saw with ADPPA and with the CHIPS and Science Act, this 
committee knows transformational policy is necessary to solve 
the issues hindering economic growth.
    Mr. Jarsulic, to reverse the declines in U.S. 
manufacturing, should we take a whole-of-government and whole-
of-economy approach and incentivize reshoring of manufacturing? 
And does that include investments in production practices and 
workforce programs?
    Mr. Jarsulic. As I indicated in my testimony, 
competitiveness in manufacturing really is a source of 
productivity growth, and productivity growth is necessary for 
growth in wages and profits. We really need that.
    And therefore, what you can do--what we can do through 
policy to strengthen manufacturing and strengthen its 
competitiveness has real economic importance.
    I think that the elements that are in the three acts I 
talked about, which are designed to overcome obstacles to 
private investment and to productivity growth in important 
areas ranging from semiconductors to biopharma, are going to 
make an enormous contribution. But I think there is much more 
that can be done.
    People who look at advanced manufacturing recognize that, 
in addition to large corporations who are making investments, 
those corporations need to have the support of clusters of 
small and medium-sized enterprises who provide inputs and 
services to those corporations. And so work that can be done to 
bring those SMEs to the technical frontier and allow them to 
participate in advanced manufacturing is really important. 
There is--a lot of that is embedded especially in the CHIPS 
Act. More can be done.
    Ms. Blunt Rochester. You mentioned the CHIPS Act and you 
also mentioned the semiconductors. And I think that is an 
example of us failing to evolve fast enough. Can you share with 
us any examples of industries or products that are at risk of 
falling behind unless we make these significant investments?
    Mr. Jarsulic. Well, we have talked a lot about EVs here, 
and I think it is very clear that some of the inputs necessary 
for the expansion of that industry really need to be looked at 
carefully. For example, batteries depend on certain kinds of 
critical minerals: lithium, cobalt, nickel. And the supplies of 
those materials are not necessarily available in ways that 
could be secure or economically viable for us. For example, I 
think--oh, sorry.
    Ms. Blunt Rochester. Sorry, my time has expired. But I will 
follow up with you, because I want to follow up on the issue of 
not just the raw materials, but also there is a report from the 
Center for Strategic and International Studies that speaks also 
to our national security risk, as well, which I would also like 
to enter into the record, Mr. Chairman.
    Mr. Bilirakis. Very good.
    Ms. Blunt Rochester. Thank you, and I yield back.
    Mr. Bilirakis. Without objection, so ordered.\1\
---------------------------------------------------------------------------
    \1\ The Center for Strategic and International Studies report has 
been retained in committee files and is available at https://
docs.house.gov/meetings/IF/IF17/20230201/115346/HHRG-118-IF17-20230201-
SD024.pdf.
---------------------------------------------------------------------------
    Mr. Bilirakis. We have my good friend from the great State 
of Florida, Mr. Dunn, please.
    Dr. Dunn.
    Mr. Dunn. Thank you. Thank you very much, Mr. Chair. It is 
a great State too, by the way.
    As we are all aware, in December the Chinese Communist 
Party issued its 14th 5-year plan outlining China's ambitions 
to become the global leader in the digital economy by 2025. In 
order to protect our private data and independence from the 
Chinese Communist Party, we have to focus on nearshoring and 
friendshoring our supply chains in conjunction with fair trade 
deals.
    We have to expose the CCP's pattern of commercial 
aggression against America and our allies. You know, examples 
abounded during the pandemic of massive impact on supply 
chains. But for example, in the medical world we imported 
billions of dollars' worth of drugs and APIs from China 
annually. And this dependance on China is a national security 
concern.
    I look forward to working with this committee and my 
colleagues and my colleagues on the China Select Committee to 
enact policies that will bring critical supply chains back to 
the U.S. and to trusted allies to help free us all from 
Dependance on China for critical commodities and 
pharmaceuticals.
    Mr. Pugh, first question. I agree with your statements that 
data privacy and security are vital to consumers and industry. 
Understanding that the CCP has repeatedly compromised our data 
and that the ADPPA from the last Congress was a good first step 
in combating this data gathering, can you please speak to the 
seriousness of delaying that legislation?
    Mr. Pugh. Well, thank you, Congressman. That is a 
phenomenal point, and every day we wait--or every second we 
wait, I should say--is just the more data that the Chinese 
Government, the CCP, is collecting and potentially exploiting 
against Americans.
    I mean, we see their collection happening in the United 
States, outside the United States but still directed at 
Americans, and then we can't diminish the fact that they 
continue to just steal and even sometimes buy it. And that can, 
unfortunately, be used to target both intelligence 
professionals, those in the military, children. So I think it 
is just paramount that this is the key priority and is done 
without delay.
    Mr. Dunn. Are there specific progrowth policies you would 
like to see from America?
    Mr. Pugh. I think one of the best policies would be, first, 
acting on the comprehensive data privacy and security law. And 
I think one of the benefits of ADPPA was the intent of trying 
to get at the fact that not all companies are the same, is that 
we need to take into account that small and medium-sized 
businesses have different needs and different capabilities than 
our largest international players. Not to say they--they all 
may not have privacy risks, but a mom-and-pop business on Main 
Street cannot comply in the same way that--or no have the same 
risk.
    So I do think that is something that we should act on now, 
a comprehensive law, and vary the--some of the provisions.
    Mr. Dunn. Thank you for your reasonable approach to that.
    Ms. Sacks, you commented on the importance of a 
multicountry approach for creating a network of trusted trading 
partners in which we lower barriers to trade in order to create 
resilient, reliable allied supply chain. This makes so much 
sense. Can you expand on that issue and perhaps say which 
allies, which partners we should be working on first?
    Ms. Sacks. Well, perhaps I will highlight a number of 
initiatives that are underway which are really positive steps 
in this direction.
    So I mentioned Global CBPRs, which is an expansion of the 
Asia Pacific-based framework. In addition, the OECD recently 
issued a set of principles around government access to data 
which would facilitate more data flows among OEC members, and 
the Japanese Government under former Prime Minister Shinzo Abe 
had put forward the data free flows with trust concept, which 
again is this idea to encourage a coalition of allies and 
partners to share data but with certain safeguards in place.
    What does that look like and what does that mean in 
practice is a question that I think experts are actively 
debating. And this spring at the Hiroshima summit, my 
understanding is there may be further movement there. So these 
are all important initiatives, and definitely merit further 
attention.
    Mr. Dunn. Well, I--thank you for your words. And I will 
tell you I sit on the economics committee of NATO as well as 
these other things, and it is a common theme among our NATO 
allies that--you know, to friendshore trade. And so I hope we 
can find a way to work our way through these trade barriers 
that we have erected to each other. And this is all--this is 
like friendly fire when we are in NATO.
    So thank you very much for--the entire panel, a very 
erudite group.
    I yield back.
    Mr. Bilirakis. I appreciate it very much, Doctor. OK. Now 
we will recognize Representative Kelly for her 5 minutes.
    Ms. Kelly. Thank you, Mr. Chair, and thank you to the 
witnesses.
    During a time of crisis, the United States relies on its 
manufacturing base to withstand economic disruptions and 
respond to national emergencies. But the COVID-19 public health 
crisis exposed, as you know, serious gaps in our critical 
manufacturing supply chains that harmed our efforts to combat 
COVID-19, crippling shortages of N95 masks, gowns, surgical 
apparel, gloves, and testing supplies. The shortages were so 
severe that nurses substituted trash bags for gowns, doctors 
wore modified snorkels as masks, and essential medical 
personnel reused single-use N95 masks for days on end.
    These crippling shortages contributed to the spread of the 
disease, causing preventable illnesses, hospitalizations, and 
death. Our healthcare system neared overload. Our healthcare 
heroes were placed under enormous strain. And the U.S. domestic 
manufacturing base was incapable of meeting the surging demand 
for critical healthcare equipment. Instead, hospitals and 
consumers turned to overseas fly-by-night brokers and 
opportunists selling standard PPE.
    Last Congress, when the Democrats were in the majority, we 
made meaningful strides to strengthen our global economic 
landscape to ensure our competitors like China don't leave us 
competitively disadvantaged. Just one example is the America 
COMPETES Act, which would have invested 46 billion for a whole-
of-government approach to monitoring and supporting critical 
manufacturing supply chains instrumental to our economic 
welfare and national security.
    Unfortunately, that provision did not become law last term, 
but I am hopeful that we can get meaningful supply chain 
legislation over the finish line this Congress.
    Mr. Jarsulic, in your written testimony you discuss the 
importance of supply chain resilience and, specifically, how 
important elements of the supply chain are subject to events in 
other countries and can, therefore, be subject to Chinese 
Government interference. How severe is the threat, and why 
hasn't the private sector been able to proactively identify and 
address such supply chain vulnerabilities?
    Mr. Jarsulic. Well, I think we have seen multiple instances 
where significant gaps in the supply chain manifest themselves 
to--and produce significant economic impacts. A salient example 
which I talk about is the shortage of chips for manufacturing 
autos. The production of autos in physical terms was down, 
like, 40 percent, relative to the precrisis level, just because 
the chips that are needed to make those autos run weren't 
available.
    There are lots of other examples where shortages were 
revealed in the crisis--are not here, they are manufactured 
elsewhere, and the ability to access them was stressed during 
that period.
    I think that it is quite important to take a systematic 
view of the places where there are potential risks. The 
incentives for individual corporations to meet risks beyond 
their own business needs are not necessarily there. And where 
those systemic risks are identified, steps can be taken to 
anticipate potential problems. There are simple kinds of things 
that could be done, you know, stockpiling of materials that are 
needed, but there are analogies to other areas where there are 
risks that might apply here.
    For example, in power generation, many power authorities 
commission the construction of residual generation capacity, 
which corporations agree to bring online if there is a surge in 
demand for power. So we might think about the production of 
things that we really need and might need in an emergency, and 
find ways to build that kind of backup or residual production 
capacity to prevent risks from becoming significant problems.
    Ms. Kelly. And let me ask you this. Last Congress I was 
proud to co-lead the bipartisan Supply Chain Act, which would 
create an office of supply chain resiliency and crisis response 
within the Department of Commerce to monitor supply chains of 
critical goods and materials and plan for, as you are saying--
respond to supply chain disruptions.
    Could supply chain resilience improve if the Federal 
Government played more of an active role in monitoring critical 
supply chains and identifying vulnerabilities?
    Mr. Jarsulic. I think, you know, studying and monitoring of 
these issues can make a very important contribution. You don't 
know where the problems are until you identify them.
    Ms. Kelly. Sure, and I yield back. Thank you.
    Mr. Bilirakis. Thank you. Thanks very much. And now I will 
recognize the gentlelady from Arizona, my good friend Mrs. 
Lesko, for 5 minutes, please.
    Mrs. Lesko. Thank you, Mr. Chair. I am excited to once 
again return to this subcommittee. It has such broad 
jurisdiction, and it is great.
    I am very excited about the future of autonomous vehicles. 
I have a huge senior citizen population in my district, and I 
am already a senior citizen. I can still drive, but there is 
going to be a point where I won't be able to drive.
    And a lot of my constituents are having problems getting to 
their doctors, getting to the grocery stores, and there is not 
enough public transportation available for them. They use the 
dial-a-ride, but they have to wait, like, a long time. And, you 
know, they complain about it, right? So I think this is a 
solution, and it is a solution for the blind, it is a solution 
for disabled, and I am excited about it, quite frankly.
    Now, I think you know that in Arizona, under our former 
Republican Governor, Doug Ducey, he was very excited about 
autonomous vehicles, as well. And so we have several companies 
that operate in Arizona. One of them is Waymo, owned by Google. 
It is partnered with the Chinese automaker Geely. Waymo 
currently has a fleet of autonomous rides in Phoenix.
    So I have a question for you, Mr. Pugh: Do you--should I 
worry--should we worry about the partnership with a Chinese 
automobile company with autonomous vehicles as far as will our 
data be secure or will the Chinese Communist Party use it?
    Mr. Pugh. Well, thank you, Congresswoman. I am not as 
familiar with that, the partnership that you referenced. But 
what I can say at a high level is that, when the Chinese 
Government does have involvement with a company, it is 
something we need to be very careful and mindful of, and ensure 
that they are not collecting data, and ensure it is not going 
back to the CCP.
    And then we also need to ensure what we are collecting is 
safeguarded and secured. I think those two go hand in hand, and 
you can't have privacy without security, and vice versa. So in 
that particular example I would--I think we need to make sure 
that the privacy and security is accounted for.
    Mrs. Lesko. Thank you.
    And Mr. Farrah, how would you anticipate the global AV 
supply chain to be set up if the U.S. continues to limit the 
ability of the U.S. AV industry to develop here while China has 
the backing of an eager government?
    So, you know, I think of--I remember California a number of 
years ago, they wanted to shut down the AV autonomous vehicle 
testing, and we picked up the slack in Arizona. So how is that 
going to affect it, if we don't change our policy here in the 
United States?
    Mr. Farrah. Well, first of all, I want to thank you for 
your enthusiasm for autonomous vehicles. We, obviously, share 
it. And your home State has been tremendous in terms of a 
partnership. I think you detail one of our great member 
companies, and there are others, as well.
    I think that the next point I would make here is that, with 
regard to supply chain, autonomy has an amazing contributing 
factor here as it relates to supply chain challenges. I will 
just give you one example, which is around autonomous trucking.
    We have a situation now in this country where we have a 
truck driver shortage of nearly 80,000 truck drivers across the 
country. That is going to double by 2031. And so autonomous 
trucking really offers a solution, and I think it gets to 
trying to alleviate the supply chain crisis that a number of 
your colleagues have flagged today.
    And so that is something where--I have been privileged to 
ride in these autonomous trucks. I see the way in which they 
are operating. They are viewing things, they are responding to 
incidents on the road that a human could never have a hope of 
being able to see. And so I think it is going to lead to more 
safety for people on the roads, for truck drivers, but better 
movement of goods.
    Mrs. Lesko. Well, I think so, too, because, you know, as 
you said, what is it--like, right now isn't the first vehicle 
to have a driver, and it--and then there is, like, a caravan of 
other trucks that are autonomous and hooked up to it? Tell me 
more about that.
    Mr. Farrah. Not so much a caravan, but there are--so 
different developers, obviously, are approaching this in 
different ways. And there are situations where, in places like 
your home State of Arizona, there are autonomous vehicles that 
are operating without a human driver sitting in the seat that 
can grab control of the wheel.
    There are other trucking examples where there is 
development that is going on, and there is currently a driver 
that is there in case. I have ridden in these autonomous trucks 
myself, and there is--they are entirely safe, and they are 
operating now.
    And so it is really a diversity of approaches, but we are 
very eager and pouring a lot of resources into trying to get 
these out in the market in greater numbers.
    Mrs. Lesko. Well, great. And I am running out of time, but 
I was just curious if, when you are answering somebody else's 
questions, if you can tell me, any of you, if you realize that 
security cameras that are made in China call back--if you are 
hooked up to the internet, they call back to China. And so a 
lot of the security cameras we use on our homes are made in 
China. Just curious about that.
    Thank you, and I yield back.
    Mr. Bilirakis. Yes, let's take that question for the 
record, please. That is so very important. Thanks for bringing 
it up.
    Next we have my good friend from the State of Florida--we 
have a lot of Floridians--that is a good thing, that is a good 
thing--on both sides of the aisle.
    So, Representative Soto, you are recognized for 5 minutes.
    Mr. Soto. Thank you, Chairman. It--Florida is in the House.
    Mr. Bilirakis. That is right.
    Mr. Soto. First, I am happy to talk about our economic 
future as the United States, as it goes vis a vis our economic 
rivals, China.
    I want to take a moment to set the table for my 
constituents. The U.S. GDP, our overall economy right now, is 
first in the world at $25 trillion. But definitely, China is on 
our tail, right? Chinese GDP is $18.32 trillion, according to 
the IMF. When you look at our populations, we are at a scrappy 
334 million, according to the census, while China's National 
Bureau of Statistics has them at 1.4 billion.
    So imagine. We are, pound for pound, the economic 
powerhouse of the world. And if you feel like, as Americans, 
you are working hard, well, it shows. We are the most 
productive nation in the world per capita by far.
    Population growth is another interesting thing. Ours is 
slowing down. We had a 0.4 percent increase in population 
growth in 2022. The vast majority is from immigration, 
actually, not even from natural population birth. So as we are 
talking about immigration reform and the importance of 
immigration, we would be declining in population if we didn't 
actually have immigration. The Chinese, they are declining in 
population: 850,000 population drop in 2022.
    So both of us face challenges, and we are at a crossroads. 
So when we come to the topic today of how Americans compete to 
win the future, the good news is the 117th Congress was the 
most productive in 50 years.
    The infrastructure law to help us rebuild America. There is 
a big headline in Florida about Governor DeSantis proposing a 
$7 billion Moving Florida Forward plan. Over 3 billion of that 
plan comes from the new infrastructure law, and over 16.7 
billion over 5 years to help redo I-4 and boost SunRail, and 
Brightline, and Poinciana Parkway, and other areas in the 
district.
    And then we passed the CHIPS and Science Act, boosting 
microchip manufacturing. We are right now only making 10 
percent of the chips, globally. This will help bring us forward 
with areas like NeoCity in my district that makes aerospace 
microchips and micropackaging and just received a $51 million 
Build Back Better grant with more to come.
    And then the Inflation Reduction Act, a $369 billion 
investment to advance clean energy, to lower pollution, combat 
climate change, boosting electric vehicles, which we talked 
about a lot, solar, wind, more efficient appliances, nuclear, 
and carbon capture.
    So the first thing I think is critical is that we don't 
push America to default on our debts. That has been talked 
about quite a bit already.
    The second is we need to find areas of common ground like 
the privacy--internet privacy bill that we passed out last year 
that I expect will be one of the biggest things we do this 
term.
    But also implementation of these laws are going to be key.
    Mr. Jarsulic, you know, China faces air pollution, water 
pollution, plastics. Their soil is toxic with cadmium and other 
heavy metals. And the rallying cry of the last generation has 
gone viral by young Chinese people vowing not to have children. 
We want to have a different future here in the United States. 
So how critical is it to our economic success that we implement 
the Inflation Reduction Act to combat pollution, to boost clean 
energy for our economic future vis a vis competition with 
China?
    Mr. Jarsulic. Well, I think that the effects of a degraded 
environment on health, labor force participation, productivity 
are significant. And so, to the extent that we can limit that, 
we--that contributes to the competitiveness of the U.S.
    And it is also the case that the world is being pushed in 
the direction of production and economic behavior that limits 
carbon emissions. And so the more that we can do to make that 
transition efficiently, the more economic competitiveness we 
will have.
    And so the kind of support that IRA gives to electric 
vehicles, to solar power, and to other forms of--and to the 
establishment of other forms of energy--incredibly important. 
The support that CHIPS gives to developments, both in basic 
science and the manufacture of semiconductors, means that we 
will have a better technical base to implement the kinds of 
things that will reduce those carbon emissions.
    So I think that there is a lot that is being done that will 
contribute significantly to our long-term economic 
competitiveness and make up for the kind of disadvantages that 
we might face in the marketplace when we are dealing with a 
competitor who kind of disregards----
    Mr. Bilirakis. Well, thank you. I thank the gentleman. The 
gentleman's time has expired. I appreciate it. Now we welcome 
the gentleman from Georgia.
    Welcome to the committee, and the Chair recognizes you for 
5 minutes.
    Mr. Allen. Thank you, Mr. Chairman, and I thank the 
witnesses for being here with us today. And thank you again, 
Mr. Chairman. And it is a privilege to serve on this committee 
under your leadership.
    Mr. Bilirakis. Best committee in Congress.
    Mr. Allen. Yes.
    Mr. Bilirakis. Don't forget that.
    [Laughter.]
    Mr. Allen. Well, it has been very interesting here today, I 
will tell you this.
    Mr. Pugh, first I want to thank you for your service, for 
your work with the Army Cyber Institute. The Army Cyber Command 
Center is located in the 12th district of Georgia, my district. 
And it is good to see how expertise can be shared across the 
public and private sectors for data security purposes.
    We are not engaged in cybersecurity warfare here, but how 
do you see passing a national data privacy framework providing 
for more cooperation among allied countries against current and 
political adversaries--how do you see that framework?
    Mr. Pugh. Well, thank you, Congressman, and I am thrilled 
to see the Army represented in Georgia. I spent a lot of time 
in Fort Benning, so I appreciate that.
    And to your point, I think the biggest issue now, 
Congressman, is we don't have a privacy law here. So it is 
forcing American companies to follow other frameworks around 
the--really, like GDPR and the European Union that is just not 
as friendly to businesses. So I think this is, really, a key 
opportunity for us to develop a framework, and hopefully others 
follow what we view as the American vision.
    And I think the critical aspect is there are several 
provisions that promote security. Just to flag one of them is 
the notice if a consumer's data goes to China, North Korea, 
Iran, and Russia. Right now, data can flow there and the 
average consumer is totally unaware of it. And that is just a 
deep concern.
    Mr. Allen. Well, obviously, that is our property, and we 
have the right to protect it, and we certainly need to do 
something about this.
    Ms. Sacks, you have done a lot of work with security-
focused think tanks. Again, you know, of course we passed the 
CHIPS Act, which, you know, I think totaled over 250 billion--
$252 billion. And now it looks like we have got a glut of 
chips, of semiconductors in the country. What--has your think 
tank looked at, you know, what happens when the government 
pours money into something, and then it creates market 
problems, market issues as far as supply and demand?
    Ms. Sacks. Well, I can speak from a personal capacity, 
rather than my organization's.
    Mr. Allen. OK.
    Ms. Sacks. I have not looked at that specific issue. I 
mean, I think you raise an important question, which is once--
when governments pick winners and losers, we have to be very 
smart about how those resources are allocated, and particularly 
because we don't want to mirror China as a nation focused on 
industrial policy.
    So how do we use State funding and facilitate productive 
partnerships between the private sector and public institutions 
to understand how do we allocate those resources to avoid 
exactly those issues that you have discussed?
    Mr. Allen. And we don't seem to look down the road at the 
implications of this, as far as the free market.
    And Mr. Farrah, the first thing is how much do these these 
vehicles cost? I mean, what is the price range?
    Mr. Farrah. Congressman, currently it is--as so-called 
level four autonomy is being deployed out into the United 
States, they are not currently available for private ownership. 
And so you have companies that are operating their own fleets 
of AVs. They are doing things such as robo taxis and--with the 
passenger cars, unmanned delivery pods that are delivering 
groceries and whatnot, AV trucks that I mentioned.
    And so, while private ownership may be in the future, that 
is not where we are currently.
    Mr. Allen. So we haven't gotten a market base on the price 
of manufacturing those vehicles? OK.
    Mr. Farrah. That is correct.
    Mr. Allen. You are an innovator. Obviously, this is a 
great--this is going to be a great tool for the American 
people. What is the best driver of innovation in this country? 
Is it free market or government?
    Mr. Farrah. Sir, what I can speak to is that our industry 
has led in terms of private capital investment into this 
industry. Certainly, this has been a private-sector-driven 
exercise in terms of deployment of AVs to this point.
    But it is important that policymakers shine a light on this 
industry because there is, obviously, a lot of work that needs 
to get done, both from a Federal legislative perspective as 
well as at a regulatory perspective.
    Mr. Allen. Right.
    Mr. Farrah. And so it truly is a partnership, and we need 
your help.
    Mr. Allen. Well, Ms. Sacks, I think you hit--I mean, you 
hit the nail on the head where how does the government do this, 
because they are picking winners and losers. And it affects all 
the markets.
    So with that, Mr. Chairman, I yield back.
    Mr. Bilirakis. I appreciate that very much. OK, now I 
recognize the representative Mrs. Trahan for 5 minutes.
    I appreciate it, thanks for your patience.
    Mrs. Trahan. Thank you, Mr. Chairman.
    It is no secret to anyone here today the United States has 
been losing the manufacturing race for a long time. It is 
certainly not a surprise to anyone in my district, which is 
where our Nation's industrial revolution was born, and where 
once-great mills have sat empty for years.
    The offshoring of manufacturing jobs has hurt almost every 
sector, particularly as supply chain issues erupted during the 
COVID-19 pandemic. But perhaps the most glaring example of this 
dangerous trend is our semiconductor industry. Since 1990, the 
U.S. share of global semiconductor manufacturing dropped from 
37 percent to 12, and in that time countries like China have 
surpassed us in semiconductor manufacturing capacity.
    Mr. Chairman, this trend poses a serious threat not just to 
our Nation's economic competitiveness but to our national 
security. And supply chain disruptions have shown in 
excruciating detail, as we have waited on foreign shipments of 
semiconductors that have been bogged down in supply chain 
disruptions.
    Like many of my colleagues on this committee, I have heard 
how this issue is impacting businesses and families that I 
represent. Massachusetts companies up and down the supply 
chain, from manufacturers of cancer screening technology to 
defibrillators, have been sounding the alarm about the 
disruption's impact on their business and the patients and 
hospitals depending on them.
    Families looking to buy a used car to make sure they can 
get their kids to school on time have had to pay ridiculous 
prices, in part because of chip shortages in the automotive 
industry. It is for this exact reason that we voted in a 
bipartisan manner last Congress to pass the CHIPS Act, the 
CHIPS and Science Act, which includes unprecedented Federal 
funding to jumpstart our semiconductor industry and reestablish 
our Nation's manufacturing leadership.
    And when I think about our competitiveness--frankly, our 
winning--I do think about the major pieces of legislation that 
we passed last year. My colleague from Florida talked about the 
Inflation Reduction Act, CHIPS and Science, of course, but also 
the bipartisan infrastructure bill.
    So, Mr. Jarsulic, I am hoping that you can speak about the 
impact that the $52 billion included in the bipartisan CHIPS in 
Science Act, as well as the billions of dollars allocated by 
the infrastructure law to revitalize our roads, our bridges, 
railways, electric vehicle charging stations, high-speed 
internet, all that supportive infrastructure, will have on U.S. 
domestic semiconductor manufacturing. And frankly, should we 
expect more private investment in this critical technology?
    Mr. Jarsulic. Yes, I think those $52 billion are divided 
into two big parts. One is 11 to support basic science research 
and development that are related to semiconductor 
manufacturing. I think that that helps to overcome the real 
public good problem of doing that kind of basic research. But 
there is another $39 billion, the majority of which, 24 
billion, provides investment tax credits for private 
investment.
    And that means that the decision making about what is going 
to be built over what time frame really rests with the private 
sector. That is, these are credits. They are going to have to 
put private capital at risk in order to--you know, to get those 
credits and expand manufacturing capacity. So I think that the 
notion that there isn't a market-based, a competitive-based 
allocation of these funds is a little bit misleading.
    That said, those two major efforts, both in terms of basic 
research and in terms of incentivizing investment, should do a 
lot to increase semiconductor manufacturing capacity. But any 
business needs an efficient and effective infrastructure to 
operate: good transportation, good water, good power supply. 
And I think that the support for that in bipartisan 
infrastructure will also benefit semiconductor manufacturing, 
as it will most business in the U.S.
    Mrs. Trahan. Thank you, I appreciate that.
    I will see if I have enough time to switch gears, because I 
was so excited to hear so many of my colleagues discuss 
privacy. Because the truth is many of the critical devices that 
require semiconductors also collect, store, and transmit 
personal and even sensitive consumer data.
    My team and I thought about this quite a bit during the 
markup of the bipartisan and bicameral ADPPA last summer, and 
strong data minimization and data loyalty language allows 
consumers to escape constant consent popups, which are 
particularly useless in a world where sensors devoid of a 
screen monitor our vital signs, our sleep patterns, and the 
location of our pets to create comprehensive profiles of our 
lives that can be used in a range of predictive analytics.
    So, Mr. Pugh, maybe for the record, hoping you can speak to 
the importance of data minimization to this Nation's cyber and 
national security.
    Mr. Bilirakis. I appreciate it. You can take that for the 
record.
    Thank you for the question, and the gentlelady yields back.
    And I will recognize the gentlelady from the great State of 
Tennessee, home of the number one Florida Gator, Steve 
Spurrier, Johnson City.
    Mrs. Harshbarger. Oh, you would have to mention that, Mr. 
Chairman.
    Mr. Bilirakis. Of course, of course.
    [Laughter.]
    Mrs. Harshbarger. I am trying to forgive him.
    Mr. Bilirakis. You are recognized for 5 minutes.
    Mrs. Harshbarger. Thank you. My question goes--the first 
one--to Mr. Pugh. But let me read a little statement.
    As a mother and a grandmother, I am deeply concerned about 
the ways TikTok is manipulating our Nation's children. You 
know, I have seen reports that detail China's version of 
TikTok, which offers the friendly version with educational 
videos and learning tools and time limits set on what the 
children look at in China. And then you come over here and you 
see the opium version, which, you know, addicts our children in 
front of their phone. And that educational tool isn't offered 
over here, like it is in China.
    What are the current data privacy protections for children, 
and how could a comprehensive data security standard help 
strengthen those protections?
    Mr. Pugh. Well, Congresswoman, thank you. Our current 
standards, simply put, are inadequate. I mean, we have COPPA. 
There were some other attempts to look at children's privacy 
legislation. But I think the real answer is a comprehensive 
approach, not the diminished attempts that are specifically 
at--directed at children. But really, privacy is a concern for 
all Americans. And I do think that was a--really, a hallmark of 
ADPPA last Congress was, regardless of age, there were 
protections there to help you.
    Specifically with children, there were several phenomenal 
ones, everything from additional resources at the FTC directed 
specifically at kids to rules around target advertising for 
kids. You could tell that kids were definitely a focus in that 
bill, and I think that should be the case going forward.
    Mrs. Harshbarger. Well, and I said this when I was on 
Homeland. I am like, if your children are on TikTok, get them 
off. Get them off. Adults, you are responsible, but children 
are not.
    Ms. Sacks, I think that we both have questions for you 
with--concerning TikTok. And it is--you know, I am tremendously 
concerned about TikTok, but I am sure there's many other 
Chinese apps that you would suggest that we be watching. And I 
guess my question is, what other Chinese companies are you 
concerned about, and what should we be asking?
    And then the second part is, can you describe how the CCP 
is encouraging the adoption of emerging technology like 
artificial intelligence and its defensive capabilities, and how 
the Beijing's unprecedented emphasis on intellectual property 
theft in this sector factors into those efforts?
    Ms. Sacks. Thank you, and a lot to unpack there.
    Mrs. Harshbarger. Yes.
    Ms. Sacks. I guess I will start with the TikTok issue. You 
know, I think that there are two important issues on the table. 
One is data security--who has access to what--and the other is 
the potential to push misinformation online, the recommendation 
algorithm.
    My understanding is that there is a national security 
agreement on the table, and I think it--and I have published an 
article which sort of details what exactly that looks like.
    You know, from a data security standpoint, if the--if 
Oracle has the data in the cloud, there are multiple third-
party auditors and an oversight board that reports to CFIUS. I 
think that that would be pretty much locked down.
    The question around what kind of information the 
recommendation system pushes forward is an important one, and 
that also under this agreement would potentially--and it is 
called Project Texas, and I have published about it just a week 
or so ago--would be, again, subject to verification source code 
review, essentially vetted by CFIUS.
    I think it is important that the public understand what 
that national security agreement would look like, and then have 
a debate. Is this enough to address those concerns? And to what 
extent would other social media companies also need to meet 
those?
    You know, I think that, as a mother, I am very concerned 
about what information my young children will be looking at 
online. And I am terrified, because right now I think it is a 
free-for-all. When we focus on specific companies, we can lock 
down that information, but it doesn't solve the issue.
    Mrs. Harshbarger. Right.
    Ms. Sacks. We can ban TikTok, force a divestiture. When my 
boys are teenagers I hope that there will be a more 
comprehensive solution, because it is not going to address the 
way that misinformation is addicting children. And so that is a 
much bigger issue than any single company.
    Mrs. Harshbarger. Well, absolutely. And not to mention, you 
know, when Director Wray says that is a national security 
threat--and I know we are not talking about that --but the 
tracking of users' data, that is a concern. That is a huge 
concern.
    And my grandsons are soon to be 6 and 8. So my son and 
daughter-in-law just better never bring TikTok to the table, 
OK?
    And I guess, with that, I will yield back, Mr. Chairman.
    Mr. Bilirakis. The gentlelady yields back. And I will 
recognize the--my good buddy from the State of Florida, Kat 
Cammack, for 5 minutes.
    Mrs. Cammack. Yes, Steve Spurrier. Land of Steve Spurrier. 
Go, Gators.
    Thank you, and congratulations to my good friend Chairman 
Bilirakis for hosting this very important hearing today. Thank 
you to our witnesses. We are coming to the end, so hang in 
there with us.
    This topic, our competitive edge against an adversarial 
nation who uses the existing multilateral system to bend the 
rules in their favor, the Chinese Communist Party, is one of 
the most important issues of our time. Indeed, the CCP has very 
little regard for basic human rights, environmental 
protections, or the rule of law as they continue on their quest 
for global dominance.
    So I believe that the greatest value that we have as a 
nation is our people, our constitutional republic, and our CQ, 
our creative quotient. We are innovators.
    From the space race to the deployment of the internet, the 
United States has been an international leader on scientific 
innovation and achievement. Our free market model, paired with 
our national creative quotient, including private R&D efforts, 
no doubt drives much of our success as a leader in the world. 
So the work that we do here today will lead and carry us 
through the next several decades.
    Without question, the U.S. and our allies must lead the 
world in privacy regulations and technological innovation. 
Otherwise, we risk allowing malign actors like the CCP to 
create a counter set of rules predicated on debt-trapped 
economies that will be enticed to leave the rules-based system 
and adopt a model made to benefit authoritarian countries run 
by groups like the CCP.
    So jumping right in, Mr. Pugh, you said in your testimony--
and my good friend from Tennessee alluded to this--you know, 
the protections and privacy laws are wholly inadequate, by and 
large. How do we balance that patchwork of State laws?
    How can we do a preemptive Federal privacy and data 
security law that specifically allows for those protections, 
while prohibiting the stifling of entrepreneurs or new market 
entrants into tech-related industries, quantum computing, 
social media, AI, et cetera?
    Mr. Pugh. Congresswoman, thank you. And I think you really 
answered the question kind of yourself, because preemption is 
key. And I think ADPPA was a great substantive step in terms of 
how preemption was resolved.
    I mean, that is exactly the thing. We need one Federal 
standard, not this patchwork that is emerging. Granted, only 5 
States will have privacy laws in 2023. We have already seen 
dozens and dozens introduced this year and last year. So I 
think the real potential of having even more laws this year or 
next is going to be there.
    And it hurts our small and medium-sized companies, because 
they don't largely have the resources to follow all the 
developments, the constant amendments at a State level. 
Whereas, if they have one standard to look to, it may still 
take resources, but at least it is one standard. So I think 
that is the key, and making sure preemption is strongly 
reflecting a Federal bill.
    Mrs. Cammack. I appreciate that. And I am going to follow 
up again on my good friend from Tennessee.
    We were sitting over here talking about TikTok. You know, I 
am the millennial in the room. And so this is a generation--
grandmother, millennial. But, you know, this is a concern to 
me, my peers, and the generation coming directly right after 
me, the Gen Zs.
    I grew up with social media, MySpace, Facebook--today Meta. 
These have real-world impacts. Privacy concerns? Heck, one 
social media platform can be directly attributed to a political 
revolution in nations abroad. So we know that there are real-
world impacts that we have to contend with. So obviously, 
TikTok being a huge one.
    Representative Harshbarger alluded to the fact that, in 
China, on TikTok children 14 and younger are shown patriotic 
videos, educational videos, history videos, and they are 
limited to 40 minutes. In the United States, they have the 
algorithms set to do shorter videos that are meant to create 
dopamine hits in your brain.
    There was a survey done between the United States and 
China, a 14-year-old, asking, ``What is the most aspirational 
career you want to have?'' In the United States the number-one 
answer was social media influencer. In China they said they 
wanted to be an astronaut. If you want to look at the future of 
our two nations, start here. That is why we need to be very 
serious about how we contend with TikTok and other apps like 
TikTok.
    So my question--and I know I am running short on time--is 
how can we protect our kids, our data, while simultaneously 
respecting free market economics in these applications?
    The balance is a really tricky one, but we need to have a 
game plan moving forward on how we contend with this. And if 
any other witnesses want to answer this, I am open to hearing 
your thoughts.
    Mr. Bilirakis. Let's----
    Mrs. Cammack. In 9 seconds.
    Mr. Bilirakis. Yes, very brief, and then we are going to 
take the question for the record. It is a very important 
question, so I want you to have as much time to answer it. This 
is what we are facing in this country. Please, briefly.
    Mr. Pugh. The short answer, Congressman and Chairman, is 
passing a national comprehensive data privacy and security law. 
We did a report last year with 125 different entities across 
all ideologies, in conjunction with Harvard. And we think that 
really is the answer of solving some of these national security 
and privacy concerns.
    Mr. Bilirakis. Thank you.
    Mr. Pugh. Thank you.
    Mr. Bilirakis. Thank you, thank you, I appreciate it. I now 
recognize the vice chairman.
    Congratulations, Mr. Vice Chairman of the full committee, 
Mr. Armstrong. You are recognized for 5 minutes.
    Mr. Armstrong. Thank you, Mr. Chair.
    Ms. Sacks, whether it is national security threats from 
aggression, nation states, or data protection regimes, it seems 
as if the trend is towards data localization. You have recently 
and even today mentioned Project Texas, TikTok's proposed 
mitigation agreement to address U.S. national security 
concerns, as a potential accelerant to data localization 
requirements. And you were speaking with Congressman Dunn about 
data free flows with trust.
    Does our experience with the challenges of the EU-U.S. 
privacy framework and broader international concerns about U.S. 
surveillance capabilities make that a realistic proposal in the 
near term?
    Ms. Sacks. Thank you for raising the issue of data 
localization, because I think this gets at an inherent tension 
here, right?
    Governments around the world, the U.S., in Europe, in 
China, in India are increasingly concerned with foreign 
government access to data, as well as private-sector access. 
And so I think what is happening is the response to this is 
increasing requirements would require data to be stored on 
local servers and undergo extensive vetting before it is sent 
abroad.
    Project Texas, from my understanding of what has been 
released publicly, would address U.S. Government concerns 
around who has access to the data by storing it in an Oracle 
cloud with a number of third-party vetters, auditors, to vet 
that in terms of the data that leaves. But it also potentially 
creates a blueprint to accelerate this trend of digital 
sovereignty, which we have seen around the world beyond the 
U.S. and China.
    And so this question of how do you strike a balance between 
facilitating greater data flows which are needed for innovation 
and economic competitiveness while also addressing legitimate 
data security questions, this is sort of the key question, and 
I think it is one that merits much further discussion.
    Mr. Armstrong. I literally just came up here from asking 
questions about the Chinese Government--or a hacking group in 
Chinese--either with coordination with the Chinese Communist 
Party, or definitely with the permission of the Chinese 
Communist Party actually going after our COVID relief funds. 
So, I mean, this is coming from every different place.
    But we often discuss CCP's collection of U.S. person data 
by citing the 2015 OPM hack, as well as the hacks on Marriott 
and Equifax. The followup question is usually how the CCP might 
operationalize that data. I think we understand the 
ramifications of weaponizing that data against national 
security officials or Chinese dissidents to blackmail or 
develop kompromat. Can you explain the risks of the CCP 
aggregating all the data they have obtained, and the type of 
risks it might reveal at the demographic or population levels?
    Ms. Sacks. Yes. I mean, to be honest, I think that creating 
profiles based on aggregate data is primarily a 
counterintelligence concern for individuals with national 
security clearances, in the military, or access to sensitive 
information. For your average American, what that--what the 
impact would probably be more in terms of would that population 
or individual preference information--could that be used to 
push information that would make, say, a spear phishing attack 
more appealing?
    It might be more likely that someone would be a--would 
click on a link because it appealed to them based on 
information that was collected. And so I would say it is--I 
would look at it from that angle.
    But what I highlighted in my testimony, the more sort of 
far-reaching impact is on economic competitiveness, which is a 
distinct issue, right? It is on Chinese firms who are able to 
access diverse international data sets beyond China. What that 
allows them to do is train AI models that could be more 
competitive in markets outside of China, where they are 
competing head to head with U.S. firms.
    So I would bucket the risk. You have national security 
issues, you also have targeted misinformation that could be 
used from that, as well as economic competitiveness between the 
U.S. and Chinese firms. And it is important to sort of be clear 
about those distinct buckets of risk.
    Mr. Armstrong. Mr. Pugh, I am going to ask you the same 
question. You got, I mean, 45 seconds to follow up, so that was 
easy.
    But, I mean, I think we always operationalize this at the 
national security, but it is hard to get it down to my 15-year-
old daughter, who is on TikTok way more than she should be, and 
all of these different issues about the data collection.
    Mr. Pugh. I think the key point to recognize, Congressman, 
is data is not just universal. There's different types of data. 
So even when it comes to geolocation data--yes, maybe I am an 
exception because I served in the military. But outside of 
that, I don't want another country knowing where I am in a 
moment, where I am going, where my movements are, regardless--
--
    Mr. Armstrong. I don't want my own country knowing that.
    [Laughter.]
    Mr. Pugh. So I think that that is a risk. And then off of 
that, not only they collect the data, they are really bad at 
securing it, evidenced by the breach they had in the Shanghai 
Police Department last summer. So they are collecting it, and 
they are not even making it safe. So even other third parties 
and adversaries are getting it.
    Mr. Armstrong. And I would just end with I didn't want to 
be a social influencer or an astronaut. I wanted to be a 
fireman. So I became a lawyer and a politician.
    Thank you. I yield back.
    Mr. Bilirakis. Oh, well, who are you going to blame for 
that?
    Folks, well, thank you. We are off to a good start, and I 
appreciate everything. Seeing there are no further Members 
wishing to be recognized, I want to thank the ranking member. 
Again, I want to thank the witnesses for being here today.
    And I have got a little housekeeping here. So, pursuant to 
the committee rules, I ask unanimous consent to enter the 
following documents into the record: a letter from the Alliance 
for Automotive Innovation; a report from the Alliance for 
Automotive Innovation titled ``Ready to Launch: Autonomous 
Vehicles in the U.S.;'' a presentation by the Alliance for 
Automotive Innovation titled ``Policy Roadmap to Advance 
Automated Vehicle Innovation;'' a letter to the Secretary of 
Transportation, Mr. Buttigieg, regarding the Huawei 
Technologies; the September 2020 China Task Force report; an 
amendment offered to the INVEST in America Act; a letter from 
the National Federation of the Blind supporting an amendment to 
the INVEST in America Act; a press release from the 
Jacksonville Transportation Authority regarding their 
partnership with Beep and NAVYA to safely transport COVID-19 
samples; an article by Klon Kitchen and Hal Brands entitled 
``Tuya may be the China threat that beats Russia's ransomware 
attacks;'' a letter regarding the FCC's Secure and Trusted 
Communication Networks Reimbursement Program; a letter from the 
Consumer Brands Association and Information Technology Industry 
Council; a letter from the Advocates for Highway Safety 
regarding emerging vehicle technologies and autonomous 
vehicles; a report from the Center for Strategic and 
International Studies entitled ``Empty Bins in a Wartime 
Environment: The Challenge to the U.S. Defense Industrial 
Base;'' and finally, a letter from the National Association of 
Manufacturers.
    [The information appears at the conclusion of the 
hearing.\1\]
---------------------------------------------------------------------------
    \1\ The China Task Force report and the Center for Strategic and 
International Studies report have been retained in committee files and 
are available at https://docs.house.gov/Committee/Calendar/
ByEvent.aspx?EventID=115346.
---------------------------------------------------------------------------
    Mr. Bilirakis. OK, very good. We got that in.
    Pursuant to the committee rules, I remind Members that they 
have 10 days, 10 business days, to submit questions for the 
record. And I ask the witnesses to respond to their questions 
promptly.
    Members should submit their questions by the close of 
business on February 15.
    If there is no other business, without objection, this 
subcommittee is adjourned. Thank you.
    [Whereupon, at 1 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    

                                 [all]