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


                     COUNTERING CHINA ON THE WORLD
                       STAGE: EMPOWERING AMERICAN
                     BUSINESSES AND DENYING CHINESE 
                         MILITARY OUR TECHNOLOGY

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 21, 2024

                               __________

                           Serial No. 118-111

                               __________

        Printed for the use of the Committee on Foreign Affairs
        
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                   U.S. GOVERNMENT PUBLISHING OFFICE                    
56-650 PDF                  WASHINGTON : 2024                    
          
-----------------------------------------------------------------------------------                         

                      COMMITTEE ON FOREIGN AFFAIRS

                   MICHAEL T. McCAUL, Texas, Chairman

CHRISTOPHER H. SMITH, New Jersey     	GREGORY MEEKS, New Yok, Ranking 
JOE WILSON, South Carolina               	Member
SCOTT PERRY, Pennsylvania	 	BRAD SHERMAN, California
DARRELL ISSA, California		GERALD E. CONNOLLY, Virginia
ANN WAGNER, Missouri			WILLIAM KEATING, Massachusetts
BRIAN MAST, Florida			DAVID CICILLINE, Rhode Island
KEN BUCK, Colorado			AMI BERA, California
TIM BURCHETT, Tennessee			JOAQUIN CASTRO, Texas
MARK E. GREEN, Tennessee		DINA TITUS, Nevada
ANDY BARR, Kentucky			TED LIEU, California
RONNY JACKSON, Texas			SUSAN WILD, Pennsylvania
YOUNG KIM, California			DEAN PHILLIPS, Minnesota
MARIA ELVIRA SALAZAR, Florida		COLIN ALLRED, Texas
BILL HUIZENGA, Michigan			ANDY KIM, New Jersey
AUMUA AMATA COLEMAN-RADEWAGEN,   	SARA JACOBS, California
  American Samoa			KATHY MANNING, North Carolina
FRENCH HILL, Arkansas			SHEILA CHERFILUS-MCCORMICK, 
WARREN DAVIDSON, Ohio			 	Florida	
JIM BAIRD, Indiana			GREG STANTON, Arizona
MICHAEL WALTZ, Florida			MADELEINE DEAN, Pennsylvania
THOMAS KEAN, JR., New Jersey		JARED MOSKOWITZ, Florida
MICHAEL LAWLER, New York		JONATHAN JACOBS, Illinois
CORY MILLS, Florida			SYDNEY KAMLAGER-DOVE, California
RICH MCCORMICK, Georgia			JIM COSTA, California
NATHANIEL MORAN, Texas			JASON CROW, Colorado
JOHN JAMES, Michigan			BRAD SCHNEIDER. Illinois
KEITH SELF, Texas  			   
                                    
                    Brenden Shields, Staff Director
                    Sophia Lafargue, Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Fernandez, The Honorable Jose W., Under Secretary for Economic 
  Growth, Energy, and the Environment, U.S. Department of State..     6
Estevez, The Honorable Alan, Under Secretary of the Bureau of 
  Industry and Security, U.S. Department of Commerce.............    14

                                APPENDIX

Hearing Notice...................................................    63
Hearing Minutes..................................................    64
Hearing Attendance...............................................    65

    STATEMENT SUBMITTED FOR THE RECORD FROM REPRESENTATIVE CONNOLLY

Statement submitted for the record from Representative Connolly..    66

            RESPONSES TO QUESTIONS SUBMITTED FOR THE RECORD

Responses to questions submitted for the record..................    69

 
                  COUNTERING CHINA ON THE WORLD STAGE:
               EMPOWERING AMERICAN BUSINESSES AND DENYING
                    CHINESE MILITARY OUR TECHNOLOGY

                        Thursday, March 21, 2024

                          House of Representatives,
                      Committee on Foreign Affairs,
                                                    Washington, DC.

    The committee met, pursuant to notice, at 10:26 a.m., in 
room 2172, Rayburn House Office Building, Hon. Michael McCaul 
(chairman of the committee) presiding.
    Chairman McCaul. The Committee on Foreign Affairs will come 
to order. The purpose of this hearing is to assess how the 
Biden Administration is keeping sensitive U.S. technology from 
foreign adversaries like China while opening markets for U.S. 
companies and other countries. I recognize myself for an 
opening statement.
    It should come as no surprise that this committee is 
holding once again a hearing on export controls. It's one of 
the most important things we do in our jurisdiction. They are 
essential to countering our adversaries, especially China, as 
they were to defeating the Soviet Union.
    During this Congress, this committee has already passed 
four bipartisan export control bills, and we plan to do much 
more. As the CCP expands their surveillance State and war 
machine, it's critical we stop selling our sensitive technology 
to them and to other adversaries. We are now witnessing a 
troubling trend where our adversaries use American components 
and their weapons and their surveillance systems.
    One need look no further than the CCP's spy balloon that 
surveilled some of our most sensitive military sites. It was 
widely reported they used commercially available American 
technology. We're beyond the point of a wakeup call.
    American adversaries are using American innovation to 
undermine U.S. national security interests and our allies and 
democratic values. BIS, while within Commerce Department, is 
within this committee's jurisdiction. And we've been working 
very closely with Mr. Estevez to use its extensive authorities.
    As was pointed out in my 90-day review the BIS released 
last December, these authorities are vitally important to 
securing our national security. While some positive action has 
been taken by the Administration to restrict advanced chips in 
chip making equipment to China, more I believe must be done. 
For instance, reports indicate that the United States did 
secure a deal with Japan and the Netherlands to apply similar 
export controls on chips which I was fully supportive of and 
helped assist with.
    But while this agreement is promising, it still largely 
allows Japan and Netherlands to service and to sell tools to 
China for chip manufacturing, I guess based on future 
contracting. Mr. Estevez, you are in charge of BIS. And this is 
a very important job at this time in history.
    And we want to work with you and support you in your 
effort. Chairman Xi wants a military capable of invading 
Taiwan. Every day, I hope you wake up and ask yourself how you 
will use export controls to deny China's military access to 
U.S. innovation and capabilities.
    And while we work to keep American technology out of our 
adversaries' hands, State needs to do more to work with our 
partners and allies to open new markets to American companies. 
We must remain competitive, have a global footprint, and use 
soft diplomacy to counter China's Belt and Road. Mr. Fernandez, 
I hope your testimony today will reflect that as your primary 
goal.
    My bipartisan Championing American Business Through 
Diplomacy Act aimed at opening markets for U.S. companies. And 
I'm concerned that some of the aspects of that law may not be 
implemented as fully as it could. We need that for great power 
competition. I'm also concerned the White House is either not 
listening to our diplomats or not being told what harm their 
actions are having on the U.S. economy.
    The President's recent decision to ban LNG export permits 
is a perfect example of a policy that harms U.S. business 
interest and U.S. foreign policy. After all, it was American 
LNG that kept the lights on in Ukraine after Russia's full 
scale invasion. I led the effort to sanction Nord Stream 2.
    I never imagined a President would waive those sanctions, 
allowing Russian energy to--and Europe to be dependent on 
Russian energy. But it's been American LNG that's helped Europe 
divest from Russia. American energy is the cleanest energy in 
the world.
    And we take that option off the table, I think we're 
hurting ourselves and the world and putting that into the arms 
of China. And their energy is not clean. In fact, it's dirty.
    Finally, just on the issue of Iran, I know Mr. Fernandez is 
not in your jurisdiction. But when we see an Administration not 
enforcing sanctions on energy coming out of Iran being sold to 
China to the tune of 80 billion dollars that then goes into 
funding their terror operations, that's an energy policy that 
makes no sense to me at all. And I know we'll talk more about 
that.
    I know that's not within your purview. But I just say that 
in this public hearing that something has to change on that. So 
with that, I now recognize ranking member, Mr. Meeks.
    Mr. Meeks. Thank you, Mr. Chairman, for holding this 
important hearing. And thank you to our witnesses today for 
appearing before us. We're here to discuss how to effectively 
use economic statecraft as a tool to compete with China.
    Now this is a critical topic because Beijing is intent on 
evading international rules and using economic coercion against 
nations big and small to advance its interests. To ensure that 
we are successful in this competition, the United States must 
lead, must be pragmatic, and must invest in the core strengths 
of America at home and abroad. And if we are serious about 
competing with China, then we must actually compete.
    We know the billions of dollars Beijing is pouring into the 
Belt and Road Initiative. We know that last year Beijing 
increased its diplomatic budget by 12 percent. But how are the 
United States responding?
    Unfortunately, the Republican House majority has proposed 
cuts to the budgets for the State Department and for U.S. 
foreign assistance. That's not leading. That's not competing.
    That's not being present where we need to be present. The 
world must view the United States as a credible partner of 
choice when it comes to foreign investment, development, 
assistance, and clean energy and infrastructure financing. To 
do that, the United States must scale up initiatives like the 
partnership for global infrastructure and investment in 
Development Finance Corporation and adequately fund the State 
Department, USAID, and BIS.
    Republican budget cuts will only tie our hands, undermine 
our ability to compete with China, a nation that will ask, 
where are you, United States, as China continues its presence. 
If we're going to effectively compete with China, we also need 
an affirmative trade an investment agenda. And I believe the 
Biden Administration's Indo-Pacific economic framework is 
critical for keeping America engaged economically and the Indo-
Pacific so that China does not replace us as the economic 
partner of choice in Asia.
    As we compete with China, we must also affirm our national 
security interests. The Biden Administration has imposed 
unprecedented export controls and outbound investment 
restrictions against China to ensure that the American dollars 
and technology aren't helping China develop military 
capabilities. In our discussion today, I hope we can talk about 
how to maximize our export controls in concert with partners 
and allies to make these actions even more effective.
    And as we strengthen technological security, we must invest 
in research and innovation here at home so that we position 
American industry to be globally competitive and create the 
jobs of the future for American workers. The work done by this 
Administration alongside Congress to pass the CHIPS and Science 
Act and the Inflation Reduction Act will ensure that America 
excels in the semiconductor and clean energy industries, both 
of which China is intent on dominating. These investments at 
home must also match with investments in our unique strengths 
abroad, our alliances and partnerships, whether it's re-
energizing NATO, launching the foundational AUKUS partnership 
with Australia and United Kingdom, or hosting a historic 
trilateral summit between the United States, Japan, South 
Korea.
    President Biden has revitalized our alliances. In addition, 
the Administration has advanced shared interest in the region 
through results or initiatives like the Quad, the Minerals 
Security Partnership, and the Indo-Pacific Economic Framework 
for Prosperity. Under President Biden, it is not America First 
or America Alone.
    It is America back at the table, marshaling a united 
response to the PRC's coercion and aggression. Finally, and 
this is critically important, we must ensure that our 
competition with China does not slide into conflict. And that's 
a lose-lose scenario.
    Too often in Congress, I see my colleagues trying to outdo 
each other on who is the bigger, China hawk. We've seen 
Republicans attack General Milley who was before our committee 
earlier this week simply for engaging with his Chinese 
counterpart to prevent unnecessary conflict. I, for one, sleep 
better at night when I know the lines of communication are open 
and one mistake and one accident does not lead to an all-out 
conflict.
    We need both deterrence and diplomacy to keep peace. The 
Biden Administration through tough but pragmatic approach is 
already paying dividends for the American people with the 
Chinese committing to work with us on addressing fentanyl 
trafficking and already acting on that commitment. This can 
save American lives.
    If we act alone, it will escalate tensions. If we do not 
live up to our values, then we will alienate our partners 
instead of isolating China. So I look forward to a spirited 
discussion today about how American can lead--continue to lead, 
continue to build the world's strongest economy, and continue 
to bring nations together in the defense of peace and shared 
prosperity. And with that, I yield back.
    Chairman McCaul. The gentleman yields. We're pleased to 
have today here Hon. Jose Fernandez, Under Secretary for 
Economic Growth, Energy, and the Environment at the U.S. 
Department of State and Hon. Alan Estevez, Under Secretary of 
the Bureau of Industry and Security at the U.S. Department of 
Commerce before us here today. Your full statements will be 
made part of the record. I now recognize Under Secretary 
Fernandez for your opening statement.

   STATEMENT OF JOSE FERNANDEZ, UNDER SECRETARY FOR ECONOMIC 
 GROWTH, ENERGY, AND THE ENVIRONMENT, U.S. DEPARTMENT OF STATE

    Mr. Fernandez. Thank you. Thank you, Chairman McCaul. Thank 
you, Ranking Member Meeks and members of this committee for the 
opportunity to speak before you this morning.
    Our focus today is on countering the People's Republic of 
China on the world stage and empowering U.S. businesses to 
compete internationally. And I'm lucky. I'm lucky to lead a 
team of some 1,500 economic offices located in almost every 
country on the planet who'll advance the Administration's 
economic stagecraft agenda and leverage U.S. global leadership 
to strengthen our domestic economic.
    We're more effective today than ever before in promoting 
U.S. businesses. And we owe much of that to this committee. 
Chairman McCaul, in 2019, you helped pass the Championing 
American Business Through Diplomacy Act, CABDA, to recognize 
the important role of commercial diplomacy and promoting U.S. 
prosperity in competing with the PRC. And I look forward to 
updating you on its implementation.
    In addition to promoting U.S. businesses, we also have to 
confront the PRC's predatory practices. We're making good 
progress. And what I'd like to do is to give you three quick 
examples of that progress.
    No. 1, we are addressing vulnerabilities and critical 
minimal supply chains. Almost a year and a half ago, I launched 
the Minerals Security Partnership to confront this challenge 
with key foreign counterparts. And we now have 14 partners plus 
the European Union collaborating to find critical mineral 
projects and to bring them to market.
    For example, the MSP has announced just recently milestones 
on six projects in every continent, ranging from extraction to 
processing to recycling. The MSP now has a pipeline of 23 
projects, and our engagement will ensure that critical minerals 
are extracted, refined, and recycled in ways that benefit all 
of the countries involved. The second example I'd like to note 
is that thanks to Congress, we're using the CHIPS Act.
    The CHIPS Act's International Technology Security and 
Innovation Fund, to rewire global semiconductor value chains. 
Already 18 months after enactment, the ITSI program has become 
a new center of economic gravity. We've announced ecosystem 
reviews for Costa Rica, Panama, Indonesia, Vietnam, and the 
Philippines.
    And other nations are asking us whether they can be 
considered. And in fact, some are taking on the hard work 
themselves. We're leveraging ITSI funding to create a broader 
semiconductor ecosystem and to maximize the pull factor, and 
we're starting to see results.
    The third example I'd like to note is combating PRC 
economic coercion which I know is of interest to this 
committee. This is one of my highest priorities. And I'm 
grateful for this committee's leadership on the issue.
    When partners face coercion, we are willing and we're able 
to help. I led the effort to support Lithuania almost 2 years 
ago which faced PRC trade based retaliation for opening a 
Taiwan office. And I used that case to develop a toolkit to 
directly support other countries facing PRC coercion.
    Today, Lithuania has survived the PRC's pressure, and it is 
not looking back. We have also coordinated with G-7 countries 
to ensure that when the next case happens, we're ready. In 
closing, I'd like to just summarize that we are leveraging 
every diplomatic tool that we have to bolster U.S. economic 
security.
    But we also need to deploy concrete resources to level the 
playing field enough to get our companies in the game. And 
that's why the Biden Administration last week released an 
Fiscal Year 2025 budget with a plan to effectively compete with 
the PRC. This request will allow us to continue to invest in 
the foundations of our strength at home, align partners and our 
shared interest, and tackle the challenges posed by the PRC.
    We can compete and we can win. But we need Congress' 
support to do it. Thank you, and I look forward to your 
questions.
    [The prepared statement of Mr. Fernandez follows:]

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman McCaul. Thank you, Secretary Fernandez. I now 
recognize Under Secretary Estevez for his opening statement.

  STATEMENT OF ALAN ESTEVEZ, UNDER SECRETARY OF THE BUREAU OF 
       INDUSTRY AND SECURITY, U.S. DEPARTMENT OF COMMERCE

    Mr. Estevez. Chairman McCaul, Ranking Member Meeks, members 
of the committee, it's my honor to testify before you once 
again on the importance of export controls to protect U.S. 
technology from adversarial countries. And yes, Chairman, I do 
wake up every morning and say what can I do with export 
controls to protect America. Export controls are a key tool in 
addressing national security and foreign policy concerns 
related to countries of concern, including the People's 
Republic of China, Russia, Iran, and North Korea.
    It's clear this committee understands that importance as 
this will be the eighth time that I or the two Bureau of 
Industry Security Assistant Secretaries have testified before 
this committee in the last 2 years. I think that's a record for 
BIS. The Bureau of Industry and Security has operated for 
decades at the nexus of national security, technology, and 
commerce.
    However, given today's threat environment combined with 
rapid technological change, our tools are more important than 
ever in protecting national security interest of the United 
States and our allies. We have used our export control tools 
extensively in the Biden Administration. For the PRC, we have 
implemented sweeping strategic countrywide controls on key 
critical technologies.
    These include advanced computing chips needed to power 
artificial intelligence for military and supercomputing 
applications as well as the semiconductor manufacturing 
equipment essential to producing those advanced chips. This 
countrywide approach is important because we are clearly 
identifying strategic sectors and items and setting clear lines 
on technological capabilities. Additionally, key allies have 
implemented similar controls for many of these items.
    These technology-based multilateral efforts enhance our 
existing extensive countrywide restrictions and are most 
effective in addressing our national security concerns related 
to the PRC. We continue to add PRC parties to our Entity List, 
in fact, adding more than 300 entities in this Administration. 
These actions help to backstop our technology based controls by 
denying PRC entities access to predominately commercial items 
that could be used for military applications or human rights 
abuses.
    BIS has also taken extensive action in concert with 38 
allies and partners to impose extensive export controls in 
response to Russia's full scale invasion of Ukraine. This 
multilateral approach has imposed increased costs on Russia and 
forced them to rely on pariah states like Iran and North Korea 
for weapons. Russia has also been forced to expand resources, 
create networks to evade our controls.
    In response, we have implemented new controls targeting 
Iran and entities throughout the world who are violating our 
restrictions. We continue to act strongly with our allies and 
partners to detect and disrupt those networks. And we are 
working with industry to enhance due diligence to detect 
efforts to evade our controls.
    While this work is important, I want to be clear. The most 
important step we can take right now to help Ukraine is to 
provide funding to support their fight. New funding along with 
other tools in our toolkit will continue to impose costs on 
Russia and those who seek to support Putin's unjustifiable 
actions.
    And while I recognize this hearing is about China, let me 
be clear. China is watching our actions and our willingness to 
stand up against illegal aggression. Helping Ukraine is also 
about China.
    Finally, speaking of funding, BIS has been asked to do more 
than ever in this era of strategic competition to address our 
national security and foreign policy concerns. To sustain our 
current pace and effectiveness, there are few realities that 
this committee should consider. BIS' budget for core export 
control functions has remained essentially flat since 2010, 
when adjusted for inflation.
    BIS's law enforcement arm employs only approximately 150 
agents to counter the threat posed by nation State actors. Our 
licensing workload has doubled from approximately 20,000 per 
year in 2012 to over 40,000 per year now. And the licensing has 
become more complex as our rules have become more complex.
    Our staff is relying on antiquated systems for both license 
adjudication and enforcement work that were put in service in 
2006 and 2008, respectively. We look forward to continue our 
constructive work with this committee to ensure that BIS has 
the resources and policy support needed to continue its mission 
critical work. I look forward to your questions.
    [The prepared statement of Mr. Estevez follows:]

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman McCaul. Thank you, Mr. Estevez. I recognize myself 
for 5 minutes for questions. On that issue--and look, in this 
Congress, we're trying to cut budgets for the most part.
    But your mission is hugely important. And you and I visited 
many times. Your ability to stop technology from going to China 
but also outbound capital flows is extremely important. So if 
you have resources to request, please provide that to this 
committee.
    I know you have OMB. But tell them that I've asked you to 
report to this committee on what the resources are that you 
need to do your job because I believe it's one of the most 
important ones. When you look at the hypersonic weapon that had 
American component parts it, the spy balloon, we have to stop 
exporting this technology.
    And then when it comes to outbound capital flow, same 
thing. I mean, the old school of thinking was to sanction a 
company and how that that would work or hope that Treasury 
would even sanction a company. And even if they did, they could 
change the name of the company overnight and the sanction has 
no force and effect.
    You and I talked about this sector-based approach, AI, 
quantum, hypersonics. Can you explain to this committee why 
that approach is superior to the old fashioned approach of the 
OFAC Treasury sanctioning a company only to see it change its 
name overnight?
    Mr. Estevez. Thank you for that question. And I appreciate 
your support for our funding. As you know, I come from a place 
where we give you unfunded priority lists----
    Chairman McCaul. Well, I understand you--OMB is probably--
yes, I understand.
    Mr. Estevez. A sector-based approach, yes, what we've done 
for advanced computing chips, the chips that are going to be 
the key to artificial intelligence, the key to the future of 
warfare, in fact, as well as future of economic prosperity. In 
China where I cannot tell because of the civil military fusion 
how those chips are going to be applied, and we know that they 
were going to be applied to military applications. Establishing 
a technological cutline and saying anything about this cutline 
should not be allowed in China because I cannot tell its use 
case is way more effective.
    It's more effective for industry because they can 
understand where that line is and they can then plan out what 
their business opportunities are. And it's more effective from 
an enforcement perspective. Export controls using the Entity 
List is a whack-a-mole game where to your point people change. 
And then we have to go after the next one which we're happy to 
do. But it's way more strategic to go after on a sector 
technological basis.
    Chairman McCaul. And as we are debating our outbound 
capital flow bill with the Financial Services Committee, I 
think that testimony is hugely important. Let me go to Huawei 
and SMIC. Your BIS approved hundreds of millions' worth of 
licenses for Intel to sell technology to Huawei. Can you 
explain that?
    Mr. Estevez. Certainly. The Huawei and SMIC rules that are 
in place were actually put in place in the previous 
Administration. However, when we put in the sector-wide 
controls that we were just talking about, SMIC is certainly 
subject to those controls. So they cannot get the equipment 
that they would need to make the highest end chips needed for 
GPU's graphic processing----
    Chairman McCaul. Can I ask you on that one? Because SMIC 
was able to use the tools and the machines and American 
equipment to make this 7 nanometer chip which is the gateway to 
AI.
    Mr. Estevez. We'll assume that it was SMIC. I cannot talk 
about any investigations that may or may not be going. But we 
certainly share those concerns, and that's certainly the 
reporting.
    There's a process to do that. It is a low yield process. It 
certainly would not be viable in any commercial company trying 
to sustain that process.
    And of course, they did access tools before we put in our 
tool controls, not the highest end tools but the level just 
below that. Those tools will ossify over time. And that process 
will be degraded.
    Chairman McCaul. Did SMIC violate U.S. export control laws 
by producing this 7 nanometer chip?
    Mr. Estevez. Potentially, yes. We'll have to assess what 
the outcome----
    Chairman McCaul. Yes. I mean, I'm not a scientist. But I 
would say they did. Finally, my time is expiring. But Mr. 
Fernandez--and this may be more of a statement. I have no idea 
why this Administration decided to stop permitting the exports 
of LNG to other countries.
    I mean, this gets back to our energy independence. Europe 
certainly wants our LNG. We should've added LNG terminals in 
Europe rather than Nord Stream 2 from Russia. That's an energy 
policy that really makes no sense to me. And then finally, I 
know this is out of your expertise. But the idea that we're not 
going to enforce sanctions on Iran and let them export 80 
billion dollars of energy to China to then use to fund terror 
operations is another foreign policy issue that, quite frankly, 
is troubling to me.
    Mr. Fernandez. Thank you for your question. Look, on the 
LNG pause, this is a pause to assess the additional LNG export 
projects, whether they are in the public interest. Given the 
increase in U.S. LNG exports and what we know about the effects 
of methane emissions and carbon dioxide emissions.
    The last assessment by DOE took place 5 years ago in 2018. 
In 2018, our exports were one-third of LNG, one-third of what 
we have today. Today, we export 12 billion cubic feet per day 
and we have a capacity of 14 cubic feet per day. We have right 
now projects coming on-stream that will increase our capacity 
to 26 billion cubic feet per day by 2030. And those projects 
are not being affected by this pause.
    Chairman McCaul. When you stop permitting, you're going to 
stop project of LNG in the United States. And LNG is very clean 
energy as opposed to what China does. And so again, this is not 
being energy independent.
    It's not helping Europe out from Russia. It's helping 
China. And it's a bad foreign policy, and I think it's a bad 
energy policy.
    And we could debate this, but I'm way over my time, sir. 
And I know that Ann Wagner has some pretty--I know Mr. Perry 
certainly has some very tough questions for you. So I will now 
recognize the ranking member.
    Mr. Meeks. Who wants to clarify some things. I want to 
clarify some things. So one of the things, though, I am deeply 
concerned about in regards to the PRC's routine use of economic 
coercion against other nations so that they can advance its 
political objectives.
    As a result, I sponsored and introduced a bipartisan bill 
called the Countering Economic Coercion Act of 2023 to support 
our partners that are victims of the PRC and economic coercion 
as well as punitive action against Beijing. So my first 
question goes to you, Under Secretary Fernandez. After finding 
out what steps the Administration has taken to counter and 
deter the PRC's economic coercion and support our partners when 
they are victims of the PRC's economic coercion.
    Mr. Fernandez. Thank you for your question. And I very much 
appreciate your support and the coordination of both houses of 
Congress on economic coercion which has been one of the top 
priorities at the State Department for me. We have seen 
economic coercion over and over again on the part of the PRC, 
Korea, Japan, Australia, the Philippines.
    I got involved with Lithuania. And with Lithuania, we were 
able to support Lithuania as it looked to react to PRC economic 
coercion. We were able to get EXIM back to double the export 
credits available to Lithuania from 300 which is what China was 
providing to 600 million dollars.
    We were able to get our posts around the world to open 
markets for Lithuania. We were able to get our partners around 
the world to also help. We have now, I'm glad to say, created a 
toolbox.
    We have a toolbox that we have developed along with other 
agencies. And we are now prepared to help other countries. And 
in fact, there's not a month that goes by that a country 
doesn't come to the State Department and wants to talk to us 
because they are afraid of economic coercion.
    The G-7 has taken this up as well. And so I think you're 
seeing that we're in much better shape today than we were a 
year and a half ago. And in fact----
    Mr. Meeks. Let me just ask this question. Now do you think 
you need anything from Congress? Do you believe that the 
Administration currently have or do they need additional 
authorities or resources that you need to more comprehensively 
address this challenge? Is there something that we can do here 
in Congress?
    Mr. Fernandez. Thank you for your question. Well, the 
President's budget request includes 1.1 million dollars to fund 
the office of the chief economist. One of the things that the 
chief economist does when countries come to us, it helps to 
assess some of the vulnerabilities that countries have to 
economic coercion.
    We also could use what I'm calling a banana fund which is 
basically agricultural products tend to be targets for the PRC. 
And they tend to rot as the PRC holds them at port. So that 
would be something else that we could look at as well. Thank 
you so much for your support.
    Mr. Meeks. And Under Secretary Estevez, I know and you had 
the discussion with the chairman in regards to the budget. And 
I guess the President in his budget request included 223 
million dollars to BIS which I think we need to make sure we 
get done. And you testified to some why and to the detail of 
what you think is needed. But let me just ask this question. In 
your estimation, does BIS currently have the modern IT 
infrastructure and software to conduct this day-to-day business 
effectively?
    Mr. Estevez. The answer to that is an emphatic no. Thank 
you for the question, Congressman Meeks. As I said, we're using 
antiquated systems fielded in the mid-2000's using 1990's 
technology. There's some requests before the committee for some 
data. We are doing 90 manual polls of that data right now 
because I do not have Google for, like, answering the questions 
that I need answered and that I'd like to support the committee 
with. And I have an enforcement function that also needs to be 
able to track who's doing what where that's really antiquated.
    Mr. Meeks. Because I have limited time, and maybe I'll try 
to do this in a yes or no real quick, dealing with China export 
controls, because I believe the Administration has supercharged 
our export control policy in the face of tremendous 
geopolitical change and challenges in the Indo-Pacific. So let 
me ask you real quickly. In just over 3 years of the Biden 
Administration, Department of Commerce has added, I think it's 
more than 1,200 entities to the entities list. Is that correct?
    Mr. Estevez. That's correct. About 43 percent of the Entity 
List.
    Mr. Meeks. And among those, BIS has added 303 PRC entries 
to that entry list. Is that correct?
    Mr. Estevez. 312, about 39 percent of all entities in 
China.
    Mr. Meeks. And is it accurate that under your leadership at 
BIS issued expansive new controls on items, end users, and end 
users as it pertains to semiconductors and advanced computing 
industries in China?
    Mr. Estevez. That is correct.
    Mr. Meeks. And based on BIS' analysis, what has been the 
impact of these controls on the PRC?
    Mr. Estevez. My analysis, which I would say I draw on the 
intelligence community and business quite frankly to assess 
that, we're having a major impact in China which over time will 
be even greater.
    Mr. Meeks. So my time has just about expired. So my last 
question because I'm concerned about the critical mineral 
supply chains. And so I like to know what steps has the Biden 
Administration taken to address the demand for critical 
minerals and enabled the United States along with our allies 
and partners to secure greater control of their supply chain so 
we're not beholden to China for access.
    Mr. Fernandez. Thank you for your question. Look, as you 
know, we have--we're going to need exponential amounts of 
critical minerals to reach our clean energy goals, 42 times the 
amount of lithium, 25 times the amount of cobalt. That's our 
need.
    Our vulnerability as of right now, depending on the 
mineral, 100 percent of the graphite comes from China, 80 to 90 
percent of all critical minerals are controlled or mined or 
owned by the PRC. What we have done is we brought together 14 
countries plus the European Union to create the Minerals 
Security Partnership in order to share information on critical 
mineral projects, invest together, finance together. And we're 
getting results.
    Just as I mentioned in my opening statement, we have in a 
year and a half--and this is lightning speed for the mining 
sector. We have six projects that are coming on-stream. We have 
23 projects that are coming on board.
    And the one thing--this is what I take away from this is 
that countries are hungry for U.S. investment. We have a 
different offer from the PRC. We value environmental standards. 
We support transparency.
    We cannot--our companies cannot engage in corruption. And 
so what we are hearing from governments and what we're hearing 
from countries in Africa and Latin America is that they want 
U.S. investment. They want our technology. They want our 
practices. And I hope that in the future, we'll be able to come 
to this committee and have even more projects that we can saw 
we have brought on-stream. We're making progress.
    Mr. Meeks. Thank you. My time is expired. I yield back.
    Chairman McCaul. The gentleman yields. Chair recognizes 
Mrs. Wagner.
    Mrs. Wagner. I thank the chairman. And most of all, I thank 
my colleagues for understanding and letting me leapfrog. My 
time is no more important than any of yours, but I am most 
grateful.
    Gentlemen, vigilantly enforced and properly coordinated 
U.S. export controls deny China the access to sensitive 
technologies that it wants to steal and fuel its military 
modernization. However, our current export control system is 
deeply flawed. As a result, controlled U.S. technologies are 
turning up in enemy programs, such as the spy balloon that was 
sent over my State of Missouri and the rest of the continental 
U.S. last year to collect data on frankly our most sensitive 
military installations.
    It is imperative that our export control system is 
efficient, targeted, and effective now that China, Iran, and 
Russia have formed a new axis of evil to attack our national 
security interests and help each other circumvent U.S. export 
controls. And this is why I am sponsoring legislation, the 
Export Control Enforcement and Enhancement Act, to ensure these 
critical safeguards are more agile and airtight. Secretary--
Under Secretary Estevez, I thank you and your staff for working 
with me on this legislation and providing good feedback.
    I look forward to continuing to discuss with your team and 
stakeholders as we move this bill forward. Secretary Estevez, I 
want to be clear that Commerce must improve its efforts to keep 
controlled American products and IP from falling into the hands 
of bad actors. But we also need to pressure our allies to do 
the same.
    How are you pushing allies and partners to harmonize export 
controls and tighten enforcement, especially I'd say on 
microchip technology? And what tools does the Administration 
have to compel allies to align with our export control policies 
and not inadvertently help China skirt U.S. export controls?
    Mr. Estevez. Thank you for that question, Congresswoman. 
I'm going to tweak your question a little bit because we do not 
pressure or compel our allies. We work with our allies. That's 
what makes them allies.
    Mrs. Wagner. I like pressuring and compelling. But go 
ahead.
    Mr. Estevez. I'm from New Jersey. But working them actually 
leads to a good end. As the chairman noted in his opening 
statement, we worked with the Dutch and the Japanese who happen 
to be the other countries that have key equipment like 
semiconductors.
    Talked to them about the threat. Talked to them about what 
we were seeing. And they instituted controls similar to ours 
that limit the highest end equipment similar to what we've done 
from going to China.
    That's not the end of that story. There's more work to be 
done. There's components that include other countries. My 
frequent flyer miles are rising, going out and talking----
    Mrs. Wagner. Good.
    Mr. Estevez [continuing]. To our allies.
    Mrs. Wagner. I hope so. And let me follow by saying in 
February, the Administration sanctioned four companies, 
providing material and technology to Iran's missile and drone 
programs. How extensive is China's support for Iran's weapons 
program? What more can be done to restrict the transfer of 
Chinese origin weapons or supply of related components to Iran 
and its proxies like Hamas and the Houthis?
    Mr. Estevez. So what we've done with regard to Iran, Iran 
sanctions program which includes export controls, it's actually 
managed by the Treasury Department. But we have related to 
Russia evasion put as you noted controls on a number of 
companies. I think it's 11 more than before that we initially 
put on. We put a bunch on December as well.
    And we instituted Foreign Direct Product Rule, both for 
those companies and for a slew of other EAR99, normally not 
regulated controls, so that even if it's not made in the United 
States but it's made with U.S. tech, they're also subject to 
those controls. And we're slapping down, I think----
    Mrs. Wagner. Thank----
    Mr. Estevez. --121 Chinese companies.
    Mrs. Wagner [continuing]. You. Secretary Fernandez, earlier 
this year, the Biden Administration announced a pause on 
pending decisions on LNG exports to non-FTA countries. This 
pause has injected new uncertainty into the regulatory 
environment in the U.S. for foreign buyers and is 
disadvantaging our companies as the compete on the global stage 
for contracts. At the same time, this Administration refuses to 
enforce sanctions on the sale of Iranian energy to our 
adversaries.
    Why we stop our energy from flowing to the global market, 
we allow Iran to flood the market with their energy, keeping 
the world dependent on bad actors and fueling China's machine. 
I am out of time, sir. But I would really like for you to 
answer in writing how you lead State officials for energy. Did 
you agree with these decisions?
    What responses did you get when you engaged, et cetera? But 
my time has expired, and I will respectfully yield back and 
hopefully look forward to your answer in writing. Thank you, 
Mr. Chairman.
    Chairman McCaul. Gentlelady yields. Chair recognizes Mr. 
Connolly.
    Mr. Connolly. Thank you, Mr. Chairman and welcome to our 
panel. Just I heard earlier concerns about our energy posture 
and the Biden Administration asleep at the wheel or something 
and jeopardizing our energy security. Mr. Estevez, wearing your 
Commerce Department hat, who's producing the most oil and gas 
in the world today, No. 1?
    Mr. Estevez. Not my writ, but the United States.
    Mr. Connolly. United States. And is it an all-time record?
    Mr. Estevez. Again, not my writ, but I believe so.
    Mr. Connolly. Yes. And would we call that sort of energy 
self-sufficient at this point? Have we pretty much kind of 
achieved that?
    Mr. Estevez. I believe so.
    Mr. Connolly. You believe so? Are we, in fact, now 
exporting oil and gas products because we produce so much for 
our own domestic consumption?
    Mr. Estevez. Yes, we are.
    Mr. Connolly. And are we, in fact, providing a lot of LNG 
exports to our European friends who are trying to wean 
themselves off Russian oil and gas? And are we not, in fact--is 
it not expanding so much that we're actually expanding 
facilities to receive that LNG in terms of depots and tanks and 
the like, in terms of constructing new facilities in Europe?
    Mr. Estevez. I'm going to yield that to Under Secretary 
Fernandez.
    Mr. Connolly. And Mr. Fernandez if I could ask you, please 
just speak into the mic. You're very hard to hear. You have a 
low voice.
    Mr. Fernandez. OK.
    Mr. Connolly. Thank you.
    Mr. Fernandez. Can you hear me now?
    Mr. Connolly. Yes.
    Mr. Fernandez. Just very simply, our LNG producers have 
really stepped up to the plate in response to Russia's invasion 
and Putin's weaponization----
    Mr. Connolly. Right.
    Mr. Fernandez [continuing]. Of energy. Right now, 70 
percent of our U.S. LNG exports go to Europe. We actually 
provide the Europeans more than 50 percent----
    Mr. Connolly. Right.
    Mr. Fernandez [continuing]. Of their imported LNG.
    Mr. Connolly. Right. So across the board actually, we're 
kind of hitting all records. So let's stop the myth that 
there's a problem with the Biden Administration with respect to 
energy. And, oh, by the way, if we want to get into renewables 
and I do, we're also producing more wind energy and solar 
energy than ever before. Is that not correct, Mr. Estevez?
    Mr. Estevez. That, I cannot answer because I----
    Mr. Connolly. Yes, the answer is----
    Mr. Estevez [continuing]. Just do not follow it. But I 
believe so, yes.
    Mr. Connolly. Yes, the answer is yes. OK, appreciate it. 
Mr. Estevez, recently the French President a few months ago 
said unbelievably that Taiwan was really an American concern. 
And he said it, I believe, in China.
    I mean, talk about a warning light and an invitation to a 
hungry wolf to have at it. That fits the bill, as if Taiwan 
were a parochial concern to the United States. So help me 
understand why another country like France might be interested 
in Taiwan from, let's say, an economic point of view. Where are 
about 80, 85 percent of the world's memory chips produced?
    Mr. Estevez. I'd say, like, 85 percent of the advanced 
logic chips are certainly produced in Taiwan.
    Mr. Connolly. Taiwan.
    Mr. Estevez. There's a little more disparity.
    Mr. Connolly. Pretty much one company too, right?
    Mr. Estevez. That's correct.
    Mr. Connolly. Right. Let's just repeat that, 80, 85 
percent?
    Mr. Estevez. Of the advanced logic chips in the world.
    Mr. Connolly. Right. So apparently President Macron 
believes the other 15 percent are all produced in France?
    Mr. Estevez. Korea.
    Mr. Connolly. Oh, so maybe France actually has an interest 
in Taiwan and that interest goes way beyond just the United 
States. Would that be a fair thing to say just looking at it in 
terms of economic dependence and technological independence?
    Mr. Estevez. That would be. But I would also say that our 
goal is to have 20 percent of those advanced logic chips made 
in the United States----
    Mr. Connolly. Fair enough.
    Mr. Estevez [continuing]. By 2030.
    Mr. Connolly. But that's across the board. That's not just 
aimed at Taiwan. Is that not correct? We're trying to lesson 
our dependence on pretty much single source----
    Mr. Estevez. That is correct.
    Mr. Connolly [continuing]. China, Taiwan, Korea, whoever it 
may be. We want to make sure that----
    Mr. Estevez. Diverse supply chain.
    Mr. Connolly. Right. And that's a supply chain issue. Mr. 
Fernandez, I'll give you the last word on the same question, 
why other people might want to be interested in the future of 
Taiwan besides just the United States.
    Mr. Fernandez. Congressman, you're talking to a big admirer 
of Taiwan. I've led four economic dialogs with Taiwan where we 
talked about supply chains in fact which are items of concern. 
We've talked about economic coercion, the energy transition and 
the like.
    We have--actually, we can say we've got some results as 
well. We were able to get the 21st Century Trade Initiative 
passed for which we thank you. And we are also promoting a 
double taxation agreement with Taiwan that we are now 
considering. Treasury is leading that. And if we are 
successful, it'll make it easier for Taiwanese companies to 
invest here in some of the projects that Congress is proposing.
    Mr. Connolly. Just a little self-promotion. I helped write 
a bill that addresses that last issue. Thank you, Mr. Chairman. 
And thank you for having the hearing. And I wish I could 
understand why we're having a second one this afternoon.
    Chairman McCaul. Well, we just work very hard on this 
committee. And I really admire the Irish Green Kelly scarf. 
It's very nice. Mr. Smith is recognized.
    Mr. Smith. Thank you, Mr. Chairman. Thank you for your 
testimony and your leadership. Let me ask you. Xi Jinping is 
credibly accused of genocide against the Uyghurs. I would think 
there's no doubt about it that he is destroying the Muslims in 
Xinjiang.
    He has taken over Hong Kong against what a lot of Sino 
watchers have said would never happen. I thought it would. I 
introduced the Hong Kong Human Rights Democracy Act in 2014 
when the umbrella was just getting off its feet.
    They're destroying human rights everywhere, religious 
freedom. The APEC Summit in my opinion was a shameless 
kowtowing to Xi Jinping, especially when so many of our 
businessmen paid so much to meet with a guy that's committing 
genocide. And frankly, I believe that trade is important as 
long as it's conditioned on human rights respect.
    And we all know that Bill Clinton delinked human rights 
from trade on May 26, 1994 after famously linking it. And he 
infamously delinked it. I went over to China. I met with them.
    They said, we're getting it long before he got rid of it. 
And that to me was the pivot point for they looking at us and 
saying, all they care about is the bottom line. Yesterday, I 
chaired my 100th congressional hearing. I chair the China 
Commission.
    We focused on this horrific practice of forced organ 
harvesting. It's my third hearing on that. I have a bill that 
passed bipartisan sitting over in the Senate since March 28th 
of last year.
    Only two people in the whole House voted against it to 
really rein in on an egregious practice. Everywhere you look, 
name the human rights abuse, Xi Jinping is excelling in it. And 
of course, he's threatening Taiwan.
    Now I had three hearings on the whole issue of cobalt. I've 
been to Goma. We know that DR Congo is sending all of its 
cobalt to China.
    When I asked Secretary Curry this at one of our hearings, 
he said, oh, they have an MOU at DR Congo. It's an 
aspirational, not worth the paper it's printed on really MOU 
because very, very high people in that country of DR Congo are 
getting huge amounts of money in their pocket in order to 
facilitate that. If you want to drive an EV, God bless you.
    No problem with me on that. I have problems with its long-
term environmental issues, what happens to the batteries, all 
of that. But if the cobalt which is it is, is coming from 25 to 
40,000 children through child labor in DR Congo and upwards of 
200,000 adults who are dying, getting sick.
    That supply chain is so seriously tainted. We got to find 
some other place. Yes, American companies and others have all 
sold out and that's sad.
    But frankly, we do have American companies here that do 
cobalt, mine it. But it's more expensive because when you deal 
with China, obviously everything is cheaper because of their 
ability to coerce labor. So my question is on the cobalt.
    How can we as a country allow the importation? I have a 
bill I've introduced that will provide a rebuttable 
presumption, similar to what we did with the Uyghur Forced 
Labor Act to say, fine, we'll bring it in as long as it's 
clean. It's not coming from a coercive situation with forced 
labor.
    Is that something you can support? I mean, we've got to be 
clear we do not advance our goals on the backs of little kids 
in the DR Congo. And again, I've been there many times, and on 
the back of their parents who are dying in these mines.
    Mr. Fernandez. Let me take a piece of that and then Alan 
can take the rest. Look, just to start from the beginning. 
Promotion and respect for human rights is an essentially tenet 
of our policy, no questions asked.
    OK. And in terms of cobalt in the DRC, this is a concern. 
But I also think that from our point of view, it is also a 
competitive advantage. If we can get involved in the critical 
minerals extraction or processing and follow the highest human 
rights environmental and work with communities so that 
communities do not have to choose between environmental 
degradation and child labor and economic prosperity.
    That's our competitive advantage. And that's what--in the 
Congo and elsewhere, that's what countries want. We are pushing 
in an open door. What we need to do is to actually show up, 
have the resources, get our companies involved, and as well as 
companies from our allies and partners.
    Mr. Estevez. And I would agree with what Under Secretary 
Fernandez just said. I note American companies are in Zambia 
doing some cobalt mining and looking in that regard. I think 
having American companies, using American standards of labor is 
critically important to our values.
    Mr. Smith. I would encourage you--I'm out of time. But 
please take a look at this bill. I think it advances that goal.
    Again, no matter where anybody comes down on EVs, it better 
be absolutely clean of child labor and forced labor of their 
parents. I yield. Yes, please.
    Mr. Fernandez. Congressman, I'd be delighted to show you 
some of the--we have put in writing in the Minerals Security 
Partnership what our environmental and human rights tenets are, 
principles are. And we put them in black and white. We can see 
it on the website. And that again, that is a competitive 
advantage for U.S. companies.
    Mr. Smith. Thank you. I'm out of time.
    Chairman McCaul. Gentleman yields. Mr. Sherman is 
recognized.
    Mr. Sherman. Mr. Chairman, I've got a bill for you.
    Chairman McCaul. Excellent.
    Mr. Sherman. You mentioned capital flows. We have a capital 
gains allowance built into our tax code because we believe that 
encouraging people to invest in stocks means that you build the 
economy. We provide a capital gains allowance for those who 
invest in Chinese stocks, building their economy at the cost of 
the U.S. taxpayer.
    But here's the good part. China has investment incentives 
for their people to invest in their economy. And they do not 
provide those incentives when people invest here. So I'm hoping 
that I can get you to co-sponsor what is now bipartisan 
legislation to say that we do not provide tax incentives for 
investing in Chinese-based companies.
    Chairman McCaul. We'll talk to the Ways and Means Committee 
about this issue. It sounds good to me.
    Mr. Sherman. Good. TikTok has come to mind. It's a national 
security issue. It's also an economic issue and one of 
fairness. Chinese companies make a lot of money showing 
Americans cat videos. Does China allow U.S. apps on the phones 
of Chinese citizens so that they can see cat videos in a way 
that makes money for American companies? Mr. Estevez.
    Mr. Estevez. I do not believe that they do.
    Mr. Sherman. So why in the hell do we let them make money 
on our cat videos when we cannot make money on our cat videos? 
Under Secretary Fernandez, we've got the Indo-Pacific economic 
framework. It involves a host of countries that seem to all 
kind of be in Taiwan's neighborhood plus us, of course. What is 
the current posture of including Taiwan in the Indo-Pacific 
economic framework?
    Mr. Fernandez. We have an open architecture. Taiwan and any 
other country can apply to join.
    Mr. Sherman. So do we expect that the other countries in 
that framework would be happy to have Taiwan join? Is there a 
reason they're not in it?
    Mr. Fernandez. I wouldn't be able to speculate, sir. I will 
tell you that Taiwan is one of our largest trading partners, as 
far as----
    Mr. Sherman. Mr. Estevez, is there any political obstacle 
to Taiwan joining the effort?
    Mr. Estevez. Not that I'm aware of.
    Mr. Sherman. OK. So I'd want to point out that the Biden 
Administration has done an unprecedented job in export controls 
to China. I understand there are 2,888 entities--entries on the 
Entity List and 43 percent of those are added by the Biden 
Administration. Do I have that correct?
    Mr. Estevez. That is correct.
    Mr. Sherman. We have the BIS which designed to effectuate 
our export controls. It's my understanding that that has been 
flat-lined in appropriations. Does BIS need more money? And 
given the fact that if I went to the grocery store with the 
same amount of money as I took in 2010, I'd be considerably 
thinner than I am now. Haven't we seen an actual cut in our 
efforts to implement export controls?
    Mr. Estevez. Our budget to your point has been flat. Our 
workload has----
    Mr. Sherman. And then when you say----
    Mr. Estevez [continuing]. Doubled and it's way more 
complex, flat.
    Mr. Sherman. Flat? Not even adjusted for inflation flat? 
Flat flat?
    Mr. Estevez. Adjusted for inflation.
    Mr. Sherman. Adjusted for inflation?
    Mr. Estevez. Yes.
    Mr. Sherman. But that's it. But we have more technology, 
more trade. And how many more applications do you have to deal 
with now than you did 15 years ago?
    Mr. Estevez. It's gone from 20,000 to 40,000. And again, 
way more complex.
    Mr. Sherman. Got you. One more thing, there is well over 
100 companies whose in China whose activities are an anathema 
to us. Some of them human rights violators. Some of them just 
integrated into the military industrial complex.
    And they're such an anathema to us that no American can by 
any product of that company. They happen to make paperclips. 
You cannot buy the paperclips. So if the company is so bad that 
you're not allowed to buy anything they make, can either of you 
gentleman figure out why we would allow Americans to buy stock 
in such a company? Or is this just a congressional oversight?
    Mr. Fernandez. I will tell you that we have what's now in 
the works and you know this is a very narrowly focused outbound 
investment rule for products that could end up in China's 
military complex.
    Mr. Sherman. I've got another bill for the chairman that 
says if you cannot buy a product of a company, you cannot buy 
stock of a company in China. It's not as interesting as the 
first bill I brought up, but I'm bringing up at the end. And I 
yield back.
    Chairman McCaul. The gentleman yields. Chair recognizes Mr. 
Wilson.
    Mr. Wilson. Thank you very much, Mr. Chairman. And thank 
you for being here today. And indeed we look forward in a 
bipartisan manner to work with Congressman Sherman on his very 
innovative initiatives that he's proposing.
    But as we being, I want to thank Chairman Mike McCaul for 
his leadership this week. On Tuesday, he actually created a 
historic significance in that sadly the appeasement in 
Afghanistan was revealed with 13 Marines murdered at Abbey Gate 
who was solely the responsibility of Biden. On August 26, 2021, 
Biden blamed the military for the disaster.
    But with the leadership of Chairman McCaul, we now know 
with General Mark Milley and General Frank McKenzie, they 
verified Tuesday that the irresponsible decision was Biden 
alone. Equally, we found out that as Biden blames Donald Trump, 
there have been the violations to the Doha agreement by the 
Taliban. And Donald Trump has indicated that it was conditions-
based and he would've never left Bagram Base.
    And so that was an historic hearing that we had. And then 
today, we're grateful to be here with you. And that is, 
Secretary Fernandez, Indo-Pacific countries are in the middle 
of an energy crisis.
    Current production levels cannot meet the growing demand 
for energy in the developing countries. And many countries in 
the region do not have geopolitical topography for the support 
of green energy sources such as wind, hydro, and solar. Many 
countries have expressed a desire to work with the United 
States on transitory energy such as cleaning current coal 
resources or natural gas to meet energy demands while improving 
the current environmental standards.
    Yet utterly responsible to me is the Biden Administration 
has announced restricts on gas, oil, and LNG exports, putting 
these countries in a bind and having no choice but to proceed 
to alternative suppliers such as the Chinese communist party. 
Current record exports by the United States are the result of 
the Trump Administration's successful policies, not the current 
Administration. And in fact, there's a contrast.
    As Trump promoted energy independence, Biden is promoting 
battery dependence on Chinese batteries. And there seems to be 
a Biden obsession for creating dependency on Chinese batteries, 
destroying American jobs. With the current proposal to cut back 
on exports, Secretary, how does this affect particularly LNG 
exports to Japan?
    Mr. Fernandez. Congressman, thank you for your question. 
And let me State again. It's an LNG pause. It's a pause 
designed to figure out by DOE whether additional LNG export 
projects are in the public interest.
    That is an assessment that DOE will make. The circumstances 
have changed since the last DOE assessment in 2018. We now 
export three times, triple the amount of LNG that we exported 
in 2018.
    We are due to double that by 2030. This pause does not 
affect current project assessments. And I have spoken to 
colleagues in Japan, and they understand what we are doing. We 
have doubled exports. We intend to double exports by 2030 with 
existing licenses.
    On Afghanistan, I'm not going to get into some of the 
specifics. I will tell you this. I keep a photograph in my 
office of an Afghan worker standing in line at the airport. And 
I can see the panic in his face. My colleagues at the State 
Department, including me, work night and day and we stand by 
that work.
    On batteries, let me just say that the Inflation Reduction 
Act has already led to substantial investments in battery 
manufacturing in the U.S. I was in Georgia a couple of weeks 
ago. Georgia has received----
    Mr. Wilson. Hey, my time is about up. Indeed, the Inflation 
Reduction Act, how irresponsible is that. Almost a trillion 
dollars to be used to subsidize Chinese batteries. I find it 
totally irresponsible.
    It has nothing to do with inflation reduction. It has 
everything to do with promoting dependency on Chinese batteries 
as you're just revealing. And that's just irresponsible.
    And we should be promoting our efforts to LNG and gas 
exports to produce American energy independence. I yield back. 
Thank you.
    Chairman McCaul. The gentleman yields. Chair recognizes Mr. 
Keating.
    Mr. Keating. Thank you, Mr. Chairman. Mr. Estevez, you 
mentioned in your opening statement that China is watching our 
actions in Ukraine. I agree. Can you expand on the importance 
of use right here in this Congress as we take 2 weeks off?
    We're on vacation and Ukrainian soldiers are going to be 
dying on the front line. Can you expand on the importance of 
how that commitment is to our allies and our coalition for 
security in Indo-Pacific as well as our economic interests in 
the Indo-Pacific? We just had a bipartisan senate bill. Not 
just frankly, 5 weeks ago, passed by an overwhelming margin.
    And we sit here to take 2 weeks off and do not act on this. 
So you mentioned it in your opening remarks, and I'm glad you 
did. Can you tell us how important it is that we honor our 
commitment to our coalition over 50 other countries, including 
in the Indo-Pacific, working together on this and not shirk our 
responsibility, which frankly with 185 members signing a 
discharge position, all Democrats.
    But I must say including members of this committee. I think 
over 100 Republican members at least willing to vote for this 
if the Speaker of this House put it on the floor for a vote. 
Can you tell us as we talk about this issue this morning how 
important that is to the things we're talking about here?
    Mr. Estevez. So I'd be happy to, Congressman. I really 
appreciate the question. I note, you know, my writ at 
Department of Commerce is export controls, and we have tight 
export controls on Russia.
    Unfortunately, export controls do not cut and immediately 
stop the Russian defense industrial base. It's more, like, the 
squeezing of an anaconda. It's a slow squeeze.
    While we were doing that, we need to supply Ukraine with 
the weapons they need. That is as a national security 
professional 36 years into the Department of Defense and two 
and half years at Commerce supporting our allies, showing our 
allies that we have the spine and backbone to meet our 
commitments, our commitments to NATO, our commitments across 
the Asia Pacific in front of malign actors who would overturn 
the world order that we established 80 years ago already, post-
World War II. Russia is challenging it. China is challenging 
it.
    That's why they're schmoozing together. Showing that we 
will stand up to aggression is critically important in 
providing Ukraine the funding that they need. Without U.S. 
boots on the ground to sustain their fight against Russia and 
Putin's illegal invasion is critically important to our world 
standing.
    Mr. Keating. Thank you. I think it's just not about 
democracy, although that's fundamental. It's also about--people 
should realize it's about their pocketbook and what things are 
going to pay. Along those lines, I just left another hearing 
where we had heard testimony about Russia's desire to secure a 
port in Sudan.
    And we look at China's activities in Djibouti and how they 
can--but it's not just in those areas. China is trying to gain 
port access and control all over the world. Can you talk about 
the effect of China's ability to--and their desire to even do 
more--control the navigational ports all over the world and how 
that affects us economically, not just in the Indo-Pacific but 
around the entire world?
    Mr. Fernandez. If I could take that. China has made 
investing in ports a strategic infrastructure priority through 
BRI, Belt and Road Initiative, through a number of investments. 
They also have a national security law obviously that compels 
Chinese companies and Chinese national to follow national 
security dictates. This is a concern. And what we are doing is 
we started a Strategic Ports Initiative, State and the NSC and 
others, to work on funding companies that want to invest in 
ports around the world and also to work on other infrastructure 
involving maritime transport.
    Mr. Keating. It's fair to say you're talking about trillion 
dollar issue here.
    Mr. Fernandez. You're absolutely right. You're absolutely 
right. The BRI numbers are astronomical. They dwarf whatever we 
have at DFC and other initiatives.
    Mr. Keating. And American consumers right now in my opinion 
are being price gouged because of the cost of shipping. You add 
to that what's going on with the Houthis and the Red Sea and 
their destruction and the cost of that. This is something we 
should clearly be focused on as our own policy. So thank you 
for your testimony, and I yield back.
    Chairman McCaul. The gentleman yields. Chair recognizes Mr. 
Perry.
    Mr. Perry. Thank you, Mr. Chairman. Mr. Estevez, the 
Institute of Forensic Sciences, I'm sure you're familiar, 
located in East Turkestan, used to aid and assist in the 
genocide and the experimentation on the Uyghurs. I'm curious 
about your delisting that entity in November of last year. Can 
you walk me through that rationale?
    Mr. Estevez. Thank you, Congressman Perry. First, the 
listing was for human rights violations as you note. We, of 
course--I shouldn't say of course. We take human rights 
concerns seriously. There are 70 or so parties on the Entity 
List related to human rights violations. This institute, which 
is a Chinese State organization engaged in crime control, it 
was certainly engaged in bad things with regard to the Uyghurs 
and, in fact, receives no exports from--no exports of note, 
like, a couple of things.
    Mr. Perry. Look, that's all, like, superfluous background 
information. I'm asking about----
    Mr. Estevez. But it's pertinent to the fact that you're 
asking about. So the delisting of that went through process, 
the normal process, requires a 4-0 vote across the interagency. 
It got a 4-0 vote. And as a result of that, the Chinese have 
engaged in cooperation for stopping fentanyl precursors from 
flowing to Mexico and other places.
    Mr. Perry. That's working out real well. So what I'm 
interested in, OK, so it got a 4-0 vote. I do not care about 
that. That's groupthink. Tell me----
    Mr. Estevez. A hundred and 15 Americans dead a day from 
fentanyl, and they're finding fentanyl----
    Mr. Perry. Yes, I know. And they keep dying more and more. 
The point is that's not working. The Chinese gave us lip 
service, and we delisted this organization that is hiding the 
fact that they're using the Uyghur for genetic experimentation 
and then manipulation and potentially warfare against them and 
us. But that aside, tell me about what factors went into the 
decision.
    Mr. Estevez. The factors that went into the decision 
related to Chinese cooperation related to fentanyl precursor, 
stopping fentanyl precursors.
    Mr. Perry. OK. So it relates to the fentanyl precursor 
manufacturer delivery to Mexico and so on and so forth. How is 
that being measured? What's the metric of success that says if 
we delist, you're going to do this? And this is measurable how? 
Is it in the deaths of Americans that's increasing every year 
by fentanyl or not?
    Mr. Estevez. It's stopping deaths of Americans, 
Congressman.
    Mr. Perry. So is that working? Are you saying we're 
stopping the deaths of fentanyl? Is that your testimony?
    Mr. Estevez. I'm saying that we're stopping the flow of 
precursors related to this action.
    Mr. Perry. You're stopping--so that's your testimony. The 
precursors are being stopped. The precursors of fentanyl are 
being stopped because of this----
    Mr. Estevez. That's the goal, Congressman.
    Mr. Perry. I'm sorry?
    Mr. Estevez. That's the goal, Congressman.
    Mr. Perry. I get it's the goal. That's a great goal. But 
when it doesn't happen because China says yes, we'll do it, and 
then----
    Mr. Estevez. If it doesn't happen, then we can turn that 
around.
    Mr. Perry. So how long--how many deaths are we going to 
wait? How many does that cost----
    Mr. Estevez. As you know, Congressman, it's just like any 
other thing with control, there's----
    Mr. Perry. Look, I'm just looking for the metrics, sir. I'm 
not trying to be difficult.
    Mr. Estevez. I'm going to turn it over to Under Secretary 
Fernandez to tell you how----
    Mr. Perry. Well, I got other questions for Secretary 
Fernandez. But I think I----
    Mr. Estevez. Well----
    Mr. Perry. I'm sorry?
    Mr. Estevez [continuing]. We run the process for delisting. 
The actions that are taken are being done in other agencies 
other than my own.
    Mr. Perry. Yes, so that everybody can do this and people 
can keep dying. Mr. Fernandez, regarding the DOE's decision on 
LNG exports of January of this year, did you object to the 
decision?
    Mr. Fernandez. No.
    Mr. Perry. So you act as those we've had other reviews and 
this is similar to that one. But on the other reviews that have 
occurred, has there been any pause as a relation to the review?
    Mr. Fernandez. I cannot tell you what has been done in the 
past.
    Mr. Perry. Let me tell you. There have been none. So right 
now, we're talking about the pause that's happening. It's for 
contracts that are being bid for 2030, for 2030.
    Let me ask you this. The other countries that we might be 
competing with or that are strategic adversaries to the United 
States to say the least, do you think that they're concerned 
with environmental justice issues when they make considerations 
about their LNG production and exports like Iran? Do you think 
that's a topic for Iran?
    Mr. Fernandez. Congressman, by 2030, right now with the 
existing guidance, we will have doubled.
    Mr. Perry. It doesn't matter, sir.
    Mr. Fernandez. Let me finish. Let me finish, please. And 
clean energy and climate are critical issues to this 
Administration. Now we can argue about climate change. We can 
get into that. But as far as we are concerned----
    Mr. Perry. So my question for you----
    Mr. Fernandez [continuing]. It is an existential challenge 
of our time.
    Mr. Perry [continuing]. It's great if it's double, triple, 
quadruple. That's irrelevant to me. The question is, is what 
other countries that we're competing with are considering 
environmental justice, countries like Iran?
    Mr. Fernandez. It is not about environmental justice.
    Mr. Perry. Well, it says so.
    Mr. Fernandez. If I may.
    Mr. Perry. That's one of the considerations, wasn't it?
    Mr. Fernandez. If I may.
    Mr. Perry. Sir?
    Mr. Fernandez. If I may.
    Mr. Perry. I'm listening.
    Mr. Fernandez. It is not about environmental justice.
    Mr. Perry. So that was not one of the considerations?
    Mr. Fernandez. It's about climate change. It is not about--
and again, we are doubling----
    Mr. Perry. I'm just asking, sir. Was that one of the 
considerations?
    Mr. Fernandez. Which one? Environmental----
    Mr. Perry. Environmental justice in the pause.
    Mr. Fernandez. One of the considerations was to allow DOE, 
the Department of Energy, to conduct an assessment based on 
trends----
    Mr. Perry. And was one of the things that they were 
assessing environmental justice?
    Mr. Fernandez. You will have to ask DOE.
    Mr. Perry. You're the--sir, it says energy in your title. 
Don't you know this?
    Mr. Fernandez. You will have to ask--DOE is conducting the 
assessment.
    Mr. Perry. Thank you, Mr. Chairman. I yield.
    Chairman McCaul. The gentleman yields. Chair recognizes Ms. 
Titus.
    Ms. Titus. Excuse me. Thank you, Mr. Chairman. 
Coincidentally, I'm going to take a minute to kind of brag 
about a bill that we passed this morning, Mr. Barr and I did, 
that had to do with cooperation with China. I think you and the 
President are right to say that we want to keep the bilateral--
I'm over here. Oh, OK. I couldn't tell if you all were talking 
to me or talking to somebody over there.
    About the science and technology agreements. And so I'm 
glad to see those moved forward because I think we can benefit 
from them as well as the rest of the world. But my question has 
to do with another meeting that I had recently.
    Just yesterday, I met with the President of the Federated 
States of Micronesia. And he was expressing some of the things 
that we've already talked about today, the attempts by China 
for financial inducements. They're impacting economic 
relations, diplomatic relations. We're talking about ports. As 
you look at what China is doing in this part of the world, can 
you just tell us, Mr. Fernandez, Mr. Secretary, what it is that 
keeps you up at night when you think about those relations and 
how we can attempt to counter them?
    Mr. Fernandez. Thank you for your question. The U.S. and 
our allies have helped to maintain the peace and security in 
the Pacific Islands since World War II. And we've also made 
possible the economic prosperity and development that you see 
there.
    We are putting in a lot of time and effort and attention on 
the Pacific Islands in response to a pattern by the part of the 
PRC of making vague confidential deals that relate to fishing 
practices to security and the like. The President has had two 
leader level summits with Pacific Island leaders in D.C. We are 
actually showing up and Secretary Blinken has been there, a 
number of my colleagues at State, a number of other departments 
as well.
    We've opened two new embassies. We have since--in the last 
2 years, we have 2 billion dollars in commitments to the 
Pacific Islands. We've increased our contribution to the tuna 
treaty which is an important treaty in the Pacific Islands. And 
we're cooperating on IUU fishing.
    We're doing a lot. And I personally was involved in helping 
Google with its cable that's supposed to go from Chile to 
Australia with a number of spurs going to the Pacific Islands. 
So I think you will see and we will continue to see renewed 
interest on the part of the Administration in working with 
Pacific Island countries.
    Ms. Titus. Yes, sir. Would you like to add to that?
    Mr. Estevez. That's really Under Secretary Fernandez's writ 
versus mine.
    Ms. Titus. Are you making progress with the settlement from 
the radiation left from the testing of weapons in the Pacific 
Islands?
    Mr. Fernandez. That one is outside of my remit. I'd be 
happy to take that back.
    Ms. Titus. Because that seemed to be kind of a sticking 
point in some of the agreements. But now that we've passed the 
COFA, it seems like some progress is being made. And the 
President was optimistic and hoping to see some of the benefits 
for social programs restored there. And I think that's 
something that we might want to look at too as we strengthen 
our relations.
    Mr. Fernandez. Thank you.
    Ms. Titus. Thank you. I yield back.
    Chairman McCaul. The gentlewomen yields. Mr. Barr is 
recognized.
    Mr. Barr. Thank you, Mr. Chairman. And Under Secretary 
Estevez, a question about BIS licenses. You and I have talked 
about this before. Appreciate the work that you're doing.
    Last year, I asked you how many BIS licenses were approved 
for companies that wanted to do business with entities on the 
Department of Defense 1260H list. That's the Chinese military 
companies or the Treasury list, the NS-CMIC list, the Chinese 
Military Industrial Complex list. Your response was that you 
needed to get back to me. That never happened. Let's try again 
this year. Do you know how many BIS licenses were approved for 
companies that wanted to do business with entities on the DOD 
1260H list or the CMIC list?
    Mr. Estevez. I do not know that answer. I know----
    Mr. Barr. Don't you--can I just say it's OK you do not 
know. Well, maybe it's OK. But do not you think that's a really 
important question for BIS?
    Mr. Estevez. Here's what I would say. You and I have had 
this dialog and we'll continue to have it because I think we're 
making progress on the overall list harmonization issue----
    Mr. Barr. Yes.
    Mr. Estevez [continuing]. Which is the real point that I 
think you want to get at. So that when an exporter looks 
whether they're an SDN on OFAC or whether they're on the Entity 
List or they're on the DOD list which actually has a completely 
different use case. So it's really not in the same vein.
    But the exporter knows that they need a license to come and 
get it. And then, of course, licensing policy on the Entity 
List mostly is presumption of denial. But there are some 
variances to that.
    An exporter actually looks at the consolidated list. They 
see all that when they do that. So they know. For us, we just 
put out a rule this week, yesterday, in fact, related to OFAC 
and Entity List synchronization related to Russia. There are 
other things that we can do in that. So there is progress in 
that vein.
    Mr. Barr. Why would Commerce ever issue a license for an 
American business to export or do business with a Chinese 
military company or a Chinese military industrial complex 
company? What possible interest do we have in that in granting 
that license?
    Mr. Estevez. Now again, if they're on the Entity List, it 
depends on when the policy is set and how it was set----
    Mr. Barr. And I'm not saying we may not. But I want to know 
what would be the interest of the United States in issuing that 
license.
    Mr. Estevez. For the most part, there is none.
    Mr. Barr. OK.
    Mr. Estevez. For the most part, it is a presumption of 
denial. There are licenses frankly to give desks and chairs and 
stuff like that----
    Mr. Barr. OK. All right.
    Mr. Estevez [continuing]. Which would be weird that the 
Chinese would be buying desks and chairs from us. But so be it. 
OK. I'll take that trade.
    Mr. Barr. OK.
    Mr. Estevez. But for stuff that's meaningful to a military 
organization, no.
    Mr. Barr. OK. Well, we just want you to stay on top of 
that. I do not really--I do not think Members of Congress on 
either side of the aisle are really interested in issuing 
licenses to do business with Chinese military companies. OK?
    Mr. Estevez. Neither is the Under Secretary of Commerce----
    Mr. Barr. OK.
    Mr. Estevez [continuing]. By the way.
    Mr. Barr. All right. Emerging and foundational 
technologies, Secretary Estevez, under the Export Control 
Reform Act, BIS is required to keep a list of emerging and 
foundational technologies, implement controls on those 
technologies, and work to establish multilateral controls with 
other countries and report the results to CFIUS and Congress, 
including the House Foreign Affairs Committee. When was the 
last time BIS submitted this required report to Congress?
    Mr. Estevez. I believe our last report went out last year.
    Mr. Barr. And Under Secretary Fernandez, as the person 
responsible for State's participation on CFIUS, have you 
received this report from BIS?
    Mr. Fernandez. I personally do not know the answer to that 
question. I can go back and check. We have other colleagues in 
my bureau who are more directly responsibility.
    Mr. Barr. Well, it's 2024. We passed this bill in 2018. We 
got to get on it. And ECRA implementation has been painfully 
slow. And we want Commerce and we want State to be on top of 
it. So let's keep that going.
    Mr. Estevez. If I could, Congressman. Under FIRRMA which, 
again, I got to testify before your committee for FIRRMA. And 
I'm glad that it passed.
    CFIUS does not need to see any list to understand where to 
put controls and what investments to make. CFIUS is working the 
way it should. But we do share technology requirements with 
CFIUS which I happen to have a say in.
    Mr. Barr. My time has expired. But I want to just make the 
point that whether we do sector based investment controls, Mr. 
Chairman, or whether we do sanctions or both, what we want--and 
I know the chairman shares this view. What we want is precision 
and certainty and clarity for the American private sector.
    So implementation of the executive order or legislation 
we're working on, we do not want the private sector to be 
guessing. We want the American private sector to know what is 
red light and what is green light. That's what the export 
control system has achieved largely over the years, and we want 
that to be the case without bound capital flows as well.
    Mr. Estevez. I concur with you, Congressman.
    Mr. Barr. I yield.
    Chairman McCaul. The gentleman yields. I would like to take 
this opportunity to ask you, Mr. Estevez. Financial Services 
has a bill. Foreign Affairs has a bill. Ours is sector-based. 
Theirs is OFAC sanction-based. Is there--in your opinion--I 
know you're a sector-based person, sort of like I am. But is 
there a way to combine both approaches? And would that be more 
effective?
    Mr. Estevez. There probably is, Congressman. You're coming 
up off the top of my head here.
    Chairman McCaul. Right.
    Mr. Estevez. Right. But I mean, we do it with things, 
sector-based that I've done it on, semiconductors and 
semiconductor equipment. Or what we would say artificial 
intelligence do not support Chinese companies that are being 
models of X, 10 to the X, 26, or something like that. And we 
can say, do not support these companies as well in y our 
investment.
    So the stock exchange thing that Congressman Sherman was 
saying. Don't buy their stock. Don't support those companies. 
So I think there's probably a combination that you could do 
that gets the full gamut of what needs to be done.
    Chairman McCaul. Well, give that some though. And perhaps 
you could get back to me and Mr. Barr.
    Mr. Estevez. Happy to.
    Chairman McCaul. That'd be very helpful.
    Mr. Estevez. You bet.
    Chairman McCaul. Thank you. Chair recognizes Mr. Stanton.
    Mr. Stanton. Thank you very much, Mr. Chairman and Ranking 
Member for holding this important hearing. Thank you to our 
witnesses for being here today. Mr. Chairman, I owe you a big 
thank you. Arizona owes you a big thank you.
    Chairman, you are a champion of the CHIPS and Science Act. 
The President of United States and Secretary Raimondo, 
Department of Commerce were in Arizona yesterday as was I to 
announce the largest investment of CHIPS and Science Act 
resources to Intel which has its largest manufacturing facility 
in my district in the State of Arizona. Those will also benefit 
there, manufacturing facilities being built in Ohio, in Oregon, 
as well as New Mexico.
    Equally as important supporting the security of the supply 
chain that goes along with it. Incredibly apropos for today's 
conversation, 8.5 billion dollars in investment to grow 
semiconductor and improve security in the semiconductor supply 
chain. The CHIPS and Science Act investments are intended to 
spur American manufacturing and shore up national security.
    But these investments need to be complemented by 
appropriate export controls administered by the Bureau of 
Industry and Security that make sure that these important 
innovations work for the American companies and bring resources 
and jobs to American families and insure that our supply chains 
are as secure as possible. Export controls are most effective 
when imposed by multiple countries, not done just unilaterally 
by the United States. Under Secretary Estevez, how has the 
Biden Administration worked to rebuild international engagement 
on export controls after a few years of taking unilateral 
action?
    Mr. Estevez. Thank you for that question, Congressman. In 
the semiconductor space directly, we moved out on some 
controls, some sweeping sector-wide controls with regard to 
China. But we were talking to our allies as we were doing that.
    Our allies fortunately share the same threats. They share 
the same values that we see. And shortly after we took our 
action, they took similar actions so that they have also 
stopped the highest end of semiconductor manufacturing 
equipment from going to China. But that can threaten us in the 
future.
    Mr. Stanton. We know that there are still gaps in 
multilateral export controls. U.S.-China Economic and Security 
Commission's 2023 annual report showed that China was able to 
stockpile semiconductor manufacture equipment between when the 
U.S. implemented its October 1922 semiconductor export controls 
and when Japan and Netherlands fully implemented theirs in 
September 2023. What is BIS doing to ensure our allies are 
honoring and implementing their respective semiconductor export 
control rules in parity with the United States? And that's for 
either witness.
    Mr. Estevez. I'll take that. First of all, we monitor sales 
across the globe just as if we were buying stock quite frankly, 
looking at the investments. I am racking up frequent flyer 
miles, talking to our allies about what they're doing, how 
they're doing it, making sure that we have parity between U.S. 
companies and the companies in our allied nations so that we're 
all having similar controls going.
    We're also looking in regard to China servicing of that 
equipment that was sent before the controls went into effect so 
that we can ossify those tools that they already have. And of 
course, we're also looking at components. We've stopped 
components going. We're working with our allies to bring them 
to--for them to do likewise.
    Mr. Stanton. In your experience, how do PRC actors work 
around U.S. controls? And how can we better crack down on those 
measures?
    Mr. Estevez. For the most part for semiconductor tools, 
they're huge, a couple containers' worth of equipment to move. 
So it's fairly hard for them to move around that. They do look 
to the secondary market.
    The Koreans have stopped secondary market sales. That's 
critical to us. And there's always a way. We have enforcement 
activity and plus working with DOJ. We were prosecuting when we 
see violations of our controls.
    Mr. Stanton. Do you have the tools you need, or could 
Congress provide you more tools in this important effort?
    Mr. Estevez. Congress could absolutely provide me more 
resources. I have 150 export control agents. I have antiquated 
systems that they operate on. We could do better, and we're 
doing pretty good without those resources.
    Mr. Stanton. I appreciate the testimony. Mr. Chairman, I 
yield back.
    Chairman McCaul. The gentleman yields. Chair recognizes Mr. 
Kean.
    Mr. Kean. Thank you, Mr. Chairman. And thank you to our 
witnesses for being here today. Under Secretary Estevez, Under 
Secretary Fernandez, do you believe agree that China is 
actively supporting Russia's war in Ukraine and Iran's support 
for Hamas?
    Mr. Estevez. That's actually a more nuanced question than 
it would seem. But there's certainly Chinese companies who are 
certainly providing capability to Russia. And we are putting 
Chinese companies that we see doing that where there's American 
technology involved on the Entity List.
    Mr. Fernandez. Look, the unlimited partnership between 
China and Russia is a reality. Russian oil exports to China 
have increased dramatically as well as PRC exports back to 
Russia. That is a concern, and we continue to monitor it.
    Mr. Kean. So at what point would you impose countrywide 
restrictions on China, not just Entity Listings, either to 
impair China's ability to support these countries or to impose 
consequence?
    Mr. Estevez. Yes, sir. You have to ask--I'd have to know 
what you want to put countrywide controls on. Semiconductors, 
for example, much of the semiconductor production does not flow 
from the United States. So our ability to control is somewhat 
limited.
    We have used the foreign direct product rule and we 
continue to do that. So then it's what's the distribution 
network flow. And we're working with American companies quite 
frankly so they cutoff that flow as well.
    Mr. Kean. OK. Under Secretary Estevez, ensuring full and 
robust enforcement of U.S. export controls is vital and 
necessary to prevent Iran from tapping into U.S. goods and 
technology, missile and drone production. Given the ongoing 
proliferation of Iranian missiles and drones often made with 
U.S. origin components, can you please--and in--excuse me, in 
China, can you please explain how this Administration is 
working to restrict Iran's access to U.S. origin technology?
    Mr. Estevez. And I'd say it's really not U.S. It's U.S. 
company branded, not necessarily made in the United States. I 
just need to put that nuance.
    We have about 20 companies related to Iranian drone and 
missile production on the Entity List and with foreign direct 
product rule. We've also put in place a foreign direct product 
rule on commodity level chips, CAR-99 chips, which are not the 
highest end chips that we control at a higher level. We put 
foreign direct product rule on those going to Iran.
    So again, we can stop that flow. And when we catch people 
violating that flow, it depends on where they are. We can use 
the prescribed Entity List. There's a number of tools that we 
are using.
    Mr. Kean. Do you have an update that you can share with us 
on the outcomes of the task force set up to look into the 
presence of U.S. and European components, including American 
made microelectronics and Iranian made drones, including those 
used by Russia?
    Mr. Estevez. I mean, we are always taking apart stuff from 
Ukraine and then assessing where it came from. There's also 
counterfeits and other flow that goes into that, even thought 
it might look like a U.S. part. We're working with companies, 
again, to stop them from selling to distributors that we 
identify that could be bad distributors. In other words, their 
distribution network which is generally good is now providing 
stuff to Russia or selling to companies that are providing to 
Russia. And again, we're using the Entity List as a tool in 
that regard.
    Mr. Fernandez. I would just add that in the last 2 months, 
Alan, our Under Secretary at Treasury, our counterpart and me 
have been calling companies specifically in order to tell them 
that there are unintended leakages of their products and up in 
the Ukrainian battlefields. And we're getting their cooperation 
to try and staunch that flow.
    Mr. Estevez. And we're giving them the data so that they 
can take action.
    Mr. Kean. Thank you. I yield back.
    Mr. Green [presiding]. The gentleman yields. We now 
recognize Mr. Costa for 5 minutes of questioning.
    Mr. Costa. Thank you very much, Mr. Chairman. I think that 
the importance of the hearing regarding countering China on the 
world stage and not only dealing with American businesses but 
the Chinese military as it reflects to the threat to our part 
of the world and the Pacific is critical. And I commend the 
committee for this hearing.
    I want to get a different twist on this because my view is, 
is that for any Administration and for Congress, China is an 
adversary, China is a competitor, and China is a vast market. 
And that makes it difficult. And we're talking about the threat 
that is posed here as it relates to the Nation that it's an 
adversary to us and to our allies.
    I want to do it in context of legislation that we've been 
looking at here that would counter that. I believe the 
Administration supports the effort on the supplemental piece of 
legislation that would've provided 2.58 billion dollars to 
bolster U.S. and allied capabilities in the Indo-Pacific. Is 
that correct?
    Mr. Fernandez. Yes, sir.
    Mr. Costa. And we have a supplemental--we have an 
alternative to the supplemental that we are trying to get heard 
on the House floor that would provide 4.9 billion dollars to 
provide deterrence and operations in the Pacific. I do not know 
if you've seen it. But if you're supporting the Senate 
bipartisan package, I would assume it you'd support this as 
well if we could get it for a vote on the floor. Is that 
correct?
    Mr. Fernandez. Congressman, we requested 4 billion dollars 
in discretionary funding for----
    Mr. Costa. Right. Well, my----
    Mr. Fernandez [continuing]. Indo-Pacific----
    Mr. Costa [continuing]. Time is limited. But basically, you 
want additional support, right?
    Mr. Fernandez. Yes, sir.
    Mr. Costa. OK.
    Mr. Fernandez. And the reason for that is we've got to show 
up. Countries are looking for----
    Mr. Costa. I agree. And we got to show up not only here but 
as it relates to Ukraine. And I want to put these two in a 
comparative analysis. It's been 2 years since Putin launched 
his brutal invasion of Ukraine. Last week, Putin delivered an 
annual State propaganda or the union to Russia and said that as 
far as he went to threaten nuclear war if NATO sends troops to 
Ukraine.
    But let's be frank about it. Russia today is a syndicate, I 
think, that's masquerading as a nuclear--a nuclear syndicate 
masquerading as a country with a mob boss called Putin. That's 
how I describe modern day Russia. And if you do not view that, 
look what he did just 3 weeks ago with his adversary, Alexei 
Navalny.
    He did what mob bosses do. He eliminated his opposition. 
But I think that China is watching what we're doing in Ukraine 
just as Russia is trying to determine what is the resolve of 
the United States. And that's why I think the two are in the 
same category frankly.
    And whether or not Congress provides this supplemental aid 
in any form, both to protect our interest in the Indo-China as 
well as protect our interest in Europe with our allies there. I 
met with a group of Ukrainian officials 3 weeks ago when I was 
in Kiev. And you see a group of brave Ukrainian folks that are 
not only fighting for their sovereignty and their democracy but 
for ours throughout the world which is what Taiwan is trying to 
do is maintain their sovereignty and their democracy as well as 
our allies in Japan and South Korea and Australia.
    And so I think there's a good comparative analysis about 
what we do with legislation to provide support not only as it 
relates to the Pacific but also as it relates to our European 
allies. But we're stuck with gridlock here in the House of 
Representatives. We cannot get the supplemental bill to the 
House floor.
    We cannot even get an alternative to the House floor that 
would provide funding for Ukraine, Taiwan, and Israel. Ukraine 
is fighting and putting up a fight that I think is in our 
interest just as our support for Taiwan and our allies in Japan 
and South Korea. When you look at what's happened in Ukraine, 
they've regained over half the territory that Russia has took.
    They've reopened the Black Sea. And they've stricken over 
two-thirds of Russia's tanks and 315,000 of Russia's troops. 
But I think for many of my Republican colleagues, I think 
they're showing weakness to Putin.
    I think this is analogous to 1939 when Neville Chamberlain 
went an appeased Adolph Hitler because people recognize 
strength. And so I think the Speaker and my Republican friends 
need to talk about putting together a package that will provide 
supplemental aid to Ukraine, to Taiwan, and to Israel. Either 
of these efforts I think would really reflect a bipartisan 
support that has been there traditionally.
    A significant amount of the funding by the way says in the 
United States as we build new weapons and replace weapons in 
our own stockpiles. So I think this, whether it's how we fund 
it in the supplemental package or whether we fund it in another 
way. The longer we delay aid to Taiwan and to Ukraine, the more 
Xi and Putin will exploit the situation.
    That's the bottom line. Or adversaries respect strength. 
And Putin won't stop until Eastern Europe is in its grasp. And 
Xi is watching to see whether or not the U.S. will support its 
allies. Do you agree?
    Mr. Estevez. One hundred percent concur.
    Mr. Costa. Let me close, Mr. Chairman.
    Mr. Green. Very quickly, yes.
    Mr. Costa. To quote an American President who understood 
strength, President Ronald Reagan said it best in 1984 when he 
said, ``To keep peace, we and our allies must be strong enough 
to convince any potential aggressor that war could bring no 
benefit and only disaster.'' I think by abandoning support and 
funding for Taiwan, for Ukraine, and for Israel sends an 
opposite message to our adversaries and the rest of the world. 
The world is watching. And I ask my Republican colleagues are 
we going to stand up with democracy or are we going to stand up 
with Putin and Xi.
    Mr. Green. The gentleman's time is expired. I now recognize 
the gentleman from Tennessee, Mr. Burchett, for his 5 minutes 
of questioning.
    Mr. Burchett. Thank you, Mr. Chair. Mr. Estevez, on October 
27, 2023, the Bureau of Industry and Security issued a 90-day 
pause on firearms exports. That pause should've ended January 
5th, 2024. Why is it still in place?
    Mr. Estevez. It's still in place, Congressman, because we 
were trying to craft the policy that meets the goals of 
stopping diversion of guns to criminal enterprises while still 
allowing proper sale of guns across the globe.
    Mr. Burchett. Where are we at in that process?
    Mr. Estevez. We're close. I cannot give you a timeline, 
sir.
    Mr. Burchett. I have a hard time being close when we're 
dealing with something that I think is constitutionally sound. 
During the campaign speech in 2019, Joe Biden referred to 
lawful firearms manufacturers as the enemy. Do you think lawful 
firearms manufacturers are the enemy?
    Mr. Estevez. As someone who used to buy firearms for the 
military, no.
    Mr. Burchett. What if they want to buy them for civilians?
    Mr. Estevez. Constitutional right.
    Mr. Burchett. What's your opinion of that?
    Mr. Estevez. It doesn't matter what my opinion is. My 
opinion is that----
    Mr. Burchett. I think we know. Did you or anyone at 
Department of Commerce have conversations with the White House 
Office of Gun Violence Prevention prior to this decision?
    Mr. Estevez. This decision is going through the normal 
interagency process.
    Mr. Burchett. Did you have that conversation?
    Mr. Estevez. This process has gone through the normal 
interagency process.
    Mr. Burchett. So you're not going to answer that. You're 
not going to answer that.
    Mr. Estevez. I'm also talking to industry and Congress.
    Mr. Burchett. So the answer is yes?
    Mr. Estevez. We've talked to lots of people involved in 
this process.
    Mr. Burchett. I'll take that as a yes. How many licenses 
have been affected by this, sir?
    Mr. Estevez. The pause has affected licenses that were 
pending. And it's a really very small number. Maybe 1,000 
applications, about 10 million dollars a year of impact for the 
pause. We have seen 6.2 billion dollars worth of pending 
firearms licenses being processed.
    Mr. Burchett. Would 4,000--the number 4,000 surprise you?
    Mr. Estevez. Four thousand?
    Mr. Burchett. Four thousand licenses have been affected by 
this.
    Mr. Estevez. I said 1,000.
    Mr. Burchett. One thousand. Has the Bureau of Industry and 
Security review existing licenses for possible revocation or 
suspension?
    Mr. Estevez. The only--we would do that if we see certain 
violations of the end user. That could happen. But that's not 
part of this process. That can happen in the regular course. 
The diversion of a weapon from an end user that was legally 
sold, we would stop those sales.
    Mr. Burchett. Mr. Chairman, this is an absolute 
weaponization of the Federal Government by the Biden 
Administration from the moment Mr. Biden began campaigning was 
dead set on attacking lawful firearms manufacturers. This is 
the attack on the livelihood of honest and hardworking 
Americans. This isn't about the Second Amendment.
    This is about how people make a living. The government 
should never have the power--should never have the power to 
stop lawful Americans from providing for themselves and their 
families. But this Administration has taken upon itself. Thank 
you, Mr. Chairman. I yield the remainder of my time.
    Mr. Green. The gentleman yields. And Mr. Estevez, if you 
would, make sure the mic--kind of pull it in a little closer. 
We're having a hard time getting you on the recording.
    Mr. Estevez. You got it.
    Mr. Green. Thank you. I now recognize Mr. Amo for his 5 
minutes of questioning.
    Mr. Amo. Thank you, Mr. Chairman. And thank you to our 
witnesses, Under Secretary Fernandez and Under Secretary 
Estevez. This morning I voted in support of the Science and 
Technology Agreement Enhanced congressional Notification Act 
which would require reports to Congress on science and 
technology agreements between the United States and the 
People's Republic of China.
    I was proud to vote for this bill because bilateral science 
and technology agreements are essential for the United States 
to facilitate international cooperation with the PRC. 
Importantly, this bill also recognizes that research and trade 
must be beneficial to Americans and prevent the People's 
Republic of China from using research and technology to harm 
our national security. The House has recently taken action on 
concerns that companies owned by entities in the People's 
Republic of China are collecting sensitive data on United 
States citizens.
    President Biden has also expressed concern about this data 
being transmitted to the Chinese Community Party and issued an 
executive order late last month to prevent data brokers and 
other commercial entities from selling Americans personal 
information to countries of concern. At a high level, I just 
wanted to ask Mr. Fernandez, what keeps you up at night?
    Mr. Fernandez. On the STA?
    Mr. Amo. No, just more broadly with China and their 
engagement on data beyond.
    Mr. Fernandez. Thank you. What keeps me up at night? Well, 
it's a little bit outside of this hearing today. I've been to 
Kiev and we've had a lot of discussions here about Ukraine.
    And one of the things that struck me as I watched is older 
people would walk past bombed out building looking straight 
ahead, determined not to let Russian bombs affect their daily 
lives. I've been in Warsaw in a children's and women's center 
where millions of Ukrainian women and children are refugees. I 
was a refugee myself. I know what that feels like.
    I've seen mothers sitting on a corner in that center 
quietly sobbing so that their children would not hear them. 
These are children who refuse to paint with colors. They paint 
in black and white. And what they paint is a plane strafing 
Ukrainian cities. They prefer that. They cannot bear to paint 
in colors.
    I think--when I cannot go to sleep, I think of these older 
citizens. I think of the women and children in Warsaw. And then 
I think of their husbands and sons on Ukrainian battlefields 
that right now as we speak these people have to choose when 
they're facing a Russian onslaught whether they have enough, 
whether to fire or not, because they may not have enough 
bullets.
    And I'll be frank with you. I look at myself. I think how 
could I look these people in the eye? And the reason I saw this 
is that Ukrainians do not have a Plan B. They know what comes 
next if Putin wins.
    Russia has tried to deny the country's existence before. 
You've got to go back to the 1930's. Ukrainians lost almost 10 
percent of their population through the Great Famine.
    When mothers dying from famine, dying from hunger would 
leave notes for their children saying, if I die, it's OK to eat 
me. That is a historical fact. They lost thousands more during 
The Great Terror, and they know exactly what happened in Bucha 
a couple of years ago.
    And so you ask me what keeps me up at night. Well, the 
world is watching. It's watching us in Ukraine. It's watching 
in Poland. It's watching us throughout Europe. It's watching us 
in Russia. And it's watching us in China.
    And you know what? It's also watching us in Taiwan. And so 
I'm grateful for this hearing about countering China. And I 
look forward to questions on that on my specific remit.
    But I will tell you this. And I leave you with anything 
today is this. If you want to counter China, fund Ukraine. Beat 
Putin. That is the best that we can do to counter China.
    Mr. Amo. Well, Mr. Fernandez, I appreciate you taking a 
broad interpretation of my query because that should keep us 
all up at night. That's why we're all compelled to action which 
is why I hope--and not just hope, but hope that we turn that 
concern, that fear into real action on the floor of the House 
of Representatives as soon as possible. Thank you, and I yield 
back the remainder of my time.
    Mr. Green. The gentleman yields. I now recognize myself for 
5 minutes of questioning. The United States of America is still 
the greatest and most powerful nation in history. And we can 
win any competition with Communist China.
    The only question is whether we're going to do it the smart 
way or with our hand tied behind our backs. At every turn, the 
Biden Administration has hamstrung American businesses and 
ceded ground to the Chinese communists. Most recently, the 
Department of Commerce which has the statutory duty to foster 
and promote foreign domestic commerce completely stopped the 
issuance of renewal and renewal of certain export licenses to 
American exports of firearms, ammunition, and related 
materials.
    This pause was dumped on American businesses with zero 
warning and zero stakeholder engagement. This action by the 
Bureau, Mr. Estevez, is costing this industry over 100 million 
dollars and it's creating a mass uncertainty. You said the 
pause would last approximately 90 days.
    We're on Day 146, a 50 percent increase in what you 
predicted. I appreciate Mr. Burchett bringing that up. In 
November when this pause was first announced, I led 87 of my 
colleagues and sent you a letter demanding an explanation on 
this unprecedented action.
    All we received in response was an unsubstantial letter 
that grossly misrepresented reports from the Government 
Accounting Office, the GAO, and the ATF. First of all, the GAO 
report was addressed to the Department of State, the Department 
of Commerce. And it's only recommendation was for State to 
increase firearms trafficking investigations.
    For the Department of Commerce to claim this as 
justification for freezing an entire industry is absolutely 
absurd. Second, the GAO report repeatedly emphasized that 
existing data is not sufficient to warrant permanent changes to 
export policies. That's a quote, and that trafficked firearms 
are overwhelmingly sourced through the black market.
    Even the ATF report openly admitted that less than 1 
percent of the firearms lawfully exported from the U.S. were 
associated with an international gun crime. Stopping the lawful 
exportation of firearms does absolutely nothing to prevent 
international gun crimes. But it will destroy an American 
industry, and people will lose their jobs.
    Rather than facilitate Commerce and help our businesses 
compete against China, BIS is targeting American gun exporters 
for crimes they did not commit while the real perpetrators of 
violence go unpunished. The industry is already highly 
regulated. Any action to limit U.S. participation will only 
allow countries like China to step into the void.
    China is among the largest exporters of these types of 
firearms. And it's well known that the CCP strategy to combat 
the United States is to destabilize western hemisphere by 
trafficking its fentanyl precursors. So there's no reason to 
think that they won't do the same with firearms.
    To right this wrong, of course, I introduced the Protect 
American Gun Exporters Act. The bill would force the Department 
of Commerce to stop this insane policy. It's imperative that we 
end this so-called pause and allow American exporters to 
compete.
    If the Bureau of Industry and Security doesn't change 
course, international gun crimes will only increase. And China 
will step into the vacuum. And I can assure you the CCP doesn't 
care who it's selling to or worse, other nefarious people.
    Mr. Estevez, what is the delay? Why are we still--you said 
90 days. You got that wrong. Why are we still not done with 
this?
    Mr. Estevez. Thank you for that, Congressman. The pause is 
on a limited small sector. Most gun sales are still taking 
place. Gun sales to Europe, and to Asian allies, are all taking 
place which is where the bulk of the gun sales do take place, 
or military to military, or government to government----
    Mr. Green. We're talking hunting stuff.
    Mr. Estevez [continuing]. Continue taking place.
    Mr. Green. That's exactly right.
    Mr. Estevez. So it's a small segment of gun sales that are 
on pause.
    Mr. Green. Why is it not done yet?
    Mr. Estevez. It's not done yet because we are trying to 
craft a rule that gets after the issue of diversion to criminal 
elements which I know we all want to stop----
    Mr. Green. True.
    Mr. Estevez [continuing]. Right? So it's a shared value and 
still allow valid sales in the world. So we're trying to craft 
it so that we get after that small segment----
    Mr. Green. You understand----
    Mr. Estevez [continuing]. To be diverted.
    Mr. Green [continuing]. Supply chains, right? If one guy 
wants something, let's say I want, I do not know, Widget X, and 
this supplier isn't getting it to me. I'm not going to sit and 
wait forever for you to approve Widget X to be sold from your 
country. I'm going to go look somewhere else.
    And then when that supply chain is established, our guys 
have lost the business. And oh, by the way, it's not just the 
gun manufacturers. Think of the shippers and they're mostly in 
Democrat districts like Philadelphia, right? Those are jobs 
lost. And we may very well--I mean, I do not know. Is it your 
intention to put this industry out of business?
    Mr. Estevez. Congressman, most of the gun sales that are 
not impacted by this pause, so they're still taking place 
including shipments around----
    Mr. Green. We've got manufacturers in my district with 
contracts over 100 million dollars and they cannot ship a 
thing. So you tell me that it's just not----
    Mr. Estevez. No existing licenses were stopped. So if they 
had an existing license, that's still valid.
    Mr. Green. These are contracts that are signed, and they're 
saying they cannot ship.
    Mr. Estevez. Existing licenses went. So the pause only 
impacted a small amount. And of course, I'm talking to NSF 
repeatedly to get this right, Congressman.
    Mr. Green. OK. Well, we need to get this done. We need to 
get this done. Thank you, and I yield. I now recognize Mr. 
McCormick, the gentleman from Georgia, for 5 minutes of 
questioning.
    Mr. McCormick. Thank you, Mr. Chair. Chinese theft of 
intellectual property of the United States military technology 
is a major problem. In a 2022 report, the Washington Post 
mapped more than 300 sales over 3 years from U.S. companies 
producing technology that went directly to Chinese companies 
involved in CCP, hypersonic, and missile programs.
    In the report, the Washington Post claimed it spoke to six 
Chinese scientists, and quote, ``working in military labs and 
universities who described almost unfettered access to American 
technology with applications in design in testing of 
missiles.'' Some of the most effective missiles that can be 
used against American military personnel and equipment. Does 
either one of you know how many Chinese nationals are students 
in our top universities here in America right now?
    Mr. Fernandez. I do not.
    Mr. Estevez. I do not either. But there's lots of Chinese 
students in America.
    Mr. McCormick. Sure are. Chinese national students, over 
300,000 easily. We average probably over 350,000 Chinese 
nationals at our top universities, learning our best technology 
to take it right back to China along with all the other secrets 
to make the best technologically advanced weaponry against the 
United States, including ship making too, by the way. Do we 
know how many H1B visas have been issued for Chinese nationals 
that are currently working in the DOD or protected technology 
such as AI here in America?
    Mr. Fernandez. Congressman, the answer is I do not have an 
exact right. I can answer your question----
    Mr. McCormick. Approximately?
    Mr. Fernandez. I do not know, sir.
    Mr. McCormick. OK.
    Mr. Fernandez. I can take that back.
    Mr. McCormick. OK. So neither one of you knows. I do not 
know either, but I bet it's a huge number because it's capped 
at 7 percent per country. And I guarantee you where they're 
putting the applications are is to take those exact things that 
the Chinese national scientists basically said, we have 
unfettered access to these technologies. I find it somewhat----
    Mr. Estevez. I would say, Congressman.
    Mr. McCormick. I didn't ask a question, sir. One second. 
Thank you. When we talk about Bureau of Industry and Security 
and the secrecy--and literally lay waste to our military. And 
I'm a military man for 20 years. It worries me that they have 
missiles and other technologies that could hurt us and lose us 
a war in the future.
    We actually have H.R. 6542 which I hope will be passed soon 
that will actually limit Chinese nationals along with Iranian 
nationals and North Korean nationals and Russian nationals from 
having H1Bs that gives us access to the DOD and other--I would 
suggest that your bureau is also work in conjunction with us to 
limit that access for national security and for your own good. 
That's just an encouragement. To add to that, China, the CCP 
has announced they're going to take over Taiwan by 2027. 
Approximately how many AI percentage--in percentage rate IT 
production, how much of our AI production is produced over in 
Taiwan right now?
    Mr. Estevez. About 85 percent of the advanced chip 
production in the world is in Taiwan.
    Mr. McCormick. For AI, it's about 100 percent. They produce 
about 90 percent of the world's AI chips, the other 10 percent 
in Samsung. So my point is if China has unfettered access to 
our technologies and now they say they're going to take the one 
place that we make all of our AI chips overseas, that is 
extremely concerning.
    The CHIPS Act did not correct that, by the way. I just want 
to make sure the public knows this, that we're not doing 
anything to protect the most valuable technology and the most 
transforming technology we've ever had in human history. It 
worries me because in China, quite frankly, there's no civilian 
government divide.
    And any company helping produce new technologies is tied to 
the CCP and their military. The U.S. should not be directly or 
indirectly funding Chinese military companies. They must clamp 
down on the blatant espionage and cyber crime that steal U.S. 
technologies and military innovations. I know I'm almost out of 
time. But I want to know how you guys are working to protect 
America, its best interest, whether it be in economy or 
military or industry. All the things we need to do to protect 
America and the next generation in the most important 
technologies that will advance our ability to fight wars and to 
advance our economy.
    Mr. Estevez. Congressman, let me jump real quick. I know 36 
years, DOD sustaining and building weapons for the U.S. forces 
so that we always have technological overmatch whenever we send 
sailor, soldier, airman, and Marine, space guardians to the 
battlefield.
    Mr. McCormick. Let me also----
    Mr. Estevez. We have put sweeping controls on the most 
advanced chips, the chips that you mentioned made in Taiwan, 
for artificial intelligence, the future of warfare, and the 
tools to make those chips to China. We're going to stop the 
Chinese from being able to use our technology against us.
    Mr. Fernandez. Let me just add something, if I may. Our 
best in the world universities thrive, in part, due to the fact 
that they're open to the brightest minds in the world. We 
continue to admit and welcome the vast majority of Chinese 
students who want to come here to pursue degrees and make 
tangible contributions in their academic field. And they can 
also benefit the U.S.
    We review every visa in sensitive disciplines that could 
impact national security. We actually engage in a targeted 
screening process. So we are aware of this. But we also have to 
be careful. And I speak as someone who used to be involved in 
the university. We've got to be careful about denigrating and 
targeting specific nationalities of students.
    Mr. McCormick. I think we also have to be careful to 
protect the national interest of the United States against all 
enemies, foreign and domestic. And I think it's naive to think 
that the United States is going to be safe from the CCP who's 
actively engaging 350,000 students here in the United States at 
our technologically advanced universities if we think we're 
going to vet them enough to keep our secrets from them being 
used against us. With that, I yield. Thank you.
    Mr. Green. The gentleman's time is expired, and he yields. 
Now I yield to Mr. Huizenga for 5 minutes of questioning.
    Mr. Huizenga. Thank you, Mr. Chairman. I appreciate that. 
Under Secretary Fernandez, last week I sent you a letter 
regarding the increasingly concerning issue of China's economic 
coercion tactics, particularly in Europe to influence the 
economic and political decisions of U.S. allied nations.
    These tactics range from targeted trade restrictions to 
leveraging investments in critical infrastructure as a means of 
exerting political pressure. We have all heard of the examples 
from Lithuania and Norway where particular industry caught the 
full force of these PRC tactics in the form of embargos. All of 
this was due to a political decision made by their government 
and their governments and entirely out of their own control.
    So first, how is the Department of State addressing the 
impact of China's economic coercion on Europe? And what 
measures are being considered to support our European allies 
encountering these tactics?
    Mr. Fernandez. Thank you for your question, Congressman. 
Earlier I spoke of what we've done specifically in Lithuania 
which was the first test case that we had. We worked 
interagency. We were able to double the export credit that the 
PRC had provided.
    We got them additional markets through our posts. The 
Department of Defense signed the procurement agreement. Right 
now Lithuania is thriving. And they are grateful for what we 
were able to do.
    Since then, we have been engaging our interagency. We now 
have a toolbox. We've also engaged in a number of allies and 
partners. We are coordinating with them as well.
    Mr. Huizenga. Yes, let me explore that a little bit.
    Mr. Fernandez. My point is we now receive on a monthly 
basis, we now receive inquiries from countries that are afraid 
of being targeted by the PRC and we're helping them.
    Mr. Huizenga. So what are you doing to develop that unified 
strategy against this coercion and making sure that our 
responses and our allies' responses are aligned and effective?
    Mr. Fernandez. Thank you for your question. We have done a 
lot. We engaged a number of our allies and partners. G-7 has 
actually taken as one of its main projects economic coercion 
and responding, creating a platform for economic coercion. We 
have progressed on this. We're not perfect. We could do more.
    Mr. Huizenga. OK.
    Mr. Fernandez. We'll get better. But we're quite good at it 
by now.
    Mr. Huizenga. And what role has the U.S. played in 
strengthening international norms and legal frameworks to deter 
economic coercion and protect the sovereignty of nations in 
making their own political decisions and economic decisions? In 
other words, are we able to do anything on that international 
stage with norms and structures that mitigates or lessons the 
impact of China or strengthens our allies in other nations?
    Mr. Fernandez. Well, the Lithuania example convinced 
Europeans to pass an anti-coercion instrument, and ACI. We 
welcome that. But they also filed a case against the PRC. I 
think rather than legal norms, I think we just got to beat 
them. And that's really what we're trying to do.
    Mr. Huizenga. OK. Appreciate that. Under Secretary Estevez, 
do you believe that Chinese facial recognition is dangerous to 
U.S. foreign policy interest?
    Mr. Estevez. I believe facial recognition technology is 
widely used.
    Mr. Huizenga. Yes.
    Mr. Estevez. But Chinese technology, capturing faces of 
U.S., I'd be concerned about, yes.
    Mr. Huizenga. Are you tracking reporting that China has 
been exporting facial recognition technology similar to systems 
used against the Uyghurs to countries like Burma, Myanmar which 
are being run by military----
    [Simultaneous speaking.]
    Mr. Estevez [continuing]. On the Entity List. I cannot stop 
outbound exports from China.
    Mr. Huizenga. But are you aware of those reports and are 
you tracking it?
    Mr. Estevez. I am not. But it doesn't surprise me.
    Mr. Huizenga. OK. Well, it's our understanding that 
companies involved include Huawei, Hikvision, and--Hikvision at 
least on the Entity List. Will BIS take action to fully include 
Huawei on that Entity List?
    Mr. Estevez. Huawei is on the Entity List.
    Mr. Huizenga. OK. And so if they're on the Entity List, I 
thought I just heard you say that if they aren't on the Entity 
List, you have no ability to track that or no ability to----
    Mr. Estevez. No, I have no ability to stop exports out of 
China. I stop exports into China.
    Mr. Huizenga. OK. All right. Secretary, thank you. 
Appreciate that. Secretary Fernandez--oh, I'm seeing my time is 
up. But I'm going to followup on a letter. We did have a second 
letter to you, and I would appreciate your timely response on 
that.
    Mr. Fernandez. Thank you. And will respond to your letter.
    Mr. Huizenga. OK. Thank you. With that, Mr. Chairman, I 
yield back--or Madam Chair. We changed chairs while I was busy 
with my questioning. So Madam Chair.
    Mrs. Kim of California [presiding]. I'd like to now 
recognize gentleman from Ohio, Mr. Davidson.
    Mr. Davidson. I thank the gentlelady. And I thank our 
witnesses. Appreciate the work that you do. It's an incredibly 
important mission for our country that it go well. So for your 
leadership and for the people that work under your supervision, 
I wish you great success.
    I am concerned prior to Congress, I came from a 
manufacturing background. And American companies can compete 
with other companies very successfully. But with China in 
particular, we're not competing with companies. We're competing 
with a foreign government. Is it either of your assessment that 
China is in compliance with their obligations under the World 
Trade Organization treaty?
    Mr. Fernandez. I would defer to my colleagues at USTR on 
that. We have--I can tell you we have lots of concerns about 
the fact that they compete unfairly. They have subsidies. They 
have state-owned enterprises. But I would specifically in the 
WTO, I would let my colleagues at USTR answer that.
    Mr. Estevez. Likewise. That's a USTR question. But I, like 
Under Secretary Fernandez----
    Mr. Davidson. That's very deferential of you. But let me 
tell you, they're not.
    Mr. Estevez. Subsidies.
    Mr. Davidson. No one in the country believes China is a 
market economy. And the base promise that they made in exchange 
for these special privileges would be that they would function 
as a market economy and they do not. They do not just do that 
to the United States, though. They do that to countries around 
the world.
    They block market access. They shape it. They steal 
intellectual property frankly with a whole of government 
approach. None of these are market behaviors.
    The subsidies are very targeted. And because of that, I 
think it's especially important that we pay attention to our 
supply chain risks. So I think this falls into your purview 
very directly for both of you. Is China more--or is the United 
States more or less dependent upon supply chains from China 
over the time you've been in office and how so?
    Mr. Fernandez. I'll start there. I think the answer we've 
made great progress on supply chains. And I will cite the 
Inflation Reduction Act. We've gotten--just in Georgia last 
week when I was there a month ago actually--12 billion dollars 
in terms of Korean investments in battery manufacturing.
    In the critical mineral space, we've created the Minerals 
Security Partnership in order to deal with the vulnerability 
that you correctly point out exists. We are very vulnerable to 
Chinese control of critical mineral supply chains. But we've 
created a partnership of 14 counties plus the European Union.
    It includes India. It includes 55 percent of the world's 
GDP. And we're making progress. We didn't get into this problem 
just now.
    Mr. Davidson. We certainly didn't get into this problem 
just now. But I do not know that we're making incredible 
progress. You cite the Inflation Reduction Act which does spend 
a lot of money but I wouldn't say that it's solving the 
problem.
    I am glad that one of the big investments is in Ohio with 
Intel. We welcome them and hope they continue to building their 
plant their which was paused for a bit. We hope the 
Administration will work to get the permitting accomplished 
that they need.
    But when we look at the core dependents upon China, one of 
the areas that you cite has stalled battery production in 
plants all over the place because they cannot get access to 
cobalt. And that's because China controls it. And we're not 
making progress on some of these critical minerals.
    We're addressing it. We're talking about it. We're giving 
speeches about it. We're spending money to do it, but it is not 
getting solved. So what on the horizon do we see that is 
actually going to change the status quo?
    And when I hear--I think we have Department of Education 
witnesses here defending Chinese students. And the reality is 
we're supposed to defend our market from Chinese influence and 
control and frankly national security vulnerabilities. So what 
on the horizon is actually addressing it?
    Mr. Fernandez. Sir, the Inflation Reduction Act has spurred 
a lot of investment in U.S. battery manufacturing. It's created 
jobs. Right now in just a year and a half, we have over----
    Mr. Davidson. The whole thing is a Green New Deal. All 
right? So it isn't. You're killing American energy. We're not 
exporting American energy. It's making us more dependent upon 
China, not less. And we've got the Administration foolishly 
banning electrical steel.
    They're trying to stop American companies. The only 
intellectual property is American, and the Chinese are stealing 
our uniform grain electrical steel that we should be building 
our electric grid on. And you guys are facilitating it under 
the Green New Deal co-branded as the Inflation Reduction Act.
    Mr. Fernandez. I'm sorry. The numbers just do not----
    Mrs. Kim of California. The gentleman's time is up.
    Mr. Fernandez [continuing]. Support that.
    Mr. Davidson. I yield.
    Mrs. Kim of California. Thank you. Let me now recognize the 
gentlelady from North Carolina, Ms. Kathy Manning.
    Ms. Manning. Thank you, Madam Chair, thank you, Ranking 
Member Meeks, for organizing this hearing. And thank you to our 
witnesses for your service. Under Secretary Fernandez, I am 
very concerned about our adversaries' attempts to dominate the 
next generation of critical technology. And one area that I do 
not think gets enough attention is Russian and Chinese attempts 
to influence and dominate international technical standards 
through the ITU, IEC, the ISO, and IETF. Does the State 
Department have a comprehensive strategy to counter their 
malign influence in these critical standard setting bodies?
    Mr. Fernandez. Thank you for your question. That actually 
is something we have spent a fair amount of time on. Three 
years ago, it dawned certainly on me that the Chinese were 
dominating a number of the international organizations.
    We put together a group to work with. And then that's--at 
the State Department, one of my colleagues is leading that. We 
also started working with our allies and partners. And in fact, 
this was one of the points discussed in the Trade and 
Technology Council with the EU. Since we started working on it, 
we've had some, I think, major successes.
    We've been able to support the winner in the ITU 
Telecommunications Union election, an American. We've also been 
able to support the winning candidates in a number of the other 
organizations, including ICAO in Montreal. So this is something 
that we are spending a lot of time on because you're right. 
Standards will dominate, will set the table for things like 6G, 
submarine cables, and the number of the telecommunications in 
ITU technologies that are coming down the pike.
    Ms. Manning. Thank you. Under Secretary Estevez, as head of 
BIS, you oversee the office of anti-boycott compliance. This 
critical office ensures that American citizens and businesses 
are not forced to comply with unsanctioned foreign boycotts, 
including against our ally, Israel. And since the October 7th 
terrorist attacks, had you seen more demands by foreign actors 
for American businesses to boycott Israel?
    Mr. Estevez. Nothing that's come to my attention on that. 
But we have strengthened our anti-boycott rule. In the Office 
of Export Enforcement, we're giving people credit for self-
disclosure. We're asking for self-disclosure. But we've also 
put if you do not self-disclosure and we stumble across you, 
the administrative penalties are going to be higher.
    Ms. Manning. I hope you will keep an eye out for those 
kinds of boycotts because with everything that's going on in 
the Middle East and with all of the attacks on our ally, 
Israel, those boycotts are sure to erupt. And I'll ask both of 
you. How do State and Commerce regularly engage with private 
sector and industry leaders? Are most American companies 
supportive of an aligned with our geopolitical strategy toward 
China? And what can we do if they're not?
    Mr. Estevez. I'm obviously through my export control 
regimes stopping billions and billions of dollars of sales. I 
spent a lot, a lot of time talking to American companies about 
why we're doing that. They may not be happy of the end game, 
but they're supportive at the end game because they see my 
controls are for national security. And they see the importance 
of national security. Secretary Raimondo said, democracy is 
good for business.
    Mr. Fernandez. I would agree with that. And in fact, Alan 
and I have cooperated in a number of instances where we're 
reaching out to companies for support in keeping their 
technology away from Russia and China.
    Ms. Manning. Thank you. And Under Secretary Fernandez, I 
heard you respond to a question asked by one of my colleagues 
when you said that China is watching everything we do. Russia 
is watching. Ukraine is watching.
    So would you agree that one of the most important things we 
should be doing--in light of those countries watching what we 
are doing, would you agree that the one of the important things 
we should be doing is passing the Senate bill for supplemental 
funding to Ukraine and Israel, the bill that the Speaker 
refuses to bring to the House floor?
    Mr. Fernandez. Well, as I said earlier, if you want to 
counter China, fund Ukraine. Beat Putin. There's no other way 
to do it.
    Mr. Estevez. Critically important to our standing in the 
world.
    Ms. Manning. Thank you. With that, my time has expired. I 
yield back.
    Mrs. Kim of California. Thank you. I now recognize myself. 
I want to thank both Under Secretaries Fernandez and Estevez 
for appearing before our committee today. Under Secretary 
Fernandez, just before today's hearing, I sent you a letter 
expressing concern with the challenges that our American 
businesses are facing in the People's Republic of China.
    You probably heard the same thing. American businesses have 
been subject to coercion behavior such as raids, confiscation 
of company's property like telephones and computers. That 
behavior is largely seen as retaliation against the United 
States for sanctioning Chinese Communist Party officials for 
their human rights abuses and also as a retaliation for the 
U.S. taking action to secure its most sensitive technologies 
through export controls. So what actions can you tell me that 
State Department is taking to address the CCP's retaliatory 
actions against American companies operating in China?
    Mr. Fernandez. Thank you for your question. I received your 
letter yesterday and you'll get a written response. Look, and I 
get U.S. companies all the time who come into my office.
    They are afraid to make their complaints known to the PRC. 
So they ask us to do it on their behalf. But this is the nature 
of this regime. It's not an aberration.
    These reports are of serious concern to the investor 
community. And what the PRC is trying to do is basically thread 
a line between conducting raids in foreign companies and also 
asking them to invest as foreign investors. And companies----
    Mrs. Kim of California. Talk specifically about what you 
are doing to help protect American interests----
    Mr. Fernandez. So we----
    Mrs. Kim of California [continuing]. Doing business there.
    Mr. Fernandez. I'll tell you what we're doing. I engage 
with them, with U.S. companies all the time. We have issued 
business advisories. I have been the skunk in the room at U.S.-
China business meetings.
    Mrs. Kim of California. What does business advisory entail?
    Mr. Fernandez. What's that?
    Mrs. Kim of California. Telling them not to do business 
because of these? What does that business advisory that you----
    Mr. Fernandez. It basically says----
    Mrs. Kim of California [continuing]. Talk about entail?
    Mr. Fernandez [continuing]. You got to be careful in the 
PRC. You've got security laws that are vague, that are 
arbitrary that can be used against your employees, can be used 
against you. As Secretary Raimondo has said in the past, China 
is taking actions that are making it un-investable. And so we 
make that point.
    Mrs. Kim of California. Earlier, you spoke about a toolbox 
the State Department offers for countries facing economic 
coercion. Can you share what tools are available for vulnerable 
countries in the Indo-Pacific as well as what measures are the 
Department of State implementing to better protect our partners 
in the Indo-Pacific from economic coercion?
    Mr. Fernandez. Well, as I said earlier, we have a number of 
tools in our toolbox. Some of them, frankly, we didn't know we 
had. And we were learning as we go along. EXIM Bank has been 
quite helpful, the DFC, DOD, a number of the other agencies or 
embassies. The Indo-Pacific opened up markets for Lithuania. 
We're working with a number of other countries in the Indo-
Pacific as they express our concerns about Chinese coercion.
    Mrs. Kim of California. Can you also talk about----
    Mr. Fernandez. And I'd be happy--if I could, I'd be happy 
in a different setting to give you some more details on that.
    Mrs. Kim of California. OK. Well, can you tell me what the 
Department of State's plan is to encourage American businesses 
to move their critical supply chains out of China and toward 
like-minded and free trade oriented partners throughout the 
Indo-Pacific.
    Mr. Fernandez. Let's be clear. We're talking about 
derisking, not decoupling. We are not telling people to leave 
China. What we're saying is we are providing opportunities for 
countries that want to go elsewhere to open up factories there.
    We're doing it in Vietnam. We're doing it in the 
Philippines. I just came back from both places. We're doing it 
in Latin America. And it is succeeding. We're getting companies 
that have decided to move their offices, move their factories. 
And we are supporting that through the ITSI Fund which is part 
of the CHIPS Act as well as through the Inflation Reduction 
Act.
    Mrs. Kim of California. Thank you. One last question, 
countries in the Indo-Pacific import significant volumes of 
goods from PRC. And the PRC is the largest trading partner of 
most countries in the region. So how big of a factor are unfair 
trade practices in making countries in the Indo-Pacific 
vulnerable to economic coercion?
    Mr. Fernandez. They're very vulnerable. Many of them are 
vulnerable which is why they come to us. And they ask us how we 
can help them. And you know what? We're providing help.
    Mrs. Kim of California. Thank you. I see that my time is 
up. Let me know recognize the gentleman from Texas, Mr. Self.
    Mr. Self. Thank you, Madam Chair. You've mentioned several 
words that I wanted to pick up on, derisking. And in your 
comment, if you want to counter China. So I want to pick up on 
a low tech area which is the critical mineral supply.
    And I very much appreciated your written testimony, Under 
Secretary Fernandez, and talked about we have advantage they 
cannot match, our allies and our partners. You started the 
Minerals Security Partnership. Under that, you mention 14 
partners, Estonia, Czech Republic, Australia, graphite in 
Mozambique, the U.K., Tanzania. And you now have a forum.
    And you end your written testimony with that engagement 
will help ensure critical minerals are extracted, refined, and 
recycled in ways that benefit all the countries involved. I 
want to talk about our national interest. Forty-nine of the 50 
rare earth minerals are located in Alaska.
    I have in front of me a list of the 55 executive orders and 
actions targeting Alaska since January 20, 2021. There was one 
executive order with six critical elements to it on the day 
that President Biden took office. He also revoked the DOI's 
previous National Oil Reserve Alaska order.
    And in 1922, he reverted the National Petroleum Reserve 
Alaska back to the 2013 plan. The day he took office, he put a 
moratorium on congressionally mandated add more leasing. And 
there is some question about whether that was a taking of 
leases that had been sold.
    We also have--they pulled a--by the way, that was January 
20th. The Alaska delegation, they met with him on May 24th, on 
December 9th of 2021, December 2022, on March 2023. My 
recommendation to the Alaska delegation, stop meeting with the 
White House because after every one of their meetings, they get 
more executive actions to include a preemptive veto of the 
Pebble Mine area, placing new surface mining regulatory 
requirements on Alaska.
    These 55 actions could help solve exactly what you 
mentioned in your testimony for rare earth minerals and other 
critical minerals. Why in God's name are we targeting our own 
domestic rare earth and critical mineral mining capacity in 
favor of something called the Minerals Security Partnership 
which is international?
    Mr. Fernandez. A couple of points, Congressman. And thank 
you for your question. No. 1, it is not--the MSP is not 
necessarily for international projects. Also, we have looked at 
projects in the U.S.
    And second, some of the points that you just raised, 
they're outside my remit. I do not deal with those issues. But 
I will tell you that we very much want to find projects in the 
U.S. No one country can solve this issue alone.
    We have to band together with our allies and partners. And 
we've got to work in countries throughout the world. And that's 
what we've been doing.
    And we started out with we have 23 projects in the 
pipeline. And I think we will continue to get projects. And 
there are projects in Alaska. We will help find investors. We 
will help find financing.
    Mr. Self. Just a couple of more points. First of all, I say 
again, 49 out of the 50 rare earth minerals are located in 
Alaska. And that's not counting the lower 48. That includes far 
more.
    Last, we always hear about how we are going to destroy 
ANWAR with the drilling. I'll make the point that everyone 
always makes. The drilling area in ANWAR is analogous to a 
postage stamp on a football field. Let me say that again, a 
postage stamp on a football field. Mr. Chair, I yield back.
    Mr. Moran [presiding]. The gentleman yields back. I 
recognize myself for 5 minutes of questions. Earlier this year, 
this committee passed my bill, the No Technology for Terror 
Act, codify and expand the foreign direct product rule on tech 
and other know how to Iran.
    I hope this bill will soon be considered on the House floor 
because I think foreign robust enforcement of the FDPR on Iran 
is critical to ensure Iran cannot continue to use U.S. origin 
goods and technology to make its lethal missiles and drones, 
the same missiles and drones being used to attack our forces 
and our allies currently. Because this undermines the 
international shipping in the Red Sea and Gulf of Aden as well. 
Given the ongoing proliferation in Iranian missiles and drones, 
often made with U.S. origin components from China, can either 
of you please explain how this Administration is using the 
foreign direct product rule to restrict Iran's access to U.S. 
origin technology?
    Mr. Estevez. Sure. Let me take that, and thank you for the 
question, Congressman. And I just received your letter about 
that, sort of studying for this hearing. But we'll get you a 
response as soon as I can.
    Mr. Moran. Thank you, Secretary.
    Mr. Estevez. We invoked the foreign direct product rule to 
a number of Iranian entities, about 20 Iranian entities 
starting at the beginning of last year and then a number that 
are involved in the building of the Russian drone factories 
with Iranian technology. And we invoked the product rule on a 
number of R99 products. That again, we're saying American 
origin.
    They're not really U.S. origin. They're U.S. company 
branded that are produced elsewhere in the globe. So invoking 
foreign direct product rule ensures that they are under that 
and those companies understand that they are liable for 
controlling their supply chains.
    And my enforcement folks both through the Disruptive 
Technology Strike Force as they're doing with Justice and on 
their own are tracking what is flowing. And we're pulling stuff 
of the Iranian battlefield. And Under Secretary Fernandez and I 
are directly engaging companies whose products we are seeing 
either flowing into Russian military equipment or Iranian 
military equipment.
    Mr. Moran. And you mentioned enforcement. So what are some 
of the barriers to enforcement right now of the foreign direct 
product rule? And what do we need to do to give you better 
tools to enforce that rule?
    Mr. Estevez. First of all, the foreign direct product rule 
is actually very complicated. And we've been invoking it a lot 
lately, both within China and now Russia and Iran. It is a 
great tool. It is best done in consultation with allies. For 
non-allied partners, we'll go after them and we'll enforce 
either administratively or criminally as we assess violations. 
The best thing I can get for help frankly is funding from my 
enforcement team.
    Mr. Moran. Are our allies cooperating with the enforcement 
measures that we're trying to undertake, or are we getting 
pushback?
    Mr. Estevez. For allies with foreign direct product, 
normally we let them know we're going to do it and why we're 
doing it. And we're getting very good cooperation from our 
allies.
    Mr. Moran. Good. Have you guys given consideration to 
expanding the foreign direct product rule to ensure that it 
covers all nine categories on the Commerce control list to 
potentially close all those gaps?
    Mr. Estevez. The foreign direct product rule started off 
really as a break glass, use in exigent emergencies. The 
threats in the world have caused us exigent emergencies, but we 
still try to use it cautiously and again in consultation 
generally with our allies sometimes who frankly ask us to use 
it so they do not have to use their own authorities to do it. 
I'd have to go back and look. I'm always wary of over 
broadening it because I think if we overuse it, you lose it.
    Mr. Moran. No, I agree with you on that. But I mean, as you 
guys have implemented this and tried to enforced it, 
internally, have you said, hey, we really need to expand it in 
this area or that area? Are there areas you've identified that 
you really need some expansion in this arena?
    Mr. Estevez. Not that I see. And I certainly have the 
authority. I do not need anything from Congress in that respect 
from an authority standpoint related to FDPR. But we're 
certainly happy to work with you.
    Mr. Moran. OK. Thank you, Mr. Secretary. Real briefly, in 
February, the Administration imposed sanctions on four 
companies providing materials and technology to Iran's missile 
and drone programs. How extensive can you guys talk about is 
China's support for Iran's weapons program?
    Mr. Estevez. Again, we see, first of all, a lot of those 
parts are actually produced in China and flow out which is why 
we invoke the foreign direct product rule, regardless of 
whether it's U.S. or not. I have 121 Chinese companies on the 
Entity List related to either direct backfill to Russia or 
through Iran to Russia.
    Mr. Moran. Thank you, gentlemen. My time has expired. I 
want to thank the Under Secretaries for their valuable 
testimony and the members for their questions. The members of 
the committee may have some additional questions.
    And we will ask you to respond to these writing. Pursuant 
to committee rules, all members may have 5 days to submit 
statements, questions, and extraneous materials for the record 
subject to the length limitations. Without objection, the 
committee stands adjourned. Thank you, gentlemen.
    [Whereupon, at 1:03 p.m., the committee was adjourned.]

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