tv Sen. Casey Sen. Cornyn Discuss Supply Chain CSPAN December 16, 2021 4:22am-5:09am EST
effort to address supply chain vulnerabilities which have been excess survey did buy several developments in recent years on obviously the pandemic and the consequences on the overall economy. and the other perhaps challenge of the economic behemoth in china. so we're gonna discuss specifically a bill on critical supply chains that the two senators have jointly cosponsored. but also address some of the wider issues that are in play. let me give a brief introduction of our analysts. senator bob casey is a native of scranton, pennsylvania and graduate of holy cross university. his first job was teaching and coaching in elementary school. from there he went on to law
school at catholic university here in d.c. he was attorney general out of the state of pennsylvania, treasurer of pennsylvania, selected to the u.s. senate in 2006 and continues to serve as a member of the finance committee, the intelligence committee and is the chair of the senate select committee on aging. from the other side of the aisle i have senator john cornyn, a native of san antonio. senator cornyn has an extremely distinguished career. after graduating law school he was a state court judge, he was attorney general for the state of texas, and justice of the state supreme court. was elected to the u.s. senate in 2002.
he served as the majority web from 2014-2018. jon also serves on the finance committee, the chairman of the trade subcommittee, also the judiciary and on intelligence. the two senators of the authors of the national capabilities defense act. we turn first to senator casey and ask you to explain about what this bill does and why you think it was necessary to pursue this. >> thank you, great to be with you and your team at the hudson institute. i am always grateful to be with john cornyn. let me just start by setting forth what i think so many americans have confronted when it comes to this terrible pandemic.
we, all of us, no matter where you live or what job or position you are in. all of us are affected not just by the gravity of this pandemic, but by some of the challenges we faced at the very beginning. you know you know you're in trouble when access to masks and gloves and gowns as well as even ventilators are in short supply. and there are so many of those critical supplies that were necessary for the kind of response we needed in those early days. but that supply had dried up due to supply chain lays originating in china. at one point, the chinese government even tightened restrictions on the export of masks and other personal protective equipment.
so we had to learn the hard way. one way, among several steps we need to take, but one way to deal with that in the future are more -- more expeditiously is to pass legislation like john and i have are gone. in this case it is called the national capabilities defense act, we introduced it and it is noteworthy for a number of reasons. i will start with bipartisanship. senator cornyn and i, as well as two other democrats and republicans, senator rubio, senator kaine and senator telus. it would establish a process to screen outbound investments in the off shoring of these critical supply chains, but only and limited to china and russia
to ensure the resiliency of these critical supply chains in the u.s. it would require copies disclose before they offer national critical capabilities to foreign app or terror -- adversaries. the review process set forth in the legislation is designed to identify vulnerabilities so that we are not in the position where in one it comes to something as basic as personal protective equipment. the result of the work of the committee would be to provide recommendations to the president. and it emphasizes remedial action such as to support domestic industry like increased r&d or utilization of manufacturing institutes or identifying subsidies. and encourages supply chain diversification, but the bill is
very limited in scope. it only covers foreign adversaries like china and russia. it is limited in its purview. looking only at these national critical capabilities. i will leave it at that, there is more to talk about, but that is the basic outline of the legislation. >> senator cornyn, would you like to comment for pursuing this bill, and also any other details of how the bill would work if this passes into law? >> it is a pleasure to be back at the hudson institute with all of you and my friend bob casey, the fact that he was in elementary teacher and coach explains a lot about his temperament. there is an obstreperous group of senators in the indicted state senate, but i am always glad to work with colleagues who
are interested in solving problems and that certainly defines bob's approach and i appreciate that. i won't add a lot more except to say that covid-19 has exposed a lot of vulnerabilities in addition to ppe and ventilators as bob mentioned. obviously, the global semiconductor shortage has threatened manufacturing, senator mark warner from virginia introduced the chips for america act to try to address that problem and try to encourage re-shoring up semiconductor manufacturing to pass the senate. and now we were aiding - waiting for action in the house to help us there. but there is nothing offset to deal with the outbound investments, and we have very little visibility into what
those investments are and how they may affect critical capabilities that we need here in america and to shore up vulnerability on those supply chains. i will give you one example that is of some concern to me. a venture capital firm in california is the largest holder of paradigm, and artificial intelligence company in china, it provides command and control of artificial intelligence software. you have an american company investing in china's military capabilities, including a means to keep track of its citizens in what has turned into a virtual police state where every movement is followed and people are given scores based on their compliance with the p.r.c., the
chinese communist party's dictates. because of its aggressive efforts and from a national security perspective. we have the committee on economic reform in the united states, and primarily with start up that produce dual use technology that can be used for the military. as you know, there is a law in the p.r.c. that any private-sector technology that has to be shared with the people's liberation army, there military and national security apparatus, but this takes care or at least tries to get started to give us visibility into those outbound investments. this bill is not intended to be a protectionist measure. we are not trying to stop trade
with china. train is essential to our healthy competition with china. but this is one level of encouragement that the u.s.-china economic commission has included this recommendation in its recommendations -- legislation in its recommendations to congress. and we are making sure it is fair and not based on inadvertence by u.s. investors into china on critical capabilities ours two digit investment by china in the united states -- or strategic investments by china in the united states that can be leveraged for the national security competition or bolster their economy. >> therefore going more into how the bill works, let's maybe do a little inside baseball here and just ask you to comment on where
it stands in the process of getting through the senate and hopefully the house as well. senator casey, would you like to comment on whether you see this moving in the near term as either law or part of another piece of legislation, perhaps a comprehensive bill? >> tom as you know in the senate, at least these days most major legislation or legislation of any kind passes as part of some other what i call a moving vehicle depending on what it is. john and i work hard to try to find that pathway. and we are still working to get that done. part of the challenge as well is we have to have a house measure to get through the house.
but there is an upcoming opportunity as many of your members know, when the senate came together and was a big part of the u.s. competition and innovation and competition act that got through the senate a while ago. we want the house to take action as soon as possible i hope that is january. as part of that effort, we're hoping that might be a pathway to get our bill considered as part of that. but we will seek out any available pathway to get this done. i think it is critical that as we are responding to the challenges posed by not just the pandemic, but also posed by china. you talk about china, you're
talking about the chinese communist party and all of the challenges presented by their efforts, which can make it terribly difficult if not impossible for our companies, our workers to compete on a level playing field. so we are going to continue to work in the senate to get it passed, as well as with colleagues in the house. >> senator cornyn, the united states has developed lots of ties with china over the years and some companies, a lot of companies are producing there. auto companies, our semiconductor companies have gone into partnerships with
technology companies. you mentioned artificial intelligence. so there is a nexus of relationships. and i wonder if you could comment on what kind of a reaction you have gotten for this approach to outward bound screening from the business community, because there is always going to be components to this sort of approach. but could you just comment in general on the reception you have gotten from your introduction up the hill? >> we can't expect the u.s. business community to ignore the huge market that is the people's republic of china. but as we both said, we need to be attentive to what is being invested in china and what we
are not. we are not making our building here in the united states because of the vulnerabilities that covid-19 has exposed. that's why this bill takes a rather modest approach into visibility into a rather narrow set of capabilities so that we understand exactly what is happening. i think there is some apprehension by some in the business community about what we are trying to do, but as we explained, the rather modest objective of this system, i think the people let down their guard a little bit, that doesn't sound so bad, it sounds like something that we do. but this is not just an economic issue, this is a national security and public health imperative.
i will just tell you, when i talked to my governor when covid-19 hit i said, what do you need? he said i need testing and i need ppe, and the fact of the matter is personal protective equipment is not being made in the united states. and china delayed announcing to the who and others that covid had been discovered in the wuhan provinces so they could garner as much of that for their own needs. i am not commenting on whether that is true or false, but it does expose a vulnerability for some of the things we need here in the united states and we need the ability to get some insight into what the supply chains look like, and assess whether those represent a durability or not. but we are work -- vulnerability
or not. but we are working with the business community to make sure they understand. i have had conversations with some semiconductor manufacturers who make investments in china, and they have made clear they understand that they cannot compete with the most cutting edge semiconductor manufacturing that now we rely on. so we are going to have to manage this. but the first step is to get visibility into what is going on, and then we can try to have a more factual discussion about what is necessary and what represents maybe something that we don't need to do. but right now we are shooting in the dark. >> i want to pursue that a little bit, senator casey. some of the other china bills on and support -- import and export
have been criticized as too broad and sort of a blunderbuss approach. if i understand correctly, your bill would set up a process of first studying what critical capabilities are. but then what would trigger action to mitigate the impact of critical capabilities that are defined by interagencies. how do you delay that and limit the applicability of the potential sanctions or restrictions? >> tom, that's a good question. at first the committee would be established, the interagency
committee you referenced. i won't go through the membership, but it is a significant membership of federal agencies. but firms that operate in these critical industries, just by way of a quick summary of the broad strokes on that, when we talk in this bill about national, critical capabilities, we are talking about systems, services, assets that are vital to our u.s. national security. that can be agricultural, it could be homeland security, energy, natural resources. but these firms would have based upon the legislation, and a firm operating in those areas of critical capability would need to report on investment to certain foreign markets, for
example, china. clearly, an economic competitor some, i would say even an adversary. and the firm would also have to report how that might compromise u.s. national security. now the committee under those circumstances which are rather limited would have the ability to block certain outsourcing activities while undertaking a review of the transaction. ultimately what would happen his recommendations would be made and set forth guidance in terms of the factors to be considered both by the committee and the president. what we don't want to have happen here is just a cursory
review of an investment. we want to make sure we are focused on vulnerabilities, and we want to focus of course on our own national security. that's why think those engagements senator cornyn made reference to with the business community are critically important. we are having one right now as part of this dialogue. whether it is the hudson institute, or in my case a couple months ago, a hearing for the u.s.-china business council where we raised a lot of questions we were answering and have answered since, that's why it's important to have those conversations. senator cornyn made reference in his opening comments about the work done by the u.s.-china economic security and review commission, which is a highly respected organization and commission that on an annual
basis is reporting on challenges both by china and the state of play. in their annual report they recommended legislation just like this to set up an outcome -- outbound investment review mechanism, which we do not have now and which i think exposes us not just in the limited circumstances that we made reference to with regard to ppe and the pandemic. but more broadly, when you have the integration of activity of our firms with actions taken by the chinese communist party to threaten us, we want to make sure we can prevent that kind of intermeshing from happening. >> if we could move the discussion to a broader scale. this week i believe is the 20th
anniversary of the entry of china into the world trade organization, and is not controversial to say that most people think that is not a mistake. in achieving the goals its supporters but it would achieve which is for china to become a responsible stakeholder and a constructive member in the liberal training order and system. in recent years, perhaps stirred by the trump administration, but not undone by the biden administration yet, stronger actions have been taken both on the import side and now your approach on the outbound investment side. some people will accuse those
who are hawks on china of saying we want to decouple from china. where do you, senator cornyn, come down on the issue of decoupling? should we just throw in the towel and say this is not working? take as many actions as we can to become more self-sufficient? the chinese, at least if you believe there rhetoric, seem to be moving in that direction themselves. >> made in china 2025, they certainly want to become self-sufficient in a number of these technologies. they are not as tied to the rest of the world. i said earlier that nobody is asking any american business to forgo one of the world's largest markets in china. i think decoupling certainly is not our goal here. we are trying to be fairly
surgical and identified a problem and identify some way to make a fax taste -- facts-based assessment of the risks and take the minimum necessary steps as opposed to just blocking the steps. sort of the reverse of what the committee on foreign investment in the united states. i don't think we are on any inevitable collision course with china, but while we are focused post 9/11 on the war with terrorism, they certainly have gotten very aggressive and changed their whole attitude. and whether it's in the south china sea, whether it comes to cyber, or building their nuclear capability in the military, certainly their belligerence in the south china sea, their threats against taiwan.
this is a new chinese communist party under president xi, and i think it calls for responsible steps in try to make sure that we understand what they are doing and we eliminate vulnerability. because as we have seen with ppe, semiconductors, something much more complex and involved then ppe manufacturing, it's the only responsible thing to do to try and identify the supply chain vulnerabilities particularly when it becomes a national security or economic security imperative to take steps ourselves in this competition. but eventually the world trade organization, i think it was overly optimistic to think that
somehow china was going to become part of the world's biggest international order, because they don't play by the rules. we know that is true particularly when it comes to intellectual property, and certainly they are not obligated to conduct themselves in the same manner as other countries like the united states and adhere to the rule of law. the role in china is the chinese communist party and president xi, and we need to find ways to protect ourselves economically and from a national security perspective, and to defend ourselves as we continue in this competition. this is not as simple as some people might suggest decoupling. i don't think that's desirable nor visible, but certainly these critical capabilities and as bob said, defining where those
vulnerabilities are and trying to strategically and surgically address those appropriate measures seems likely right way to go. >> senator casey would you like to comment on that? >> i think john said it well. i think it's not in any way practical, nor would most people recommended. we are in a competition. this is part of the so-called great power competition. what we have to be mindful of is not competition in the american sense, where there is for the most part a level playing field. this playing field is not level. when you have one country that as john made reference to is not abiding by the rules. i set it on awful lot, ives that it -- i have said it is much in
the last couple years, which is when china cheats, pennsylvania loses jobs. and i think that's been true especially in terms of exponential job loss since 2001. so this unfortunate anniversary i think is testament to that. but it is a competition. and we just have to be mindful that when you are dealing with a group of firms in another country that has the backing of the chinese communist party it's not going to be fair competition. so we have to insist that a level playing field is there. i think we will always have an advantage in terms of our workforce, in terms of the innovation that americans can bring to every economic competition. and we just have to make sure we
are building in safeguards, so that our companies can compete and our workers can compete. and too often some people will shrug their shoulders and say this is just the way it has to be. it doesn't have to be this way. we have to deal with china as a competitor that has built in advantage is for their companies and workers. but i think we are starting to move in the direction of making sure that we put workers at the center of this challenge and make sure that our companies can compete. so one of the ways to do that is to make sure that they don't steal and undermine our national security capabilities. and put in place kinds of
structures that we know we can do not just compete, not just on a level playing field. >> perhaps as a final part of this conversation, i'd like to ask a question about whether or not we need some more help from our allies in addressing the challenges china presents to us. they are both economic and increasingly national security challenges as well. both of you in your statements over the last year have called for a lot more cooperation with our allies. and senator cornyn, specifically on the trade front, you have called for the united states to join the asian trade agreement
that was negotiated originally as a transpacific partnership, and over time has become a more comprehensive and aggressive transpacific partnership. my question is, we've had trouble getting the europeans especially to go along with this. is there more we can do to work with our allies in europe and east asia and south asia, and how would you go about that? you have this trade agreement, but we also have the european trade and technology council. should we be optimistic that we should work with our allies and be in a better position to induce china to change his behavior? >> i think we made a mistake
during the obama administration when we did not take update transpacific partnership for the reason you mentioned. one thing china does not have that we have is friends. we have a lot of them in asia who are very concerned about the rising of china. i was just recently over in the indo-pacific and was able to visit a number of those countries including taiwan, including india. as you know, the recent development of the quad of the united states, japan, australia and india. a senator from delaware and i have written up a statement saying we missed out on an opportunity with the tppp, we missed that, for the reasons you
mentioned. that is where we have a comparative advantage with china and it make sense to work with our friends and allies against this common concern in china. so we're seeing more concerns being raised by the eu and others about china in the south china sea and taiwan. and this is our greatest asset, i think it would be a mistake to view this as a bilateral competition between the united states and china. we need all of our friends and allies to join us in determining -- deterring china from aggressive military action say, in taiwan. we need all of their help in order to leverage things like
export, our program here which many countries are modeling out after what we did in congress, because they share many of our concerns. so yes, i think working together makes enormous sense. and i was encouraged by what we are seeing. i just wish it were happening faster. >> senator casey? >> yes, tom. i think it might be that pandemic which unfortunately with all of its horror and devastation was shining a light on a number of problems that we may have been aware of before, but maybe not to the extent or didn't fully understand the extent or the gravity of the problems.
and which unless we take action has is over a barrel too often, we don't want to put ourselves in that state of vulnerability again. that's why this legislation as well as the scipa legislation i made reference to earlier is critical, and that is why we will talk about a whole series of measures to deal with the reality of the economic threat that china poses. unfortunately, it doesn't end with just an economic threat. this challenge really is a national security threat as well. i think that's been evident to us. i think much more evident to our european partners. john is right, we have to do this with friends, with allies. i think that recently this agreement negotiated by the administration, and i want to commend especially secretary of
commerce raimondo for her work on the so-called section 232, steel and aluminum agreement that was negotiated between the united states and the eu. i think that's a good template to continue to have efforts made where we can come together to deal with these new realities. that's not an agreement he would have been able to strike even a few years ago. so we do have to invest and reinvest into diplomacy, but i think our european partners are much more aware of the threat posed by nonmarket economies generally, but in particular, the ultimate nonmarket economy, which is china. we are seeing european partners
take a stronger stand against china. john was outlining some of the manifestations we are all more aware of now. but unified efforts to impose sanctions upon the chinese government for its abuses of the weaker muslim minority, a greater engagement with taiwan between and among countries beyond just the united states, and this european commission mobile gateway infrastructure plan is further up. i think we are moving in the right direction, but we have to continue to build these elements of our alliances to confront more aggressively the threat posed by china. >> ok, well it's encouraging to
an observer to see this bipartisan agreement on direction of change and many of the specifics. you all have been working late, and i don't want to take too much more of your time. is there any thing, any further comments you would like to make on the general subject or the more specific subject of your bill, any final remarks? >> let me just say thank you to you and the hudson institute are hosting best. sometimes one of the biggest challenges we have of passing legislation is people not exactly understanding it. and they may regarded as a threat, or something disadvantages. but there is nothing like the facts to be able to combat
misunderstanding or even misinformation when it comes to legislation. but you all provide us a forum to address some of these. i'm sure we will continue to have more conversations and discussions about this. i agree with bob that i think our best shot is going to be on this. we started out with the endless frontiers act in the senate, now it is maybe being called something else before it is passed and signed by the president. but i think the intent is good, and it's important. and i agree with bob, that one of the very few good things that came out of covid-19 is that it exposed vulnerabilities, and forced us to take action faster than we did previously. so thank you again for giving us the opportunity and we look forward to continuing the
conversation with you and others who are interested i am great power competition with china. >> senator casey, any final words? >> yes, thank you for being the host of this and moderator and i am grateful to the hudson institute. i want to thank john for his work relationship on this bill, and it is true of other bills that we have worked on, and i am grateful that we have bipartisanship on this commission. i'm grateful to the four other senators i have worked with. i encourage folks to take a look at this bill, senate bill 1854, it is not quite 25 pages so it is digestible. so take a look at it and if you have suggestions or recommendations we want to hear those. we hope that we can pass
legislation in the next couple months, even in january. we are always an optimist around here. but we are grateful because this is one of the many steps i think we have to take to deal with the threats to our supply chains. threats to the good old american innovation that we can bring to bear on any problem or challenge, but we don't have to -- want to have our national security compromised or to use my emphasize -- imprecise language put over a barrel when it comes to something as basic as personal protective equipment and weight never wanted to happen again, there are steps to take us to get there, but this is one we can take and i look forward to working with folks to get it done. >> thank you to both of you for
issues as a result of covid-19. >> good afternoon. at the federal reserve we are strongly committed to achieving the monastery voluntary -- monetary policy goal given to us. today the federal open market committee kept interest rates near zero and updated its assessment of the progress at that the economy is made toward the criteria specified in the committee's 40 guidance for interest rates. in addition, in light of the strengthening labor market and elevated inflation pressures, we decided to speed up reductions in our asset pch