[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]







  H.R. 4678, FOREIGN MANUFACTURERS LEGAL ACCOUNTABILITY ACT, AND H.R. 
 5156, CLEAN ENERGY TECHNOLOGY MANUFACTURING AND EXPORT ASSISTANCE ACT

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

                                HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON COMMERCE, TRADE,
                        AND CONSUMER PROTECTION

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 16, 2010

                               __________

                           Serial No. 111-136




[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]






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                    COMMITTEE ON ENERGY AND COMMERCE

                 HENRY A. WAXMAN, California, Chairman
JOHN D. DINGELL, Michigan            JOE BARTON, Texas
  Chairman Emeritus                    Ranking Member
EDWARD J. MARKEY, Massachusetts      RALPH M. HALL, Texas
RICK BOUCHER, Virginia               FRED UPTON, Michigan
FRANK PALLONE, Jr., New Jersey       CLIFF STEARNS, Florida
BART GORDON, Tennessee               NATHAN DEAL, Georgia
BOBBY L. RUSH, Illinois              ED WHITFIELD, Kentucky
ANNA G. ESHOO, California            JOHN SHIMKUS, Illinois
BART STUPAK, Michigan                JOHN B. SHADEGG, Arizona
ELIOT L. ENGEL, New York             ROY BLUNT, Missouri
GENE GREEN, Texas                    STEVE BUYER, Indiana
DIANA DeGETTE, Colorado              GEORGE RADANOVICH, California
  Vice Chairman                      JOSEPH R. PITTS, Pennsylvania
LOIS CAPPS, California               MARY BONO MACK, California
MICHAEL F. DOYLE, Pennsylvania       GREG WALDEN, Oregon
JANE HARMAN, California              LEE TERRY, Nebraska
TOM ALLEN, Maine                     MIKE ROGERS, Michigan
JANICE D. SCHAKOWSKY, Illinois       SUE WILKINS MYRICK, North Carolina
CHARLES A. GONZALEZ, Texas           JOHN SULLIVAN, Oklahoma
JAY INSLEE, Washington               TIM MURPHY, Pennsylvania
TAMMY BALDWIN, Wisconsin             MICHAEL C. BURGESS, Texas
MIKE ROSS, Arkansas                  MARSHA BLACKBURN, Tennessee
ANTHONY D. WEINER, New York          PHIL GINGREY, Georgia
JIM MATHESON, Utah                   STEVE SCALISE, Louisiana
G.K. BUTTERFIELD, North Carolina
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana
DORIS O. MATSUI, California
DONNA M. CHRISTENSEN, Virgin 
    Islands
KATHY CASTOR, Florida
JOHN P. SARBANES, Maryland
CHRISTOPHER S. MURPHY, Connecticut
ZACHARY T. SPACE, Ohio
JERRY McNERNEY, California
BETTY SUTTON, Ohio
BRUCE L. BRALEY, Iowa
PETER WELCH, Vermont
        Subcommittee on Commerce, Trade, and Consumer Protection

                        BOBBY L. RUSH, Illinois
                                  Chairman
JANICE D. SCHAKOWSKY, Illinois       CLIFF STEARNS, Florida
    Vice Chair                            Ranking Member
JOHN SARBANES, Maryland              RALPH M. HALL, Texas
BETTY SUTTON, Ohio                   ED WHITFIELD, Kentucky
FRANK PALLONE, Jr., New Jersey       GEORGE RADANOVICH, California
BART GORDON, Tennessee               JOSEPH R. PITTS, Pennsylvania
BART STUPAK, Michigan                MARY BONO MACK, California
GENE GREEN, Texas                    LEE TERRY, Nebraska
CHARLES A. GONZALEZ, Texas           MIKE ROGERS, Michigan
ANTHONY D. WEINER, New York          SUE WILKINS MYRICK, North Carolina
JIM MATHESON, Utah                   MICHAEL C. BURGESS, Texas
G.K. BUTTERFIELD, North Carolina
JOHN BARROW, Georgia
DORIS O. MATSUI, California
KATHY CASTOR, Florida
ZACHARY T. SPACE, Ohio
BRUCE L. BRALEY, Iowa
DIANA DeGETTE, Colorado
JOHN D. DINGELL, Michigan (ex 
    officio)









                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Bobby L. Rush, a Representative in Congress from the State 
  of Illinois, opening statement.................................     1
Hon. Ed Whitfield, a Representative in Congress from the 
  Commonwealth of Kentucky, opening statement....................     2
    Prepared statement...........................................     5
Hon. Betty Sutton, a Representative in Congress from the State of 
  Ohio, opening statement........................................     8
Hon. Robert E. Latta, a Representative in Congress from the State 
  of Ohio, opening statement.....................................     8
Hon. Doris O. Matsui, a Representative in Congress from the State 
  of California, opening statement...............................     9
Hon. Phil Gingrey, a Representative in Congress from the State of 
  Georgia, opening statement.....................................    10
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, opening statement.................................    11
Hon. Steve Scalise, a Representative in Congress from the State 
  of Louisiana, opening statement................................    12
Hon. Bruce L. Braley, a Representative in Congress from the State 
  of Iowa, opening statement.....................................    13
Hon. Cliff Stearns, a Representative in Congress from the State 
  of Florida, opening statement..................................    14
Hon. Linda T. Sanchez, a Representative in Congress from the 
  State of California, opening statement.........................    15
Hon. Lee Terry, a Representative in Congress from the State of 
  Nebraska, opening statement....................................    15
Hon. Tim Murphy, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................    16
Hon. Michael R. Turner, a Representative in Congress from the 
  State of Ohio, opening statement...............................    17
Hon. Gene Green, a Representative in Congress from the State of 
  Texas, prepared statement......................................   140
Hon. Joe Barton, a Representative in Congress from the State of 
  Texas, prepared statement......................................   142

                               Witnesses

Jeremy Baskin, Office of the General Counsel, United States 
  Consumer Product Safety Commission.............................    18
    Prepared statement...........................................    21
    Answers to submitted questions...............................   145
Ami Gadhia, Policy Counsel, Consumers Union......................    25
    Prepared statement...........................................    28
    Answers to submitted questions...............................   149
William Morgan, victim of defective Chinese drywall..............    34
    Prepared statement...........................................    36
Andrew Popper, Professor of Law, American University Washington 
  College of Law.................................................    38
    Prepared statement...........................................    40
    Answers to submitted questions...............................   155
Marianne Rowden, President and Chief Executive Officer, American 
  Association of Exporters and Importers (AAEI)..................    58
    Prepared statement...........................................    60
    Answers to submitted questions...............................   171
Mary Saunders, Deputy Assistant Secretary for Manufacturing and 
  Services, United States Department of Commerce.................    81
    Prepared statement...........................................    84
    Answers to submitted questions...............................   180
Deborah Wince-Smith, President and Chief Executive Officer, 
  Council on Competitiveness.....................................    94
    Prepared statement...........................................    97
    Answers to submitted questions...............................   189
Owen E. Herrnstadt, Director of Trade and Globalization, 
  International Association of Machinists & Aerospace Workers....   111
    Prepared statement...........................................   113
    Answers to submitted questions...............................   193
Jack Crawford, Jr., Chief Executive Officer, Jadoo Power.........   116
    Prepared statement...........................................   118
    Answers to submitted questions...............................   196
Anthony Kim, Policy Analyst, Heritage Foundation.................   124
    Prepared statement...........................................   126
    Answers to submitted questions...............................   199

 
  H.R. 4678, FOREIGN MANUFACTURERS LEGAL ACCOUNTABILITY ACT, AND H.R. 
 5156, CLEAN ENERGY TECHNOLOGY MANUFACTURING AND EXPORT ASSISTANCE ACT

                              ----------                              


                        WEDNESDAY, JUNE 16, 2010

              House of Representatives,    
           Subcommittee on Commerce, Trade,
                           and Consumer Protection,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 2322, Rayburn House Office Building, Hon. Bobby L. Rush 
[chairman of the subcommittee] presiding.
    Present: Representatives Rush, Sarbanes, Sutton, Stupak, 
Barrow, Matsui, Braley, Dingell, Stearns, Whitfield, Terry, 
Murphy, Gingrey, Scalise, and Latta.
    Also Present: Representatives Sanchez and Turner.
    Staff Present: Angelle Kwemo, Counsel; Felipe Mendoza, 
Counsel; Michelle Ash, Chief Counsel, Commerce, Trade, & 
Consumer Protection; Peter Ketcham-Colwill, Special Assistant; 
Althea Gregory, Intern; and Elizabeth Letter, Special 
Assistant.

 OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Rush. The subcommittee on Commerce, Trade and Consumer 
Protection will now come to order.
    The purpose of today's hearing is to hear testimony on two 
bills, H.R. 4876, the Foreign Manufacturers Legal 
Accountability Act, and H.R. 5156, the Clean Energy and 
Technology Manufacturing and Export Assistance Act.
    The chair recognizes himself for 5 minutes for an opening 
statement.
    I want to thank the members of the subcommittee for 
participating in this important legislative hearing. As I 
stated before, we will be considering two important bills.
    The first bill deals with products manufactured overseas 
that are flooding the U.S. market and aren't safe for American 
consumers. And the second bill deals with access to global 
markets by American manufacturing new products. Both bills aim 
at protecting American jobs and American consumers. And I would 
be remiss if I didn't commend Congresswoman Betty Sutton and 
Congresswoman Doris Matsui for attempting to lean on both of 
these very critical issues for the safety of the American 
people.
    Last year we were saddened by the tragedies caused by the 
toxic effects of Chinese drywall on consumers. The victims 
sometimes from areas still reeling from the aftermath of 
Hurricane Katrina, finding themselves suffering as a result of 
serious health problems.
    More saddening is the fact that it is very difficult, if 
not impossible, to hold accountable the foreign manufacturers 
of those products. H.R. 4876, the Foreign Manufacturers Legal 
Accountability Act, will fix that loophole and allow suppliers 
of foreign-made products to be sued for defects in those 
products used here on U.S. soil. And I must also say that while 
the U.S. market is open to global manufacturers, the contrary 
is not always the case.
    Our next bill illustrates the need for green technology and 
the need for necessary remedies. Last year, the subcommittee 
held a hearing on how to increase the export of green 
technology products. We heard about the challenges U.S. 
manufacturers are facing in overseas markets despite the fact 
that U.S. technology is unquestionably one of the best.
    We all agree that clean energy is a vast, untapped market. 
There is a large world demand for U.S. goods. But our market 
share in 2008 dropped in from 14 to 9 percent. Even emerging 
economies are rising and trying to replace the U.S. in its 
current position as global leader in manufactured goods. It 
will happen if we don't assert our long-recognized and long-
held leadership on this particular matter.
    H.R. 5156, the Clean Technology Manufacturing and Export 
Assistance Act will help our industry do that and will 
strengthen the manufacturing industry's capacity and also 
provide them with the tools they need to boost their exports.
    We have, on several occasions, highlighted the importance 
of having a strong domestic policy to allow the manufacturing 
industries to be confident enough to penetrate the 
international markets. We are all aware that the events 
currently taking place in the Gulf of Mexico is another real 
concern. It reinforces the need for environmentally friendly 
technologies. This is where our future lies.
    As I said before, and I will repeat it again, we must seize 
every opportunity or fall drastically behind. And I want to 
thank all of the witnesses again for being here, and I look 
forward to your testimony on the bills we are considering 
today.
    And now I am going to recognize the ranking member for 5 
minutes for the purposes of an opening statement.

  OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

    Mr. Whitfield. Chairman Rush, thank you very much and we 
certainly appreciate the witnesses being with us here this 
morning as we explore two pieces of legislation that I think 
all of us would agree have great intentions, and I think it's 
important because this legislation is so important that we 
listen to some experts today about some concerns that certainly 
I have about this legislation, although I agree with the intent 
of the legislation.
    For example, on 4678, which holds foreign manufacturers 
accountable in the U.S. for selling products that comply with 
our safety standards and require them to have an agent for 
service of process, I don't really have any problem with that. 
But I think we have to explore, for example, in 2002, the 
Congress passed the Public Health Security and Bioterrorism 
Act, and under that Act, under certain circumstances, certain 
companies had to have registered agents. The U.S. Customs law 
already requires agents for companies that do business in the 
U.S. in certain instances.
    We are signatory to the Foreign Sovereign Immunity Act, and 
we know that in many countries around the world like China, a 
lot of those companies are owned by the government and it 
raises the issue even if you have a service of process you 
obtain the judgment can you really collect on it, because of 
sovereign unity and so forth. And then we have the Hague 
Convention on the Service Abroad of Judicial and Extra Judicial 
Act and what will the impact of this have on that?
    So we have a lot of mechanisms already in place through the 
government to ensure the people of America that we are dealing 
and consuming and using safe products. Now, I am not saying 
that those are enough. But I also know that if we adopt this 
kind of legislation, we might also expect that other countries 
may also adopt it, which could have some negative impact on our 
small exporters that are trying to open up foreign markets, and 
I know that President Obama, one of his goals is to 
significantly increase our exports.
    So all of these are issues that I think we have an 
opportunity to work together here, but I think it is important 
that we explore the ramifications of this legislation. And so 
we look forward to the witnesses' testimony on that issue.
    On the clean energy technology manufacturing export 
assistance fund, I think all of us are certainly interested in 
exporting green technology or clean technology, and I know 
already the Department of Commerce has an extensive assistance 
program to encourage exports of U.S. products. And it appears 
that this legislation would simply be carving out clean energy 
technology, which is fine.
    But as I was reading this legislation, just to give you an 
example of one thing I was concerned about because I am from a 
coal State. Coal still provides 51 percent of all electricity 
produced in America, and I don't think anyone believes that 
renewable energies or wind power or anything else, I guess they 
are one in the same, over the immediate term will come close to 
providing our electricity needs.
    But if this bill became law, for example, I would like to 
see some assistance given to carbon capture sequestration 
technology because China is using more coal every day than the 
United States even thinks about. And right now, they are just 
burning coal, low-grade coal, and polluting the environment and 
if we can export clean coal technology to them, that would be 
great.
    But as I read this legislation, it says to be eligible for 
this program, the project or the entity has to do one of the 
following: Generate electricity. Well, carbon capture 
sequestration does not generate electricity but it removes 
carbon dioxide. Second thing, substantially increases the 
energy efficiency of buildings, industry, or agricultural 
processes. Well, I am not sure that carbon capture 
sequestration would meet that criteria, or it substantially 
increases the energy efficiency of the transportation system.
    So those are some questions that I think we need to explore 
because this is very important legislation, it has great goals, 
and I think we have an opportunity here to explore a lot of 
these issues and come up with a proposal that all of us can 
agree to. I yield back my 14 seconds.
    [The prepared statement of Mr. Whitfield follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Rush. The chair thanks the gentleman.
    The chair recognizes the gentlelady from Ohio, Ms. Sutton, 
for 2 minutes.

  OPENING STATEMENT OF HON. BETTY SUTTON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF OHIO

    Ms. Sutton. I thank the chairman for holding this hearing, 
and I think both of these pieces of legislation are important. 
I am proud to be the sponsor of H.R. 4678 along with 61 
cosponsors from both sides of the aisle.
    I am going to keep my remarks limited to that at this 
point.
    Every year many Americans are injured, sometimes fatally, 
by dangerous products that have been manufactured abroad and 
imported into the United States. Recent examples include toxic 
drywall, faulty infant cribs, lead paint in children's toys and 
defective tires. These products not only hurt American 
consumers, they hurt American businesses.
    U.S. manufacturers are responsible for insuring that the 
products that they put on the market are safe, yet it is 
extremely difficult for injured parties to hold foreign 
manufacturers accountable because they are unable to serve 
process or establish jurisdiction. As a result, American 
consumers and businesses are forced to engage in cost-
prohibitive and time-consuming international legal battles 
rarely receiving the redress they deserve.
    The Foreign Manufactures Legal Accountability Act would 
require foreign manufacturers doing business in the U.S. to 
identify a registered agent authorized to accept service of 
process on behalf of that manufacturer. Registering an agent 
would constitute an acceptance of jurisdiction of the State in 
which the agent is located. This bipartisan bill would help 
protect American consumers and businesses from defective 
products manufactured abroad, would level the playing field for 
American manufacturers, and provide U.S. consumers with the 
necessary tools to seek proper redress.
    And I want to thank my colleague and cosponsor 
Representative Mike Turner who is here this morning for his 
work and support on this legislation.
    I also want to thank Representative Linda Sanchez for her 
leadership and work on this issue, and she may be joining us as 
well.
    I look forward to hearing from the witnesses and to working 
through whatever concerns that the ranking member may have to a 
solution on this very, very important work.
    At the end of the day, this is about fairness and justice. 
American consumers and businesses deserve both, and this 
legislation will help us achieve that.
    Mr. Rush. The chair now recognizes the gentleman from Ohio, 
Mr. Latta, for 2 minutes.

OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF OHIO

    Mr. Latta. Thank you, Mr. Chairman, Ranking Member 
Whitfield. Thank you for holding this hearing today on these 
two pieces of legislation both related to manufacturing. My 
congressional district is heavily based in manufacturing, and I 
am constantly advocating for ways to assist these manufacturers 
to remain in business and to continue producing goods.
    According to the National Association of Manufacturers, my 
district is the largest manufacturing district in the State of 
Ohio, the 20th largest in Congress. When I was first elected in 
December of 2007, I represented the ninth largest manufacturing 
district, and in two years it dropped to 20th. The current 
unemployment rate in Ohio is just under 11 percent, and there 
are many counties in my district that have over 12 percent 
unemployment.
    In looking at these two pieces of legislation, the 
subcommittee needs to ensure that it does nothing to hinder 
further economic growth to put further restrictions on U.S. 
manufacturers. It is important that Americans have safe 
products for use and that companies comply with U.S. safety 
standards. However, I have several concerns with H.R. 4678 and 
that will have unintended consequences on American 
manufacturers.
    They are concerns that under this bill the U.S. companies 
that have contracted with foreign manufacturers for parts will 
be the ones responsible for establishing a registered agent on 
behalf of the foreign supplier. In addition, I have concerns 
that other nations will reciprocate similar laws that would 
impose additional compliance regulations or liability exposure 
to U.S. exporters abroad.
    The manufacturers in my district can not withstand either 
of these scenarios. Many of these companies are still holding 
on by their fingernails in this troubled economy and will not 
be able to withstand further government mandates or increased 
exposure to liability. I have concerns that this legislation 
could inadvertently lead to an increase in lawsuits on our 
manufacturers.
    My district is also home to many facilities relating to 
alternative energy sources. Clean energy technology 
manufacturing is an important piece of the puzzle for America's 
energy independence. As with all of our manufacturing products, 
exporting is a key to the U.S. to remain a world leader. 
However, I do have concerns with H.R. 5156 and its creation of 
another new government program administered by the 
International Trade Administration within the Department of 
Commerce. At a time when our national debt is skyrocketing, I 
do not believe in expanding our government but should be trying 
to limit it.
    There are also concerns that this new grant program 
duplicates other programs that have already been created 
through the energy stimulus bills.
    I look forward to the hearing today.
    Mr. Rush. The chair now recognizes Mrs. Matsui for 2 
minutes.

OPENING STATEMENT OF HON. DORIS O. MATSUI, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Matsui. Thank you, Mr. Chairman, and thank you for 
calling today's hearing.
    I, first of all, want to applaud my good friend, Betty 
Sutton, for introducing H.R. 4678, and I support her 
legislation. I would also like to thank the witnesses for being 
with us here today. And I particularly want to welcome our 
witness from the Sacramento area, Jack Crawford, CEO of Jadoo 
Power.
    Under Jack's leadership, Jadoo Power is a leader in 
manufacturing clean energy technologies and providing hybrid 
fuel cell power for military, government, and commercial 
applications. Jack has a wealth of expertise in the clean 
energy sector, and I look forward to hearing from him today.
    As he can attest, the Sacramento region is well positioned 
to be a leader in producing clean energy technologies with more 
than 110 clean tech companies that focus on production of fuel 
cell technology, biofuels, solar, wind energy, and others.
    To continue growth, the U.S. clean energy sector, 
particularly small and medium-sized firms, need manufacturing 
expert assistance to boost their competitiveness in the 
international marketplace. In fact, our Nation's clean tech 
industry is lagging behind many of its competitors in exports, 
including Germany and China. This is simply unacceptable. The 
U.S. must be a leader in manufacturing and exporting clean 
technologies. That is why I, along with Chairmen Rush and 
Dingell and Representative Eshoo, introduced H.R. 5156, a bill 
to boost the competitiveness of American-made clean tech 
products both here in the United States and around the world.
    The bill will create a fund to develop and sustain a 
national clean energy technology export strategy to provide 
U.S. clean tech firms with expert assistance and finding and 
navigating foreign markets to sell their goods and services to 
new customers.
    The President has laid out a laudable goal to double U.S. 
exports over the next 5 years, and this legislation will ensure 
clean energy exports are at the forefront of the national 
export strategy. The bill will also strengthen America's 
domestic clean tech manufacturing industry.
    Ultimately, H.R. 5156 will enhance our standing in the race 
to be the global leader in clean energy. The BP oil spill only 
underscores the need for leadership in the clean energy market, 
and this spill has sent a strong message that America is 
serious about being the leader in producing and exporting these 
technologies.
    I look forward to working with my colleagues on the 
committee to achieve this goal, and I thank you, again Mr. 
Chairman, for holding today's hearing.
    Mr. Rush. Dr. Gingrey is recognized for 2 minutes.

  OPENING STATEMENT OF HON. PHIL GINGREY, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF GEORGIA

    Mr. Gingrey. I want to thank you for holding today's 
hearing on two pieces of legislation, H.R. 4678 and 5156, to 
allow us to hold a discussion on important issues facing 
consumers as we strive to create jobs. I believe that both of 
these bills are well intentioned as they attempt to assist 
consumers and improve the clean technology trade deficit that 
we currently face.
    Unfortunately, I believe that both bills will have 
unintended consequences that could prevent them from 
accomplishing their respective goals.
    Mr. Chairman, H.R. 4678 seeks to rectify the problems that 
have been associated with foreign product recalls. While I am 
saddened by what has occurred to the victims--one of whom is on 
our first panel of witnesses--I fear that H.R. 4678 will not 
fully address the underlying issue.
    The purpose of this legislation is to hold foreign 
manufacturers responsible for the products that come to the 
United States. However, unintended consequences many times 
domestic companies contracting with foreign manufacturers will 
likely be responsible for establishing registered agents, 
thereby putting American companies at risk as opposed to their 
foreign counterparts.
    I have similar concerns with H.R. 5156. During the budget 
window of this bill, we provide $75 million in funding instead 
of tackling two of the biggest problems with our clean 
technology trade deficit.
    Mr. Chairman, the first deals with the raw materials 
available domestically to support innovation in clean 
technology. The minerals needed to commercially manufacture 
these products are either not abundantly available in U.S. or 
current policies prevent them from being mined properly.
    The other problem is the issue of trade. Without access to 
markets, without burdensome tariffs, we will continue to trail 
our competitors when it comes to clean technology products. 
Unfortunately, I do not believe that H.R. 5156 will ultimately 
alleviate the trade deficit that we face in this area.
    Mr. Chairman, despite my concern about these bills though, 
I do look forward to hearing from both panels of witnesses so 
they can provide us with their expertise on these matters.
    Mr. Rush. The chair now recognizes the chairman emeritus 
for the full committee, the gentleman from Michigan, Mr. 
Dingell, for 5 minutes.

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Dingell. Mr. Chairman, I thank you. I commend you for 
holding today's hearings on H.R. 4678, the Foreign 
Manufacturers Legal Accountability Act, and H.R. 5156, the 
Clean Energy Technology Manufacturing and Export Assistance 
Act.
    The former will help ensure foreign manufacturers are held 
accountable for injuries their products may cause to American 
public health and safety. And the latter will bolster the 
Nation's exports in the growing sector of green technology. 
Both are important, and I support efforts such as these and 
will welcome the input of our witnesses.
    Before concluding my remarks, I wish to say a few words in 
support of H.R. 5156 which you, Mr. Chairman, Congresswoman 
Matsui, and I are original sponsors.
    There is broad agreement that the United States lags behind 
other nations in terms of exports. Whereas exports can now 
account for 49 percent of Germany's GDP, they account for only 
9 to 13 percent of our own. More alarmingly, while Germany 
exported $19.6 billion in clean technologies and services 
between 2004 and 2008, the United States exported only 7.7 
billion.
    In brief, the United States consumes far more than it 
produces and in so doing, is squandering not only our valuable 
resources, our moneys, but our opportunity to be a leader in 
green technology exports. H.R. 5156, by establishing a modest 
support mechanism for the export of such technologies by U.S. 
manufacturers will significantly help remedy this matter.
    Moreover, the tax revenue generated from these exports will 
pay more than the bill's cost over a 5-year period. The bill 
should enjoy bipartisan support and must be recognized as a 
critical component of our Nation's economic recovery.
    And to return to H.R. 4678, it should be noted that had 
such legislation been in effect, our troubles with the matter 
of Toyota vehicles and their safety consequences would have 
been handled much easier.
    Mr. Chairman, I thank you, and I yield back the balance of 
my time.
    Mr. Rush. The chair recognizes the gentleman from 
Louisiana, Mr. Scalise.

 OPENING STATEMENT OF HON. STEVE SCALISE, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF LOUISIANA

    Mr. Scalise. I would like to focus my comments on H.R. 
4678, the Foreign Manufacturers Legal Accountability Act, a 
bill that is relevant to my State and district because of the 
problems we are experiencing with toxic drywall.
    To date the Consumer Product Safety Commission has received 
over 3,300 incident reports related to toxic Chinese drywall 
from 37 States. Twenty percent of these reports are from 
Louisiana, which is second only to Florida. And my office 
continues to receive complaints from constituents affected by 
toxic drywall.
    Last week, a resident of New Orleans contacted my office at 
a loss for what steps to take or what to do for help. Like many 
others, her family was forced to move out of her home because 
of toxic Chinese drywall, and they can no longer afford to pay 
the mortgage on the home they aren't occupying while paying 
rent for temporary housing at the same time.
    The CPSC has been investigating toxic Chinese drywall for 
over a year and a half, and it has sufficient evidence that 
toxic Chinese drywall manufactured by Chinese companies is 
responsible for the severe damage we have seen in thousands of 
American homes. Last month, the Commission even identified 10 
drywall manufacturers whose products emitted high levels of 
hydrogen sulfite in laboratory testing. Unfortunately, no 
action has been taken against these companies.
    We must hold the manufacturers of toxic Chinese drywall 
accountable, and I have continued to push for this including 
requesting that the Department of Homeland Security pursue any 
and all options available to the department including the 
seizing of assets being shipped into the United States against 
those entities that manufacture toxic Chinese drywall and have 
been found liable for the damages associated with the 
contaminated products.
    These foreign manufacturers bear responsibility for serious 
damage for thousands of homes across the country and have 
caused homeowners significant financial hardship and in some 
cases, physical harm. Even more concerning is that they have 
done so without repercussion. We must take action to hold 
accountable those who are responsible for the damages caused by 
toxic Chinese drywall until they settle with the affected 
victims or comply with the rulings of U.S. courts.
    Given the challenges we are facing in doing this, I am 
pleased to see some of my colleagues recognizing this issue. 
The goals of H.R. 4678 are good, but I do have questions about 
whether its implementation will accomplish its intentions. 
While it can be argued that this bill would make it easier to 
prosecute foreign manufacturers in the U.S., foreign courts 
would still be under no obligation to enforce such judgements. 
We would still be dependent on the good will of foreign courts 
to enforce those judgments.
    My constituents and others around the country who have been 
affected by toxic Chinese drywalls deserve answers and 
solutions, and this subcommittee must work with the 
intergovernmental task force on problem drywall to help deliver 
that.
    Mr. Rush. The chair now recognizes the gentleman from 
Georgia, Mr. Barrow of Georgia for 2 minutes.
    Mr. Barrow. I thank the chairman, and I will waive opening.
    Mr. Rush. The chair now recognizes Mr. Braley for 2 
minutes.

OPENING STATEMENT OF HON. BRUCE L. BRALEY, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF IOWA

    Mr. Braley. Thank you, Mr. Chairman, for this important 
hearing.
    And as chairman of the Populist Caucus, I am proud that the 
bill known as H.R. 4678, the Foreign Manufacturers Legal 
Accountability Act, is part of our America Jobs First platform. 
This bill requires foreign manufacturers doing business in the 
United States to identify a registered agent authorized to 
accept service of process on behalf of the manufacturer.
    And one of the reasons I support this legislation is 
because unlike a lot of people at this hearing, I have actually 
tried to hold foreign manufacturers accountable for their 
defective products in U.S. State courts. It is virtually 
impossible. There are companies marketing products in this 
country who put the word ``U.S.A.'' in their company logo and 
put out publications that say ``in an industry dominated by 
foreign competition, we are proud of the fact that our products 
are manufactured right here in the United States,'' and yet 
when those products gave rise to a defect and suit was pursued, 
they turned around and said these products, in fact, were not 
made in the United States. They were made in China. Which then 
dumps you into the bottomless pit of attempting to get suit on 
an entity that may be a part of the Chinese government who is 
manufacturing that defective product.
    So you can imagine how difficult it is when you have to 
translate that document into the native language of the country 
of where the suit is being served, then get help from a 
government entity that may be unwilling to subject its 
manufacturers to liability in U.S. courts. And after all of 
those delays, nothing happens.
    And I have heard some of my colleagues express concerns 
about U.S. companies being exposed to increased litigation. 
They are not well founded concerns because the reality is right 
now in many States if you cannot find the manufacturer of a 
defective product and hold them accountable, then some of the 
immunity that goes to the distributors of those products, if 
the manufacturer is available and can be pursued in that State 
court go out the window and then the U.S. distributors and 
manufacturers are the one on the hook.
    So this bill actually is a great thing for U.S. 
manufacturers. It levels the playing field and gives them the 
same opportunities to compete with foreign manufacturers that 
U.S. companies have.
    That is why I support it. And I yield back.
    Mr. Rush. The chair now recognizes the gentleman from 
Florida, Mr. Stearns, for 2 minutes.

 OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF FLORIDA

    Mr. Stearns. Mr. Chairman, thank you very much.
    Having chaired this committee when the Republicans were in 
the majority, we tried to wrestle with this problem of 
reciprocity between countries where there is fraud, abuse, and 
incompetence and intentional mislabeling and things like that. 
Mr. Braley mentioned some of the problems. We were never able 
to get to the point where we were able to get together a bill 
that would deal with this very serious problem. It affects not 
only manufacturing, but also the Internet, how to go after 
people that are fraudulent on the Internet or basing their 
companies outside the United States. So I think the bill is 
well intended. I think the hearing will be worthwhile listening 
to.
    But I have to tell you that I don't think the problem that 
Mr. Braley talked about is going to be solved here because this 
agent is going to like a cardboard agent where he will deliver 
all of these documents that are in English, and he will just 
dead file them.
    I think this registered agent will be there, but I think we 
might even have to explore other ways to have reciprocities 
between countries because that is the larger issue because a 
lot of these countries are going to just stonewall us.
    Can we hold foreign manufacturers accountable for harmful 
products? Foreign courts are under no obligation to enforce 
U.S. judgements. So I welcome this hearing, Mr. Chairman. I 
look forward to what they have to say.
    I just conclude with H.R. 5156, the Manufacturing and 
Export Assistance Act, clean energy technology. This is going 
to cost us money. This is questionable. I would think all of 
this, Mr. Chairman, was in the cap-and-trade which passed out 
of the House. Perhaps it is also in the stimulus bill. So, you 
know, I think we have to realize that if we didn't get 
everything together in that cap-and-trade I would be very 
surprised. There were hundreds of amendments and we discussed 
it for weeks. So I think a lot of it was there.
    I just conclude where are you going to get all of this 
clean energy technologies bit parts from.
    So I think it is worthwhile to have these hearings on these 
two bills. I just think that perhaps when we mark this up, we 
might have to make it a little bit stronger.
    Mr. Rush. At this time I am going to entertain a unanimous 
consent request that two members who are not members of the 
subcommittee for the purposes of this hearing. And those 
individuals are Ms. Sanchez of California and Mr. Turner of 
Ohio.
    Hearing no objections. So ordered.
    I will recognize Ms. Sanchez recognized for 2 minutes for 
the purposes of an opening statement.

OPENING STATEMENT OF HON. LINDA T. SANCHEZ, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Sanchez. Thank you, Mr. Chairman, and distinguished 
members of the committee, and I appreciate you allowing me to 
participate with the subcommittee today. And I apologize. I am 
not going to be able to stay for the entire time, but the 
committee I serve on is currently holding a hearing as well.
    I want to share my support for the Foreign Manufacturers 
Legal Accountability Act that was introduced by my good friend, 
Congresswoman Sutton from Ohio. I am an original cosponsor of 
this piece of legislation, and I introduced similar legislation 
in the last session of Congress, and we held hearings on that 
in the Judiciary Committee as well.
    I have long been alarmed by the steady stream of toxic or 
defective foreign manufactured foods or products that harm U.S. 
families every year. Beyond the risks that these products pose 
to our health and welfare, I am also concerned that many 
foreign manufacturers have gained an unfair advantage over U.S. 
manufacturers by avoiding liability for the injuries and deaths 
that their products cause.
    Because of the difficulties associated with serving process 
on and establishing jurisdiction over foreign manufacturers, 
many Americans that are harmed by defective foreign-made 
products have no recourse. They literally never get their day 
in court.
    The Foreign Manufacturers Legal Accountability Act amends 
current law to facilitate service of process on foreign 
manufacturers. Quite simply, it just requires manufacturers who 
want to put their goods in our stream of commerce to establish 
a registered agent in the United States who then can be served 
process.
    That simple requirement just making sure that they are 
servable if injuries should arise will level the playing field 
for U.S. manufacturers by eliminating the unfair competitive 
advantage enjoyed by foreign manufacturers. This would 
essentially put them on equal footing making sure that all 
companies, whether foreign or domestic, are held accountable 
for the harm that they cause to American consumers.
    I want to thank the chairman for calling this hearing, and 
I am pleased that the subcommittee has taken the time to 
discuss H.R. 4678.
    And again, I appreciate the invitation to come. And I yield 
back my time.
    Mr. Rush. I now recognize Mr. Terry.

   OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEBRASKA

    Mr. Terry. I appreciate that.
    I am concerned. I am also going to discuss the Foreign 
Manufacturers Legal Accountability Act as one of the original 
sponsors and worked a little bit with Ms. Sutton on this.
    I think this is an important piece of legislation in 
protecting American consumers from defective goods manufactured 
outside the United States in the sense that if they don't have 
any presence within the United States, there may be very little 
ability for the victim to be compensated or justice to occur 
which then falls then mostly on the taxpayers instead of the 
foreign entity. And all this does, and Cliff is correct, the 
gentleman from Florida, that this doesn't really correct that 
problem but you can't get to the second hurdle and the third 
hurdle in this process without being able to effectively hand 
the petition to a representative of that country. And so this 
is just setting up the first step here.
    We do need to continue the dialogue on this. But this seems 
to be kind of the first step, the easy, noncontroversial, or 
for the most part, the least controversial part of the process.
    I want to thank the chairman for holding the hearing on 
this matter. I am anxious to hear from the witnesses and their 
input.
    And I yield back.
    Mr. Rush. Mr. Murphy.

   OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    Mr. Murphy. Thank you, Mr. Chairman. We have now reached a 
point where China is the largest foreign holder of U.S. debt at 
$900 billion, and more than 2.3 million manufacturing jobs have 
been displaced to Chinese companies that sell products like 
drywall that causes terrible illness, lead in toys, and fungus 
in diapers and toxins in baby bottles.
    I am thankful we are having a hearing on how to hold better 
manufactures of a harmful product liable, but the larger issue 
is, how we are going to pursue policies that are going to 
invigorate American manufacturing in a fair playing field. And 
if we are going to tame an economic dragon like China, it is 
not going to be about lofty theories or more government 
spending, but how to make sure that it is a level playing 
field. I know that along with Congressman Tim Ryan of Ohio, he 
and I have introduced H.R. 2378, the Currency Reform Fair Trade 
Act, which stops some of the unfair trade practices of China, 
particularly some of their currency manipulation, which we 
consider vital.
    As we are looking at legislation that tries to find ways to 
help promote American businesses, I believe that often times we 
do not need American businesses to get more ideas on how to 
wade through complex trade laws, but make sure that we have 
trade laws that are fair and they are fairly enforced. Recently 
the Steel Caucus, which I am vice chair, has pushed for and 
been successful in getting some findings where China has dumped 
pipe and in the past steel, rolled steel in unfair trade 
practices. This is what manufacturers want to see. But we also 
want to make sure we have a system whereby we are not setting 
up laws here such as cap-and-trade and light bulb laws which 
basically turn our jobs over to China.
    I am looking forward to hearing some insight today from 
this panel today to make sure we do have fair trade laws and 
make sure what we are doing. Not just to tell American 
companies how to wade through this complexity but make sure 
they are able to use their ingenuity, their creativity and 
their manufacturing skills to bring back American jobs.
    And I yield back. Thank you.
    Mr. Rush. The chair now recognizes the gentleman from Ohio, 
Mr. Turner, for 2 minutes.

 OPENING STATEMENT OF HON. MICHAEL R. TURNER, A REPRESENTATIVE 
               IN CONGRESS FROM THE STATE OF OHIO

    Mr. Turner. Thank you, Chairman Rush and Ranking Member 
Whitfield. I thank you for allowing me to participate in 
today's hearing on H.R. 4678, the Foreign Manufacturers 
Accountability Act of 2010. I am an original cosponsor of H.R. 
4678, and I want to thank my Ohio colleague, Betty Sutton, for 
her hard work on this important piece of legislation. 
Representative Sutton has been a steadfast advocate for her 
community and for manufactures in Ohio.
    I also want to thank the U.S. Chamber of Commerce, who has 
been working with both my office and Representative Sutton's 
office on H.R. 4678, and I look forward to the continued 
collaboration as we move forward with this important 
legislation. The Chamber has expressed concern about a 
provision that may permit jurisdiction in U.S. courts for non- 
U.S. matters it is an unintended consequence and both Betty 
Sutton and I are looking at language that could adjust that.
    In this hearing I know there could be other unintended 
consequences, and I look forward to those being addressed. But 
mostly I appreciate the manner in which Representative Sutton 
has worked on this in a bipartisan manner and worked with the 
Chamber to ensure that the bill will protect consumers while at 
the same time avoid jurisdiction in U.S. courts concerning 
matters that have not caused injuries in the United States.
    The State of Ohio has faced many challenges as it 
transitions from being a manufacturing-based economy. Many of 
our local manufacturers have worked to remain competitive but 
find themselves in an uphill battle with foreign manufacturers 
because of unfair trade practices. One way in which foreign 
manufacturers are given an unfair advantage is by their ability 
to often times avoid the American judicial system. Because 
service of process in establishing jurisdiction is difficult 
with these products, maintaining a registered agent in the U.S. 
will assist American consumers in their ability to redress 
injuries. How does it do this? By establishing agents, it 
allows U.S. courts to have jurisdiction over the foreign entity 
and thereby allow them to render a judgment including the issue 
of seizing assets.
    And it will also help level the playing field for domestic 
manufacturers as they also have to avail themselves of the 
American judicial system. I want to thank you again for the 
opportunity to participate and for holding this important 
hearing. I look forward to reading the testimony from the 
witnesses today and hearing the comments and working with 
Congresswoman Sutton for drafting this important legislation.
    Mr. Rush. The chair thanks all of the members of the 
subcommittee for their opening statements.
    It is now time for us to hear from the policy experts, our 
witnesses who have been invited to testify before this hearing. 
And let me again welcome you and thank you so much for 
extending your valuable time to this subcommittee.
    And I want to introduce you all beginning on my left, Mr. 
Jeremy Baskin, who is with the Office of the General Counsel 
for the U.S. Consumer Product Safety Commission. Seated next to 
Mr. Baskin is Ms. Ami Gadhia. She is a policy counsel for the 
Consumers Union. Next to Ms. Gadhia is Mr. Bill Morgan. He is 
the victim of defective Chinese drywall. And seated next to Mr. 
Morgan is Professor Andrew Popper, and Professor Popper is a 
professor of law at the American University in Washington. And 
next to Professor Popper is Marianne Rowden. She is the 
President and CEO of the American Association of Exporters and 
Importers, or the AAEI.
    The chair again welcomes you. And it is the practice of 
this committee that all of the witnesses be sworn in.
    So will you please stand and raise your hands.
    Let the record reflect that all of the witnesses have 
responded in the affirmative.
    And now we will have 5 minutes of opening testimony from 
our witnesses beginning with you, Mr. Baskin.

  STATEMENT OF JEREMY BASKIN, OFFICE OF THE GENERAL COUNSEL, 
 UNITED STATES CONSUMER PRODUCT SAFETY COMMISSION; AMI GADHIA, 
    POLICY COUNSEL, CONSUMERS UNION; BILL MORGAN, VICTIM OF 
  DEFECTIVE CHINESE DRYWALL; ANDREW POPPER, PROFESSOR OF LAW, 
AMERICAN UNIVERSITY WASHINGTON COLLEGE OF LAW; MARIANNE ROWDEN, 
PRESIDENT AND CHIEF EXECUTIVE OFFICER, AMERICAN ASSOCIATION OF 
                 EXPORTERS AND IMPORTERS (AAEI)

                   STATEMENT OF JEREMY BASKIN

    Mr. Baskin. Good morning, Chairman Rush, Ranking Member 
Whitfield. My name is Jeremy Baskin. I am the general attorney 
who works with the import surveillance division of the Office 
of Compliance of the U.S. Consumer Product Safety Commission.
    I am pleased to be here today to discuss the U.S. Consumer 
Product Safety Commission's efforts in the area of import 
surveillance and H.R. 4678, the Foreign Manufacturers Legal 
Accountability Act. Before I begin, let me first note that the 
testimony that I give this morning is mine and has not been 
reviewed or approved by the Commission and may not necessarily 
represent the views of the Commission.
    From 1998 to 2007, the volume of consumer products imported 
into the United States increased over 100 percent. During that 
time period, imports from China nearly quadrupled and now 
constitute over 40 percent of all consumer goods. The shift in 
specific product areas has been more pronounced.
    In 2002, approximately 60 percent of toys purchased in the 
United States were imported from China and Hong Kong. By 2008, 
that number had risen to almost 80 percent of the U.S. market.
    In response to the rapid increase in consumer product 
imports, the CPSC has taken several steps to inspect products 
entering the country to ensure that they comply with applicable 
safety standards. In 2008, the Commission announced its import 
safety initiative and established a new import surveillance 
division within the Office of Compliance. The establishment of 
this new division allowed the CPSC to collocate permanent full-
time compliance investigators at key ports of entry of the 
United States.
    In 2009, the division had 10 full-time employees, FTEs, 
dedicated to port surveillance. That number is scheduled to 
rise to 14 FTEs by the end of fiscal year 2010 and 19 by fiscal 
year 2011. In addition, the division can call on the resources 
of the entire Office of Compliance which has over 100 FTEs when 
necessary.
    The CPSC has also sought to enhance its relationship with 
larger agency partners such as the Department of Homeland 
Security. Through the operation guardian program, CPSC partners 
with U.S. Customs and Border Protection, CBP, staff in order to 
leverage joint resources. In addition, CPSC recently assigned 
two FTEs to CBP's new commercial targeting and analysis center, 
called to CTAC, and executed a memorandum of understanding with 
CBP that allows the agency direct access to pre-arrival cargo 
data. This allows CPSC inspectors to target suspect shipments 
before they arrive, and most importantly, before potentially 
dangerous goods can enter the U.S. stream of commerce.
    We have also conducted training programs with CBP to 
educate both government personnel and the importing community 
on CPSC and CBP product detention and seizure authorities. So 
far, the results of these initiatives are encouraging.
    In fiscal year 2007, CPSC collected approximately 750 
samples of suspect products entering our country. In fiscal 
year 2009, the number more than doubled to almost 1,600. At the 
same time, we started to see a commensurate decrease in the 
number of voluntary recalls from 5,063 in fiscal year 2008 to 
466 in fiscal year 2009.
    In most cases, CPSC has been able to work with domestic 
partners of foreign manufacturers such as importers or 
retailers on enforcement activities to obtain relief for 
consumers without resorting to adjudicative proceedings. In a 
few cases, however, the lack of a registered agent for service 
of process has hindered the Commission's ability to develop 
information that would help us provide relief to consumers.
    One example of this is the CPSC's effort to provide relief 
to U.S. homeowners impacted by problem drywall imported from 
China. In a number of cases, CPSC staff attempted to send 
requests for information to Chinese drywall manufacturers only 
to have these requests returned to the Commission refused and 
unopened.
    The lack of registered agent for service of process has 
also been recognized by Chinese industry groups and some local 
lawyers in China have provided legal advice seeking to exploit 
this situation. Thankfully this type of sentiment appears to be 
rare. However it is foreseeable that additional attempts to 
stymy or obstruct commission efforts to obtain information 
voluntarily from manufacturers outside of U.S. legal 
jurisdiction and that could occur in the future.
    Any such recalcitrance could impede commission efforts to 
assist consumers with potentially defective consumer products. 
Additional authority allowing CPSC to require that foreign 
manufacturers designate a U.S. registered agent for service of 
process could be helpful in some cases, particularly those 
involving administrative requests for documents or information.
    On January 15, 2010, CPSC chairman Inez M. Tenenbaum noted 
in a statement accompanying a report to Congress that helpful 
changes to existing statutes might include service of process 
requirements for foreign manufacturers so the agency can more 
easily pursue recalls.
    Currently, any action against an identifiable foreign 
manufacturer would require service of process using The Hague 
convention.
    As the subcommittee moves forward however some additional 
direction would be helpful with regard to the range in size of 
manufacturers that would be subject to the registration 
process. In addition, it might also be helpful to involve the 
import safety working group in this process to ensure that 
appropriate jurisdictional and operational details are 
addressed.
    Mr. Chairman, thank you again for the opportunity to 
testify. I would be happy to answer any questions at this time.
    [The prepared statement of Mr. Baskin follows:]


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    Mr. Rush. Thank you, the chair now recognizes Ms. Gadhia 
for 5 minutes.

                    STATEMENT OF AMI GADHIA

    Ms. Gadhia. Thank you, good morning, Chairman Rush, Ranking 
Member Whitfield, and members of the subcommittee. My name is 
Ami Gadhia, and I'm policy counsel with Consumers Union, the 
nonprofit publisher of Consumer Reports Magazine. We appreciate 
the opportunity to testify the today in support of the Foreign 
Manufacturers Legal Accountability Act. I offer my testimony on 
behalf of both CU and the Consumer Federation of America. My 
full comments are contained in my written testimony, but I will 
summarize them briefly here.
    H.R. 4678 is necessary to ensure that consumers who are 
harmed by unsafe products can obtain redress no matter where 
the product is manufactured. It will also create a level 
playing field for all manufacturers, both domestic and foreign, 
by holding the responsible party accountable when consumers are 
injured. CUA and CFA have long fought for legislation and 
regulation that will result in safer products on our store 
shelves. But in the event that an unsafe product makes it into 
the marketplace, consumers should be able to pursue all 
remedies for the harm they suffer whether the manufacturer of 
the unsafe product is a foreign company or a domestic one.
    The products that Americans use every day are increasingly 
being manufactured overseas. According to the Toy Industry 
Association in 2007, toys made in China made up 70 to 80 
percent of the toys sold in the U.S.
    Of the products recalled by the CPSC since 2006, more than 
75 percent of products were manufactured outside of the U.S.
    We have too many frightening examples in recent years of 
dangerous or deadly foreign made products melamine, which is 
toxic to animals, was blended into pet food to give 
artificially high protein readings. Diethylene glycol, 
potentially lethal to humans, was substituted for its higher 
cost cousin glycerin, in the manufacture of toothpaste. Tires 
were manufactured with either a minimal or missing gum layer 
needed to prevent catastrophic tread separation. Toxic lead 
paint was substituted for the paint that was originally 
approved for popular children's toys presumably to save money.
    These are all cases were unscrupulous business practices 
have jeopardized the health and safety of the consumer.
    This legislation would assist our Federal agencies as well 
in their ability to recall consumer products manufactured by 
foreign entities.
    The following example is illustrative in May 2001, the CPSC 
recalled a home soda machine manufactured by Drinkmaker of 
Sweden. Components inside the soda machine broke apart and went 
flying, and there were reports of lacerations, fractures and 
contusions caused by the machine. However, the manufacturer, 
Drinkmaker of Sweden AB, either could not be contacted by the 
Commission or would not cooperate with the voluntary recall. 
Fortunately, a responsible company, the Soft Drink Company of 
Seattle, Washington, agreed to conduct the recall of these 
machines with the CPSC and to repair the Drinkmaker.
    It is untenable, however, to have a system of 
accountability that relies upon this kind of altruistic and 
rare behavior. By requiring that foreign manufacturers have 
registered agents in the U.S., H.R. 4678 will make considerable 
strides in assisting CPSC, FDA and EPA in holding the 
appropriate entities responsible for the products that they 
introduce and sell to U.S. consumers.
    If foreign entities have the benefit of selling products 
and making profits from sales in the U.S., they should be 
accountable if the product causes harm.
    While in some instances, U.S. retailers and other entities 
have shouldered the burden of the foreign manufacturers for the 
products they sell, this cannot be relied upon and is not 
always fair.
    Domestic manufacturers who make safe products should not be 
undercut by foreign manufacturers who are not prioritizing 
safety. If a foreign manufacturer knows that they cannot be 
held responsible in U.S. Courts for the dangerous products they 
sell, this knowledge has a likely significant impact upon the 
manufacturing decisions. Did they use the stronger more 
expensive component? Do they ensure that the product meets 
safety standards? Holding manufacturing entities accountable in 
our civil justice system acts as an important deterrent to 
unethical and potentially harmful business conduct.
    Deterring wrongful conduct is a significant attribute of 
our civil justice system and it does not make sense that 
foreign manufacturers who sell products in the U.S. Should be 
outside that system.
    We have a modest suggestion for an improvement to the bill. 
In section 3(a)(3) of H.R. 4678, the minimum size of the 
foreign manufacturer is left to the discretion of the 
applicable agency. At a minimum, the heads of each agency must 
coordinate the definition of which companies would fall under 
the bill's scope, and ideally there will be a consistent 
definition. It would be confusing and counterintuitive if a 
manufacturer were to produce some products that fall under the 
scope of this bill and some products that do not.
    Further, a consumer could be killed or seriously hurt by a 
product made by a manufacturer of any size. Our groups 
understand that it may be necessary to make a determination 
about which manufacturers fall under the bill but ensuring that 
consumers can obtain redress should be prioritized.
    We want to prevent companies from purposely using the size 
limits to evade responsibility to purchasers and users.
    Finally, we oppose efforts to weaken aspects of this 
legislation including efforts to shift cases from State to 
Federal courts. Efforts to limit access to State courts have 
negative consequences for consumers. Corporations that violate 
State laws are less likely to be held accountable for their 
wrongdoing when a Federal Court hears the case rather than's 
State court. Further corporations now seek to avoid 
responsibility under State law as States enact laws expanding 
consumer and environmental protections.
    When a case is based solely on a violation of State law as 
many product liability cases are, no compelling reason exists 
for stripping State courts of the ability of enforce that State 
law.
    Consumers Union and Consumer Federation of America support 
the Foreign Manufacturers Legal Accountability Act and we look 
forward to working with you to ensure that this bill becomes 
law. Thank you.
    [The prepared statement of Ms. Gadhia follows:]


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    Mr. Rush. The chair now recognizes Mr. Morgan for 5 
minutes.

                  STATEMENT OF WILLIAM MORGAN

    Mr. Morgan. Chairman Rush members of the subcommittee, 
thank you for allowing me to come here and testify. Thank you 
for allowing me the opportunity to come here and share my 
experiences with you here this morning. My name is Bill Morgan. 
I'm a retired police officer after having served the City of 
Newport News, Virginia for 24 years. My wife, Deborah, is a 
school teacher. She and I have been married 27 years. We have 
two daughters and our first grandchild was born a couple of 
weeks ago.
    My wife and I bought our dream home in July 2006. It was a 
beautiful home on a corner lot in Williamsburg, Virginia with a 
big yard. Both Debbie and I fell in love with the home. It was 
the perfect home for our family. We paid a little under 
$400,000 for the home.
    After my wife experienced multiple episodes of nose bleeds 
and headaches and after our house had a series of failures with 
the air conditioning and electrical systems, we discovered our 
had been built with defective drywall imported from China. We 
learned that this drywall contains high amounts of sulfur and 
that corrosive sulphur gases were circulating in our home 
corroding our electrical and mechanical equipment. My home was 
built with almost 200 sheets of 4 foot by 12 feet Chinese 
drywall.
    After a hearing in front of Judge Eldon Fallin in New 
Orleans earlier this year, he found that the electrical and 
mechanical systems in my home had been completely destroyed and 
needed to be replaced. The only solution to this extensive 
damage is to strip my house back down to the studs and 
completely rebuild it. I can't afford that.
    The corrosive gases have also damaged my computers, 
televisions and other electrical and electronic devices in my 
home. We were scared for our family's health and concerned 
about the risk of fire. We moved out of the house in June, 2009 
last year. Since having to abandon our dream home, I've been 
unable to pay the rent on the place where we are currently 
living and my mortgage. I have lost my home in foreclosure, and 
I have had to file for personal bankruptcy.
    The company that manufactured the drywall in my home was 
called Taishan. This company is located outside of Beijing in 
China. Although the Chinese company sent enough drywall into 
Norfolk, Virginia to build several hundred homes, it has 
refused to take any responsibility for its defective product. 
In the complaint that was filed on my behalf, it was necessary 
to have a lawsuit translated into Mandarin with special process 
service flying to China utilizing a time consuming and 
expensive process.
    The Foreign Manufacturers Legal Accountability Act would 
streamline this process and give victims of defective foreign 
products a more speedy and equitable procedure to have their 
claims addressed. My lawyers have advised me that they spent 
well in excess of $150,000 serving foreign drywall 
manufacturers for victims like myself.
    It's not unusual for these foreign authorities to sit on 
the lawsuits for 6 months before serving them on the defendant 
manufacturers. The average American, like myself, cannot afford 
this expensive time consuming and frustrating procedure.
    Foreign manufacturers should not be allowed to sell 
products which destroy homes and make people sick with 
impunity. Unless these companies require to make themselves 
amenable to being sued in U.S. Court, they should not be 
allowed to sell their products here.
    U.S. businesses are required to abide by our laws and 
foreign businesses that profit off of U.S. consumers should do 
so as well.
    I look forward to answering any questions you folks may 
have, and thank you for allowing me to come here and share this 
experience with you here today.
    [The prepared statement of Mr. Morgan follows:]


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    Mr. Rush. The Chair recognizes Mr. Popper for 5 minutes.

                   STATEMENT OF ANDREW POPPER

    Mr. Popper. I thank you, Mr. Chairman, and a special hello 
to Congresswoman Sutton from my alma mater Baldwin-Wallace in 
Berea, Ohio.
    H.R. 4678 is a straightforward appropriate essential step. 
It is, as far as I can tell, constitutionally sound, beneficial 
to consumers, beneficial to U.S. businesses and consistent with 
the laws and practices in many of our trading partners. It is 
as far as all of the witnesses seem to understand, a way to 
level the playing field. It strips foreign manufacturers of an 
unfair advantage. It closes an understandable loophole in our 
legal system. And that is not a loophole that is illegitimate. 
There is a constitutional basis for it. But there is also an 
answer for it. And the answer is this legislation.
    It begins at least in terms of how we think about these 
things with the obvious need, and I don't think any of us could 
say it better than Mr. Morgan just did. When you place into the 
stream of commerce millions of products, and we are talking 
about millions of products with toxic levels of lead, drywall 
that is destroying a home and a family, cribs that present a 
risk of strangulation, aqua dots that are coated with date rape 
drug as part of their paint, contaminated toothpaste and 
seafood and honey and pet food, you got a problem.
    And you might want to think that there are nice ways to get 
around this or our existing system of laws will account for it, 
but you really need to take the bull by the horns here.
    This is a very wise, very simple piece of legislation. The 
idea of designating an individual for service of process, and 
by that designation, establishing consent is, as I think we all 
said, it's a logical, simple, appropriate and constitutional 
approach.
    Imagine the scenario that was just presented by Mr. Morgan 
repeated over and over and over again. The majority of our most 
common pharmaceutical products are manufactured abroad, crash 
helmets, manufactured abroad, and the list, as you see from my 
testimony, goes on and on and on.
    Here is a bill that deals with the problem finally of the 
difficulty of haling into court--an interesting term--a foreign 
entity that otherwise has a minimum contact and reasonability 
basis for resisting service of process.
    Here is a bill that actually solves the problem.
    And we all recognize what the problem is. If you don't have 
an agent or officer in this country, if you don't own property 
or have a representative in the United States, it becomes 
difficult under our current system, under our current 
jurisprudence to establish in persona jurisdiction. Now with 
one simple bill that mimics legislation in other fields that 
seems fair that seems a legitimate quid pro quo, a condition 
for doing business in the United States that is mimicked in 
many other areas, you solve the problem.
    There were other solutions that people thought of, the 
aggregate of contacts suggestion that comes from the concurring 
opinion and the plurality opinion in Asahi is a legitimate 
answer. It's just complicated.
    This is simple. This is right. And this is the moment to do 
it.
    You have foreign producers who are creating a risk and are 
now being given a simple choice. I like to think of this 
legislation in terms of that word. This is choice. This is 
party autonomy. You don't have to do business here. If you 
choose to do business here, then you're subject to our laws. If 
we are lucky enough under the other legislation that is being 
considered or in any other area to have our wonderful 
manufacturing community able to market its goods abroad, do you 
think that they would get a free pass from other countries? 
China has just adopted a comprehensive tort law with strict 
liability, punitive damages, do you think that China is going 
to recognize a minimum contacts theory and not impose on our 
companies who do business there the same responsibility that we 
ought to be imposing on companies who do business in the United 
States?
    I don't think so. I don't think so.
    On the question of trade, and on the question of whether 
this creates an unfair advantage, there was a case involving 
artificial Christmas trees that catch on fire in the United 
States District Court about 2 years ago. And that product was 
manufactured in China. And the court held as follows, in this 
age of WTO and GATT, it is only reasonable that companies that 
distribute allegedly defective products to regional 
distributors in this country anticipate being haled into court.
    Well, of course it's reasonable. Of course it's normal, it 
is a condition of doing business here. And yet a loophole 
exists. Close the loophole. It's not that complicated. This is 
leveling the playing field. This is getting rid of a free pass 
that we are giving foreign manufacturers, a free pass that our 
manufacturers don't get.
    The law of the land in this country, the law of the land in 
virtually every common law country is lex loci delicti. You 
apply the law to the place of the wrong. The place of the wrong 
is here. This is where the manufacturer is harmed. Give the 
manufacturer the access to our courts, give the harmed 
individual access to our courts and let our system of justice 
work.
    This is good legislation. It's going to produce fair 
result. It isn't perfect. No legislation is. The Constitution 
isn't perfect. That's why we keep amending it.
    I ask that you give consideration to this bill. Thank you.
    [The prepared statement of Mr. Popper follows:]


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    Mr. Rush. Ms. Rowden, you are recognized for 5 minutes.

                  STATEMENT OF MARIANNE ROWDEN

    Ms. Rowden. Thank you, Chairman Rush, Ranking Member 
Whitfield, and members of the subcommittee, my name is Marianne 
Rowden, and I'm president and CEO of the American Association 
of Exporters and Importers. AAEI has been the voice of the 
International Trade Community since 1921, and we represent the 
entire spectrum of the trade community. AAEI greatly 
appreciates the opportunity to testify today. Our written 
testimony submitted for the record raises five points, but I 
would like to concentrate on two fundamental issues.
    Since enactment of the Consumer Product Safety Improvement 
Act, product safety has become an integral part of trade 
compliance. This new responsibility follows the trade community 
adopting new practices to enhance supply chain security since 
9/11.
    Our experience over the last decade has been that 
regulating goods produced outside of the United States requires 
two things: First a wholistic risk management system; and two, 
implementation of product safety legislation, which would 
eliminate the need for H.R. 4678.
    Let's turn to the chart entitled A Multi-Layered Approach 
to Wholistic Risk Management.
    This chart categorizes companies based on risk 
characteristics. This solution will allow the government to 
spend its limited resources efficiently and effectively to 
prevent defective products from entering the commerce of the 
United States, secure the homeland and increase trade 
compliance.
    We would like to highlight the companies who joined CPSC's 
voluntary partnership program with CBP, the importer self-
assessment program for product safety would fall into the ultra 
low risk category as a result of their demonstrated commitment 
to ensuring the integrity of their imported products and the 
safety of U.S. consumers.
    This wholistic risk management approach is critical to the 
implementation of product safety laws enacted by Congress. 
First, without information about the integrity of imported 
products, we will continue to see defective products. AAEI is 
working with CBP, FDA, CPSC and other Federal agencies to 
leverage the data already collected by CBP to assess risk.
    Congress has chosen different methods for dealing with 
risks posed by different products. For consumer products, 
Congress has directed CPSC to require certifications 
demonstrating that the product meets applicable safety 
standards.
    For food drugs and devices, Congress chose to require 
foreign manufacturers to register with FDA because of the risks 
posed to the public health by potential bad actors seeking to 
compromise the integrity of these products.
    These laws need time for implementation and evaluation of 
their effectiveness before adding more legislative 
requirements.
    Finally, AAEI remains concerned that if Congress chooses to 
pass H.R. 4678, similar requirements will be placed on U.S. 
companies exporting to foreign markets. We believe it will be 
difficult for small U.S. companies to expand export 
opportunities and create jobs in the United States if they are 
required to appoint a registered agent in foreign countries to 
defend lawsuits.
    We thank you for the opportunity to testify today, and I'm 
happy to answer the subcommittee's questions.
    [The prepared statement of Ms. Rowden follows:]


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    Mr. Rush. The chair thanks all of the witnesses for their 
opening statements. And the chair now recognizes himself for 5 
minutes for the purposes of questioning the witnesses.
    Mr. Morgan, I must begin with you, your story of you and 
your family, the tragedy that you had to endure was heart 
wrenching. There is not one of us that wasn't moved by your 
story that you provided us. And I want to thank you for your 
willingness to share your story with us today. The story of 
defective Chinese drywall in what you thought was your dream 
home has, you said, made your life turned upside down, forced 
into bankruptcy and forced you to lose your home. And I can't 
think of anything that would be as horrible as having someone 
to lose their home under these kind of circumstances.
    Your story demonstrates quite clearly to all of us that the 
expense of foreign defective products on the American consumer 
can be enormous and can be life altering.
    We are not only moved emotionally, but we are also outraged 
by what happened to you and your family, and what is happening 
to not only you and your family but to thousands of other 
American consumers who are victims of this defective drywall, 
and other products, I might add, foreign manufactured and 
defective that come in from overseas.
    We are just very, very moved by the results that Americans 
have to suffer from the circumstances.
    I guess this might be kind of an interesting elementary 
question, but can you share how you feel about that and say why 
you support this legislation?
    Mr. Morgan. Yes, sir. I bear no ill will to China or the 
companies, 14 months ago, my life was perfect. We had no 
concerns, no issues, and in 14 months, I'm here today talking 
with you good ladies and gentlemen. Just hold them accountable 
like anybody else in this country. I don't think they should be 
placed on a higher standard. Just put them, hold them 
accountable like everybody that does business in this country 
is. As a police officer, my wife being a school teacher, we 
always had to obey the rules. It's just our nature. And I think 
that is probably the most frustrating thing is they are not 
being made to obey the rules of doing business in this country.
    Mr. Rush. Since your story has been made known to the 
public, have you been able to identify or share your stories 
with other American citizens who have had a similar story?
    Mr. Morgan. Yes, sir. And my story is very typical. The sad 
thing is it took almost 2 years for our home to start to 
display the problems. In other words, we built it brand new in 
2006 and it was around 2008 we started experiencing the 
problems with the electrical systems, the air conditioning, my 
wife had the nose bleeds the coughing, the headaches, all those 
types of things. And the homes that were built last year, there 
are a lot of people that have it in their homes and they don't 
know it yet. Anything I can do, and that's one reason I wanted 
to come here today, anything I can do to bring awareness to 
this, it's hurtful to sit and tell people that I've had to file 
bankruptcy. May 17th my home went into foreclosure.
    My wife and I were always the type of people, our mortgage 
check was there on the first because we were afraid if it was a 
day late they were going to come take the house. Here again, we 
have always done what we're supposed to do, and that's just 
what I hope anybody that does business with this country will 
be held to the same standards as those of us that live here and 
work here.
    Mr. Rush. Again, I want to thank you and members of this 
committee, our hearts go out to you and we are highly motivated 
to solve this problem.
    Mr. Morgan. Thank you, chairman.
    Mr. Rush. The chair is extending this time now, the chair 
now recognizes Mr. Whitfield for 5 minutes.
    Mr. Whitfield. Thank you very much, and thank you all for 
your testimony.
    When we talk about safety of products in the U.S., of 
course one part of it is we have a mechanism where we can 
recall certain items and then what this legislation really is 
about is giving an individual or a legal entity an opportunity 
to get a defending party into court. And let's take Mr. 
Morgan's example, and Mr. Morgan, I also would like to convey 
my very much concern about you and your family and what has 
happened to you and other people caught in the same 
circumstance.
    But if this law had been in effect, the one that we are 
talking about, and Mr. Popper, if we if we were able to serve, 
get the service of process on the Chinese company that provided 
this drywall and if we obtained a judgment in a court in the 
U.S., whether Federal or State, whatever, how difficult would 
it be to actually obtain the funds to collect to the judgment?
    Mr. Popper. I guess the best way to answer that would be to 
say that you would never get to that question unless this 
legislation is adopted. Because you would never get to having 
that manufacturer in court.
    Mr. Whitfield. I understand that. If we are going to try to 
really help people like Mr. Morgan, we can help get service of 
process very easily. But what can we do to collect on the 
judgment? In his case for example?
    Mr. Popper. The potential of liability changes behavior. 
The potential for civil liability is one of the most powerful 
forces in the American economy. Selling a product in the United 
States and knowing that you don't get a free pass or a dodge 
but that you can be haled into court and that you can haled, 
found liable, I think, creates an incentive that is worthwhile. 
That is the whole theory behind the tort system. That is the 
corrective justice effect. I don't mean to avoid your question. 
But you start with the fact, you asked me how this could happen 
or how this could be avoided? That is one way. The second way 
is we position----
    Mr. Whitfield. How do we collect the money?
    Mr. Popper. You go after the manufacturer and if the 
manufacturer doesn't cough up the money on the judgment, or if 
the manufacturer makes it difficult to secure that judgment 
under The Hague convention, then you have to go after the 
distributor. But you don't get to do any of that right now. 
None of those, none of those values are there.
    To be clear, this legislation doesn't solve every problem 
in the civil litigation system when you're dealing with a 
foreign manufacturer. It does give you a valid starting point. 
This bill wasn't designed, as I read it to facilitate the 
collection of foreign judgments. It allows for the entry of the 
judgment. Now potentially, you have got a judgment creditor, 
you have a company that is in trouble, you have an enforcement 
mechanism through the Department of Homeland Security----
    Mr. Whitfield. Mr. Popper, thank you, I appreciate that. I 
only have 1 minute and 50 seconds left. Thank you for that.
    But the importer of this product, Mr. Baskin, this tainted 
wallboard that was used in Mr. Morgan's house, would there be 
any mechanism through a treaty or otherwise that a lawsuit 
could have been filed against the importer or the distributor 
of the product in the U.S.?
    Mr. Baskin. The importer is responsible for obligations 
that the Tariff Act puts on him with regard to importation, but 
the importer would not necessarily be responsible for paying 
money damages.
    Mr. Whitfield. Mr. Morgan did your employers sue the 
importer of the product?
    Mr. Morgan. Not yet, no, sir.
    Mr. Whitfield. Have they had talked to you about doing 
that?
    Mr. Morgan. Yes, sir, I know all things are being looked 
at, and I would have to defer any additional questions like 
that to them.
    Mr. Whitfield. So they have not made a final decision yet. 
OK. But they are looking in it.
    One other question I would like to ask, and I'm not an 
expert in this certainly, but some experts have told us that 
this legislation may run afoul of WTO requirements for similar 
treatment of foreign and domestic products that if the bill 
passed foreign manufacturers would face the penalty of 
exclusion of their goods from commerce for failure to have a 
registered agent and thereby accepting the specific 
jurisdiction of the State court. However domestic manufacturers 
do not face this significant penalty of banishment from 
commerce for any similar violation.
    Is there any argument there that WTO would look at this as 
a discriminatory type action?
    Mr. Baskin. I would have to defer to Customs and 
International Trade Commission for an answer like that. CPSC 
wouldn't be in a position to answer that.
    Mr. Whitfield. But Mr. Popper, you had indicated that 
recently China had changed their tort law. Is that correct?
    Mr. Popper. My understanding, and it is in my testimony 
that China adopted a new, what they call a new tort law to take 
effect July 1, 2010.
    Mr. Whitfield. Have you had an opportunity to look at that 
yet? That law?
    Mr. Popper. It has been in the making for 8 years, and I 
have looked at the components parts of it that are available 
online. I haven't read it in its native tongue.
    Mr. Whitfield. May I ask one other question and I know we 
have other people.
    But Mr. Baskin, does the Consumer Product Safety Commission 
have a position on this bill?
    Mr. Baskin. Yes. We support the concepts of the bill. But 
as I noted in my testimony, there are some issues that we would 
have with regard to the range and size of manufacturers that 
would be subject to the process.
    Mr. Whitfield. You do support the concept?
    Mr. Baskin. Yes.
    Mr. Rush. Thank you. Ms. Sutton is recognized for 5 
minutes.
    Ms. Sutton. Thank you, Mr. Chairman.
    Mr. Baskin, in your testimony, you stated that earlier this 
year Chairman Tenenbaum sent a letter to Congress, and in the 
letter noted that helpful changes to the existing statutes 
might include a service of process requirements for foreign 
manufacturers so that the agency can more easily pursue 
recalls, is that correct?
    Mr. Baskin. Yes.
    Ms. Sutton. And so this legislation could be helpful to the 
Consumer Product Safety Commission as well as to providing 
redress for injured consumers, correct.
    Mr. Baskin. Yes.
    Ms. Sutton. Ms. Gadhia, thank you very much for your 
testimony as well.
    The CPSC has a number of tools as we have heard here today 
intended to prevent unsafe consumer products from entering the 
market. And you testified that this bill will make considerable 
strides in assisting CPSC and other agencies in holding 
appropriate entities responsible for products that they 
introduced and sell to our consumers.
    Could you elaborate about how this would work together and 
complement the CPSC's activities?
    Ms. Gadhia. Absolutely. As has been noted, there are 
mechanisms on the front end such as the CPSIA and other 
statutes in place that hold all manufacturers to certain safety 
standards that their products have to meet before they are sold 
in the U.S.
    And there are mechanisms once those parts come to our 
borders, through the good work of CBP and Department of 
Homeland Security to screen those products. But there are two 
issues with regards to that, one, not every company is going to 
follow the safety standards. You're going to have unscrupulous 
products, manufacturers and products, dangerous products coming 
through. And with the resources that CBP and others have, they 
are not able to screen every single one of the products at the 
border.
    So the end result for a variety of reasons is that there 
are going to be dangerous products on the market, despite 
everyone's efforts. And so this is yet another mechanism on the 
other side of things to address the harm when it does occur and 
allows consumers when they are injured and go through the 
devastating circumstances that Mr. Morgan and his family have 
gone through to try to begin to obtain some redress for that.
    Ms. Sutton. Thank you. And of course, Professor Popper, you 
were just explaining the benefits of also having this kind of 
legislation pass so that we can give an incentive to those who 
produce products to make them safe. Would you like to elaborate 
on that and how this is a useful tool up front as well as 
providing redress?
    Mr. Popper. I think that there is no question that the 
potential for liability changes behavior. It means both making 
sure in the production process that you have exercised 
reasonable care and that in the distribution and sale process 
you provide adequate information and warning. You know that 
liability is down the road. Whether as has been suggested, you 
may have difficulty selecting the judgment is a very separate 
question.
    The other piece of this is that once you interject the CPSC 
into the equation and the way the consumer product safety 
improvement legislations worked is, you end up with findings of 
regulatory violations where you don't have the collection of 
judgments a problem. Those findings become facts that 
constitute a violation, they constitute a breach of a duty of 
care and they are readily imported into our legal system. It's 
the way U.S. manufacturers function. They work both the front 
end and back end. It's what creates safer products. Why not do 
that with foreign manufacturers? It seems fair to me.
    Ms. Sutton. I appreciate that very much. Mr. Morgan, thank 
you so much for being here and for testifying for sharing your 
experience with the committee in an effort to try and improve 
the situation for others.
    I'm very sorry to hear about what has happened to your 
family. I'm sorry to hear about the toll that it has taken and 
the time that you have had to deal with in pursuing some kind 
of effort at recourse.
    To the questions that some of my colleagues have raised 
about enforcement, I have some ideas about enforcement too so I 
look forward to pursuing those.
    But I just, I'm struck and I think that it was professor 
Popper who indicated that your words frankly summarize it when 
you say foreign manufacturers should not be allowed to sell 
products which destroy homes and make people sick with impunity 
or the list of any of these other products that come into our 
stream of commerce, and frankly it will improve safety of 
products not just for American consumers, but for all 
consumers. And so I would advise and encourage folks to look at 
the list of items, Professor Popper, that is contained in your 
testimony I believe about things that are coming in to this 
country.
    And I don't have much time left, but I would just because 
I'm not very familiar, Ms. Rowden, with exactly with your 
entity that you are representing but I believe you said you 
represent the international trading community in the United 
States. And you support what I believe you described as fair 
and open trade policies, did you all support, did your 
organization support then things like NAFTA and CAFTA and NPTR?
    Ms. Rowden. Yes, traditionally, we have supported free 
trade agreements.
    Ms. Sutton. So you support all those things?
    Ms. Rowden. Yes.
    Mr. Rush. The chair now recognizes Commander Murphy.
    Mr. Murphy. Thank you, Mr. Chairman and thank you to the 
panel. Professor Popper, a question for you, I just want to 
make sure I have a proper summary of your testimony, so if we 
use these products, you can be poisoned, strangled, choked, 
fall, crash, burned, bruised, cut or die but you can't sue?
    Mr. Popper. That's correct.
    Mr. Murphy. Then given that, then I have a couple of 
follow-up questions there. And you pointed out that when one 
has to face the responsibility of litigation or the chance of 
litigation, it is a motivator for companies to make sure they 
keep an eye on their products because they are going to be held 
responsible for that.
    Does that add to the cost of products made in America such 
that products made in other countries that don't bear that 
responsibility use that as a mechanism to actually undercut the 
cost of products and sell them cheaper in the United States?
    Mr. Popper. I'm not sure I understand exactly your 
question, but I believe in my testimony what I stated in the 
written portion of it was that foreign manufacturers who are 
freed of this responsibility bear lower costs because they 
don't have to observe the due care responsibilities and they 
bear lower insurance costs and companies in the United States 
do have to observe due care responsibilities, do have to 
observe statutory obligations, do have to ensure against harm, 
and do spend more money. Consequently, the U.S. companies are 
definitely at a disadvantage.
    Mr. Murphy. That is what I wanted to know if you have any 
kind of dollar figure percent figure you have that it is one of 
those things that foreign companies may actually, we know they 
manipulate currency, they do a number of other things to 
subsidize or manipulate taxes, but I'm wondering along these 
lines too if we have any kind of dollar figure of what it is 
that they may by bypassing us actually undercut the cost of 
products.
    Mr. Popper. It's actually a very wonderful question, and 
it's very volatile because it is what is referred to in the 
United States from time to time as the tort tax. If you listen 
in the tort reform debate to people who don't necessarily agree 
with me on some of the issues, and they complain about the 
imposition of liability what they do is they place a percentage 
number on what it costs to produce good and safe products in 
this country and comply with our tort system. And I'm going to 
estimate that it is somewhere in the neighborhood of 15 to 20 
percent.
    Mr. Murphy. But that is a significant number----
    Mr. Popper. Massive.
    Mr. Murphy. And companies are saying we will just build in 
China and send it over here, and we don't have to pay that 
extra 15 to 20 percent and we manipulate currency which puts 
another 40 percent savings on, it's hard to compete with those 
countries.
    Mr. Popper. It's hard to compete with those countries and 
with those products so long as those products are not subject 
to the U.S. legal system.
    Mr. Murphy. Thank you. Mr. Baskin, I have a question, too, 
on your testimony. Does the Consumer Product Safety Commission 
have sufficient personnel to screen these products before they 
even get over here?
    Mr. Baskin. That would be a question that would be outside 
of my range of knowledge here.
    Mr. Murphy. I know you mentioned about the number of people 
who were involved in this and you have increased the number of 
screening, which is good news, but, even before they enter our 
ports, or I don't know where you feel that it's more important 
to check them before they leave the country of origin or when 
they come to our country, it's one of those areas that in order 
to protect consumer safety, if someone from your agency could 
get back to us because it's an important question to know what 
we would need to do with that.
    Mr. Baskin. Certainly, certainly.
    Mr. Murphy. Can someone also answer the question of what 
happens to U.S. Products in a foreign country? So if we sent 
something to a foreign country and it is deemed to be unsafe or 
some other problem, what happens to those products from foreign 
countries, anybody know?
    Mr. Popper. I will just give you a quick answer.
    Footnote 33 in my written testimony, I refer to a couple of 
pieces, one on the new Chinese tort law, and the other a piece 
pertaining to South and Central America and the imposition of 
liability on U.S. companies doing business in foreign 
countries. And the record varies. But for the most part, I have 
come to stand behind lex loci delicti. If you're in another 
country and you commit a wrong, the idea that the United States 
State Department is going to come in and bail you out when 
you're being subjected to civil liability, as far as I know, 
doesn't happen.
    Mr. Murphy. One final question then, do the importers of 
products in this country, do they mislabel products in terms of 
country of origin, content, anything else? Is that showing up 
anywhere, Mr. Baskin, in your findings?
    Mr. Baskin. That is always an issue. I have spent some time 
in Customs, and that is always a violation that customs would 
find. It would be no less applicable to CPSC.
    Mr. Murphy. Thank you very much.
    Mr. Rush. The chair now recognizes Mr. Braley for 5 
minutes.
    Mr. Braley. Mr. Morgan, I had the opportunity at the height 
of the Chinese drywall publicity to inspect some homes in 
Delray Beach, Florida, and I got to see first hand exactly what 
you were describing in your home, the corrosive effect on the 
wiring and the materials, the overwhelming smell of sulfur in 
there. And it was eye opening for me because the homeowners 
were devastated about what was happening to homes that they put 
a lot of money and were very proud of. And then I went back to 
Iowa where I live, and I was sick for about the next 6 weeks 
with respiratory problems.
    Have you or your family had any types of health-related 
problems because of being exposed to this Chinese drywall that 
we were talking about?
    Mr. Morgan. Yes, sir, my wife experienced nose bleeds for a 
long time, persistent coughing and headaches. After we moved 
out of the Chinese drywall house into our rental home she had 
nose bleeds for 2 days and she hasn't had one since.
    Mr. Braley. You're the perfect example of what foreign 
manufacturers who aren't subject to having a registered agent 
available in the United States do manipulate and that is they 
know that the long period and cost of trying to hold them 
accountable for what whatever they do, people will get 
frustrated and give up because at some point you have to move 
on with your life and you can't wait for that magic solution 
when you have got bills to pay and people are pushing you into 
bankruptcy. Has that been your experience?
    Mr. Morgan. Yes, sir, I mean just the cost just to do the 
translation, you know, $150,000, to myself or people like me it 
might as well be $1 million. It's just money that we don't 
have, we can't afford, and being a police officer, I hate to 
say in public, thank goodness for attorneys. They have been a 
real lifesaver for us in trying to get some of our life back. 
It's just been a maddening process. It really has.
    Mr. Braley. Mr. Popper I want to follow up with you. I have 
a very clear memory of a front line program talking about the 
trade imbalance between China and the United States, and they 
showed the Port of Long Beach with shipping container after 
shipping container come in with finished consumer products, a 
lot of them electronics, you name it, coming in and then they 
showed what was leaving the Port of Long Beach and it was 
recycled scrap metal and cardboard. That was the extent of what 
was going on in terms of the bulk of the shipping coming in and 
out of that port.
    And you talked about the practical aspects of enforcing a 
judgment against a foreign manufacturer.
    When you have got a judgment, all it is is a piece of 
paper. It means nothing whether you're suing a domestic 
manufacturer or foreign, but it gives you the right to enforce 
a judgment, and if you have got assets available in the United 
States, through a domestic manufacturer, you pursue that. If 
they refuse to pay, or if they are not insured, you can levy on 
those assets, you can attach them, you can have them sold, and 
then those proceeds can be used to satisfy a judgment, correct?
    Mr. Popper. That is correct.
    Mr. Braley. The same thing applies with foreign goods that 
would be in this country coming in through our ports that are 
owned by a foreign manufacturer, those are tangible assets that 
if need be, could be levied upon to satisfy a judgment if you 
can trace them back to the owner of the manufacturer, and they 
are doing business in the stream of commerce in the United 
States, right?
    Mr. Popper. That is correct.
    Mr. Braley. So it is not like we are developing a remedy 
without a payoff. It's just that it's very difficult, given the 
relationships with these foreign manufacturers and their 
ability sometimes to hide their assets overseas that makes it 
difficult for people who have been injured by these defective 
products to actually get a payout at the end.
    Mr. Popper. Yes.
    Mr. Braley. Would you agree with that?
    Mr. Popper. I would agree with that.
    Mr. Braley. Ms. Gadhia, one of the things I want to talk to 
you about is why this is so important? Because when you talk 
about something as massive as what we've seen with Chinese 
drywall, the average individual consumer, by themselves, are 
typically powerless against these large foreign manufacturers 
many of whom are hard to identify, because when you go into 
your Lowes or your Home Depot, they may have a product there 
that looks on the surface like it's a domestic product, and in 
reality, it was imported by a distributor, and being sold under 
their name rather than the original manufacturer. Why is it so 
important to consumers that we move forward on this 
legislation?
    Ms. Gadhia. It's incredibly important because, first of 
all, I think consumers have an expectation, and rightfully so, 
that the products that come into their homes regardless of 
where they come from are safe and it's only fair to domestic 
manufacturers that the rules that they play by should also 
apply to foreign manufacturers.
    You also need a mechanism that works on the other end of 
this entire supply chain in this system, where when you have 
got standards in place and you have got border protection in 
place, but you still have unsafe products coming through, 
sometimes you have a situation where you didn't know that this 
product was going to be problematic. I don't think anybody 
could have foreseen that you would have a children's toy with a 
chemical on it that turned to the date rape drug. I don't think 
you could have foreseen years ago that you would have sulfur 
coming out of drywall and causing these kinds of horrific 
problems. You have a lag time between these products coming in 
sometimes and the problems they cause, and you need that 
redress on the other side for consumers to be able to be made 
whole.
    Mr. Braley. Thank you. I yield back, Mr. Chairman.
    Mr. Rush. The chair recognizes Mr. Sarbanes now for 5 
minutes.
    Mr. Sarbanes. Thank you, Mr. Chairman. Thank you to the 
witnesses for their testimony.
    I always feel at these hearings, and in particular, 
committee, that I'm always sitting here saying you mean we 
don't already do that? Whatever the topic is, whether it's 
regulating chemicals, or in this case, whether consumers are 
going to have recourse when these foreign manufactured products 
come into the country, because I think the average American 
probably expects that this is already being done.
    And in that respect, I want to thank Congresswoman Sutton 
for this legislation because I think as four out of five of you 
testified, it makes absolute common sense to pursue it.
    I once argued in the Fourth Circuit a case on minimum 
contact. So I'm very familiar with the frustration, of a case 
called Eloquent Machine Corporation. And we were down to trying 
to make the case that faxes and other communications that were 
coming into the State of Maryland were sufficient to establish 
minimum contact for the purpose of exercising personal 
jurisdiction, I don't know if you're familiar with that case or 
not. But in any event, it makes absolute sense to try to fill 
this, or close this loophole as you have described it. And I 
wondered, though, if you could, Mr. Popper, respond to Ms. 
Rowden's arguments about whether we sort of don't need to go 
there yet, but it's really just a matter of improving the 
oversight through CPSC and other measures that we can take and 
that this is just kind of a extra layer that is unnecessary at 
this time. If you could respond to that, I would appreciate it.
    Mr. Popper. I think about 2-1/2 years ago when we started 
learning about the problems with pet food and the entire 
country seemed to mobilize around the issue, your question was 
answered. Were you dealing with isolated incidents, isolated 
problems and you had a solid regulatory structure in place, it 
might be worth waiting to allow that system to mature.
    I think that is not the case. I think you are looking at a 
remarkably broad problem when you're talking about 80 percent 
or more of the goods regulated by CPSC, the vast number of our 
pharmaceutical products, goods throughout the United States 
that we use in good faith. You started out your comment about 
why don't we already do this, I think as a country, one of the 
best things about us is that we operate in good faith, we 
operate in trust. We believe that when we buy a product sold by 
a reputable seller that we can rely on its safety and its 
efficacy. And we have learned with foreign manufactured 
products we can't do that. The regulatory system needs to be 
bolstered. The civil liability system needs to be bolstered.
    I certainly understand the desire to maximize our trade 
position. I think that is correct at every level. But requiring 
companies doing business in the United States, whether they are 
domestic or foreign, to follow the same set of laws strikes me 
as not inconsistent with that goal. It strikes me as perfectly 
consistent with it.
    And from my perspective as a law professor, I thank you for 
saying lawyers are, from time to time, heroes. They are. But 
you can be a good lawyer and representing a client who has a 
serious problem and run into exactly what you ran into in the 
Fourth Circuit, and there is nothing you can do about it. And 
when that happens, the concerns that we might have about some 
of our trading partners being miffed about the impositional 
liability strike me as not particularly the dominant concerns 
that one ought to have.
    Mr. Sarbanes. I appreciate it, and I think, Ms. Gadhia, you 
made the point that even a very rigorous regulatory oversight 
regime doesn't mean that you're going to completely be able to 
prevent harmful products from coming into the stream of 
commerce.
    Ms. Gadhia. Correct.
    Mr. Sarbanes. And you need other ways to create deterrence 
and/or create some remedy or recourse should that happen.
    Ms. Gadhia. That is absolutely correct. And in addition, as 
I mentioned in my testimony, this type of registered agent can 
also help agencies like the CPSC that are trying to conduct 
recalls within that regulatory scheme to do so in a proper 
fashion.
    Mr. Sarbanes. I have got 15 seconds. One last question for 
you Mr. Popper. And that is you spoke a little bit about what 
other countries have in place. Can you speak about what is 
happening with Chinese products going into certain other 
countries in terms of the way they are handling, because China 
has obviously been a focus of our discussion here.
    I mean, are we sort of in good or bad company, however, you 
might want to characterize it, in terms of the way we are 
equipped to handle these products coming in from China when we 
look at other countries or are others ahead of us on that?
    Mr. Popper. To the best of my knowledge, we provide a 
remarkably generous environment for foreign manufacturers by 
not imposing liability. I believe in the EU countries and in 
Latin America and in South America they are treated the same as 
their domestic companies. And so I think what we are doing is 
both domestically and internationally leveling the playing 
field.
    And if I might add just in terms of the regulatory 
obligations, keep in mind that as effective as regulatory 
systems are, they do not provide individual personal injury 
remedies. They provide a regulatory recourse, that affects the 
broad population, but the individual affected adversely by the 
violation of a safety regulation doesn't have recourse before 
the agency. The agency isn't an Article 3 court. It doesn't 
provide those remedies.
    Mr. Rush. The chair now recognizes Mr. Stupak for 5 
minutes.
    Mr. Stupak. Thank you, Mr. Chairman, thank you all for your 
testimony. Mr. Morgan, sorry, about your problems there and 
unfortunately your problems are duplicated many times 
throughout this country. Just a question though, you said you 
had your house built, right.
    Mr. Morgan. Yes, sir.
    Mr. Stupak. Did your builder charge you the going rate for 
drywall or did you get a lesser cost.
    Mr. Morgan. I don't know. I would like to know what the 
cost difference was.
    Mr. Stupak. I would like know that too. You might have a 
perfect claim right there against your builder.
    Let me ask Mr. Baskin or Ms. Gadhia, what happens when 
products come into the United States like this drywall, let's 
say, come came in right now from China high in sulfur, what 
would happen to it? You discover it at the border.
    Mr. Baskin. Luckily it's not. So that is a good thing in 
that----
    Mr. Stupak. But if it did, what would happen.
    Mr. Baskin. If it did, it could be detained at the border.
    Mr. Stupak. It sits there, right.
    Mr. Baskin. Yes.
    Mr. Stupak. Why don't we shove it back to the shipper?
    Mr. Morgan. The authorities allow that eventually.
    Mr. Stupak. They do?
    Mr. Baskin. Yes.
    Mr. Stupak. Well, then we had the inferior steel coming in 
from China, we had a couple of schools collapse in California 
because of inferior steel, they are telling us they have no 
authority to return it. In other words, it comes in, if they 
test the steel, it doesn't have the proper strength, they set 
it aside, tag it, set it aside, and it sits there, or whoever 
ordered it comes, picks it up, they are told they can't use it, 
say, for construction of a school, but it sits there or they 
take it use it for some other use in theory. So while you have 
authority to detain it, do you have specific authority to send 
it back to China.
    Mr. Baskin. I don't know about the steel situation.
    Mr. Stupak. How about drywall? Right now if bad drywall 
came in, you had the right to detain it at the border I agree 
with you, but do you have a right to send it back to China? And 
if so, who pays for it.
    Mr. Baskin. Good questions all. I would have to defer an 
answer to that, get that question in writing and we can get 
back to you on that.
    Mr. Stupak. Ms. Gadhia, you indicated, and Mr. Sarbanes, 
that the registered agent could help in a recall. How would a 
registered agent help in a recall underneath this legislation.
    Ms. Gadhia. The border would help is that you have got an 
entity here in the U.S. that should the agency need to get 
information from the agency about the scope of the product and 
when it was manufactured, the dates that they believe the 
defective product was manufactured, where the product went, how 
it was distributed, you have got an actual agent here that is, 
as the agent for service, of process, a contact domestically 
for the agency so they aren't trying to chase an entity 
overseas.
    Mr. Stupak. But sure but 4647 just requires you to have a 
registered agent here to accept process. You don't have to know 
anything about the product. You just have to be able to accept 
process so you don't have to send it to China and try to chase 
someone down where the central government holds it for 6 months 
before they give it to the manufacturer. How would a registered 
agent help? There would have to be more in the legislation 
wouldn't there to be able to really help in a recall.
    Ms. Gadhia. I think what it would do is it gives the agency 
one more option, one more entity to try to get that information 
from rather than sending it to China and having it sent back.
    Mr. Stupak. I agree if you're going to bring a lawsuit, you 
have a person or individual or entity you serve the process to 
and that manufacturer in this case is drywall would be 
considered served, but I don't know if I have a registered 
agent how that would help in a recall because they are not 
required to know manufacturing location, physical location, 
they just have to be a registered agent for a company, right?
    Ms. Gadhia. I might defer on the details of what the CPSC 
would be looking for as far as information the recall process 
to the agency. But I think it would depend on the case. It 
would depend on in some situations the agent for service of 
process might be an entity that has that information. In some 
cases you're right it could be simply and agent that accepts 
the paperwork.
    Mr. Stupak. So in this legislation shouldn't we expand the 
role of the registered agent more than just a person or entity 
that accepts service? Shouldn't they have greater knowledge of 
at least, if it's going to help in a recall.
    Ms. Gadhia. I think it could certainly help to do that, to 
expand it.
    Mr. Stupak. So do you suggest we put that in this 
legislation.
    Ms. Gadhia. I would respectfully take a minute to, I would 
respectfully respond that I would think about that a bit and 
get back to you on the record, if that's all right.
    Mr. Stupak. Please do. Mr. Chair, when we are in Oversight 
and Investigations, we see this all the time, whether it's 
melamine or whatever it might be, and a registered agent 
doesn't do anything to help you. In fact, all it is is a point 
of contact here in the United States.
    Ms. Rowden, why doesn't the American Association of 
Exporters and Importers just volunteer to be the registered 
agent for all these importers?
    Ms. Rowden. Oh, gosh.
    Mr. Stupak. Oh, gosh? I mean----
    Ms. Rowden. Our members are importers and exporters of 
goods. Often it is the U.S. importer who has the legal 
responsibility under U.S. customs law to deal with product 
safety and also will ensure----
    Mr. Stupak. Are you saying that the importers are 
certifying that the product is safe when they bring it in this 
country.
    Ms. Rowden. They have the obligation to make sure that that 
product meets all U.S. laws.
    Mr. Stupak. Really? Under what law is that.
    Ms. Rowden. All laws, not only U.S. Customs law, the FDA--
--
    Mr. Stupak. So Mr. Morgan should just sue the importer.
    Ms. Rowden. He can. The question is I'm not a trial 
attorney, but whether that would, the causation would be there 
for the U.S. importer to be liable. I just don't know.
    Mr. Stupak. So the fact that they may have it, it's not 
real liability that Mr. Morgan could look to the importer of 
this drywall and say aha, you imported this, you had a 
responsibility and duty to make sure it met U.S. standards and 
if not, therefore, Mr. or Ms. Importer, you are subject to our 
courts and jurisdiction.
    Ms. Rowden. Certainly, the U.S. importer is subject to U.S. 
law as a U.S. entity. They are subject to all the regulatory 
requirements.
    Mr. Stupak. But doesn't the law require them to knowingly 
know that they imported a defective product, and the burden of 
proof is really on Mr. Morgan, not on that importer to show 
that.
    Ms. Rowden. That would be a normal trial law.
    Mr. Stupak. So it's really useless. But going back to my 
question. Why wouldn't you just be the registered agent? All 
you're doing accepting process, so therefore you could cut down 
on all the expenses, the fear of Congress putting forth 
regulations that you fear in your statement here, it could be 
resolved by your agency, just being the registered agent. All 
you're doing is accepting process and we could short circuit 
this, get right to the court and see who has liability here.
    Ms. Rowden. But our association has no commercial 
relationship with foreign manufacturers.
    Mr. Stupak. You don't have to have a commercial 
relationship. All you have to be is a person who is present in 
the United States over usually the age of 21 and be willing to 
accept the process. You don't have to be an attorney or 
anything. All you have to be is a person, you are a point of 
contact to begin that process so Mr. Morgan doesn't have to run 
all over China to find his manufacturer.
    Ms. Rowden. It is not our role as a trade association to 
serve as that function, because that is a legal function.
    Mr. Stupak. Well, if you're trying to promote trade, why 
wouldn't you do that? Because you're promoting trade, you're 
providing a service for people importing or exporting in. I 
would think that would be the service you would want to do.
    Ms. Rowden. I doubt that our membership would support that.
    Mr. Stupak. I doubt that too, but good argument. I yield 
back, thank you.
    Mr. Ross. The chair thanks the members, and also the chair 
thanks the witnesses for your outstanding and extraordinary 
contribution to this hearing. And with that in mind, again we 
thank you for the valuable time, you allowed us to utilize your 
valuable time.
    This first panel now is dismissed. Thank you very much for 
coming. And Godspeed to each and every one of you.
    Mr. Morgan, this committee does stand in support of you and 
your family. Thank you very much.
    Will the second panel please be seated.
    We certainly want to welcome members of the second panel to 
this subcommittee hearing. And again, I want you to reemphasize 
to you how extraordinarily grateful we are for your sacrifice 
of your time and energy to be here to help make a contribution 
to the hearings that the subcommittee has to deliberate on the 
important matters. And I want to recognize each and every one 
of you by name.
    And to the members of the subcommittee on my left, is Mary 
Saunders. She is the assistant Secretary for manufacturing and 
services for the international trade administration. Seated 
next to Ms. Saunders is Ms. Deborah Wince-Smith. She is 
president and CEO of the council on competitiveness.
    And next to Ms. Wince-Smith is Mr. Owen E. Herrnstadt. Mr. 
Herrnstadt is the director of trade and globalization for the 
international association of machinists and aerospace workers.
    And then next to Mr. Herrnstadt is Mr. Jack Crawford 
Junior. He is the chief executive officer of Jadoo Power.
    And Mr. Anthony Kim is seated next to Mr. Crawford. He is 
the policy analyst for Heritage Foundation.
    Again, welcome to each and every one of you. It is the 
customary tradition of this committee to swear in the 
witnesses. So would you please stand and raise your right hand.
    Mr. Rush. Let the record reflect that all of the witnesses 
answered in the affirmative.
    We will begin with you, Ms. Saunders. You have 5 minutes 
for an opening statement.

STATEMENT OF HON. MARY SAUNDERS, DEPUTY ASSISTANT SECRETARY FOR 
    MANUFACTURING AND SERVICES, UNITED STATES DEPARTMENT OF 
 COMMERCE; DEBORAH WINCE-SMITH, PRESIDENT AND CHIEF EXECUTIVE 
   OFFICER, COUNCIL ON COMPETITIVENESS; OWEN E. HERRNSTADT, 
DIRECTOR OF TRADE AND GLOBALIZATION, INTERNATIONAL ASSOCIATION 
 OF MACHINISTS & AEROSPACE WORKERS; JACK CRAWFORD, JR., CHIEF 
 EXECUTIVE OFFICER, JADOO POWER; ANTHONY KIM, POLICY ANALYST, 
                      HERITAGE FOUNDATION

                   STATEMENT OF MARY SAUNDERS

    Ms. Saunders. Chairman Rush, Ranking Member Whitfield, 
thank you for the opportunity to speak to you today about the 
important topic of clean energy technology and export 
assistance.
    As you are well aware, clean energy is one of the greatest 
economic opportunities of the 21st century, and promoting the 
development, production and energy efficiency technologies and 
services is the highest priority for the Department of 
Commerce. These technologies are important to economic growth 
in the United States and locally.
    At the International Trade Administration or ITA, we have 
identified significant overseas market opportunities for U.S. 
firms in these technologies surfaces areas.
    For the record, I will not be commenting on H.R. 5156, but 
rather, my testimony will provide a prospective on the issues, 
challenges and opportunities within the clean energy technology 
and services sector today, as well as highlight some of the 
many programs that ITA has put in place to support U.S. 
industry competitiveness on this front.
    ITA is the lead export promotion agency in the Federal 
Government. Our mission is to create prosperity by 
strengthening the competitiveness of the U.S. industry, 
promoting trade and investment, and ensuring fair trade 
compliance with trade laws and agreements that enhance the 
ability of U.S. firms and workers to compete in the global 
marketplace on a level playing field.
    At his State of the Union Address this year, President 
Obama announced the National Export Initiative, or NEI, with 
the goal to double U.S. exports in years in support 2 million 
jobs. The President also emphasized that the Nation that leads 
the clean energy economy will be the Nation that leads the 
global economy.
    Clean energy technologies are a key way to meet global and 
economic development needs, mitigate climate change and capture 
the high value of innovation of jobs that this sector offers. 
Within ITA, we are responding to the NEI and to the President's 
emphasis on clean energy by hiring trade specialists in 
emerging growth markets, supporting small and medium size 
enterprises to broaden their exposure to international markets 
and developing outreach and trade mission programs to improve 
exports in high growth replacement clean energy.
    U.S. clean energy technologies and services companies face 
fierce competition in international markets. I want to 
highlight three factors that have a strong effect on 
international competitors: The strength of the domestic 
industry, the availability of international markets that offer 
U.S. companies a fair opportunity to compete, and the ability 
of U.S. companies to access the resources and master the skills 
required to export.
    The United States currently has a relatively small share of 
manufacturing capacity for clean energy-related industries. 
Nevertheless, there are clear opportunities for the U.S. To 
lead the world in high technology for clean energy 
manufacturing. We can leverage the R&D and innovation being 
pursued by companies, universities, and the Department of 
Energy national labs.
    Just turned on the microphone. Sorry.
    U.S. clean energy exports cannot increase if protection and 
rules and policies prevent open competition. Many countries 
have adopted policies that make it more difficult for foreign 
firms to compete in their markets. These include favoring their 
domestic industry through preferential tendering criteria and 
burdensome certification requirements.
    In addition, concerns regarding adequate protection of 
intellectual property rights hamper some firms from entering 
foreign markets.
    Intense foreign competition from State-owned enterprises 
poses another challenge for U.S. companies, particularly in the 
civil nuclear sector.
    And the final challenge to increasing clean energy 
technology exports that must be addressed is the willingness of 
U.S. firms to export. In the clean energy sector in particular, 
companies face challenges to exporting that are not market or 
policy based but are internal to that particular company's 
knowledge and comfort with the export process. Issues include a 
shortage of available capital or financing, complex domestic 
and foreign regulatory requirements, lack of knowledge, and 
comfort in local financial institutions to finance innovative 
clean energy products and difficulty in finding a local partner 
or distributor.
    ITA has multiple clean energy initiatives to support the 
President's NEI and works in close collaboration with other 
agency partners. We have initiatives focusing on sustainable 
manufacturing energy efficiency for U.S. companies as well as a 
civil nuclear trade initiative that identifies the sector's 
most pressing trade challenges and opportunities and 
coordinates public and private sector efforts to address them.
    We are leading a trade promotion coordinated committee 
effort to develop an export strategy for renewable energy and 
energy efficiency technologies and Secretary Locke recently 
established a renewable energy and energy efficiency advisory 
committee for industry to advise the Department directly on 
pressing trade promotion activities.
    ITA is actively promoting U.S. Clean energy solutions in 
overseas markets through trade events, foreign buyer programs 
at major renewable energy trade shows. We have brought 
delegations from all over the world to these events. We have 
organized numerous trade missions focused on clean energy.
    Most recently, the Secretary led a clean energy business 
development mission to Hong Kong, other cities in China and 
Indonesia. We have a number of reports and helpful resources, 
and I have brought copies of several of them. They provide a 
useful resource for small and medium-sized enterprises in the 
clean energy technology industry.
    And we recently released a small renewable energy 
assessment report on Indonesia and have continued to hold 
informational webinars on diverse topics.
    Lastly, I wanted to highlight the market development 
cooperative program which allows nonprofit groups or 
universities to propose projects to develop global markets for 
specific technologies. Last year, we awarded three awards in 
the clean energy sector. This year we have received numerous 
applications for MDCP rewards and are currently reviewing them.
    In closing, I would like to thank you, Chairman Rush, 
Ranking Member Whitfield, and members of the subcommittee for 
the opportunity to highlight what ITA is doing to help U.S. 
Companies compete in markets for clean emergency technologies 
and for all kinds of U.S. goods and services around the world.
    Expanding opportunities to export clean energy technologies 
will not only maintain the competitiveness of U.S. companies, 
but will create jobs and generate economic growth. In addition, 
it will increase the reliability of our energy supply.
    American businesses have the technology, the expertise and 
the experience to help countries around the world reach their 
climate and energy goals and this an extraordinary opportunity 
and a win-win for everyone.
    I welcome any questions you might have.
    [The prepared statement of Ms. Saunders follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Mr. Rush. The chair recognizes Ms. Wince-Smith for 5 
minutes.

STATEMENT OF DEBORAH WINCE-SMITH, PRESIDENT AND CHIEF EXECUTIVE 
              OFFICER, COUNCIL ON COMPETITIVENESS

    Ms. Wince-Smith. Chairman Rush, thank you for inviting me 
to testify today on the Clean Energy Technology Manufacturing 
and Export Assistance Act. This legislation acknowledges the 
pivotal role that the emerging clean energy industry will play 
in ensuring America's economic competitiveness and in our 
national security going forward.
    The growth and vitality of this industry depends upon the 
development of a robust domestic market coupled to access to a 
burgeoning global market for these essential technologies and 
services that will take us to a low carbon economy, energy 
security, and addressing climate change.
    Since 1986, the Council on Competitiveness has brought 
forth creative solutions to America's most pressing 
competitiveness challenges. Comprised of leaders from industry, 
academia and organized labor, the Council is unique in its 
abilities to build synergies and consensus across a wide span 
of organizations and interests.
    Next week on June 23rd, our chairman, Samuel Allen, the CEO 
and chairman of John Deere Corporation, will be launching with 
our members a new flagship initiative on U.S. manufacturing 
competitiveness in the 21st century. I submit for the record a 
summary of this initiative.
    The Council, with our partners in government and the 
private sector, will deliver a national manufacturing strategy 
to the administration and Congress at a national summit in 
2011. And energy and the clean energy revolution will be at the 
heart of this agenda.
    Our energy security innovation and sustainability 
initiative where we outlined a very robust plan last September, 
clearly supports an alliance with the objectives of the Clean 
Energy Technology Manufacturing and Export Assistance Act.
    As the 20th century drew to a close, rising global 
competition, the opening of global markets, challenged U.S. 
manufacturers raising concern about the export of U.S.-made 
goods, offshoring of our manufacturing production, the loss of 
skilled U.S. manufacturing jobs, and a rising account deficit, 
currency manipulation and distortion. With the growing strength 
and consumer demand of the emerging economies, competitors such 
as China, India, South Korea, and Brazil, now there are many 
that feel that U.S. manufacturing will spiral into further 
decline.
    The Council believes that no Nation can be a technology and 
economic leader without a robust multi-sector manufacturing 
capacity. And the stakes are extremely high. Our roadmap for 
energy security sustainability and competitiveness highlighted 
that revenue in just three clean energy sectors--wind, solar 
and biofuels--is projected to nearly triple over the next 
decade and markets for clean technologies and their attendant 
services will expand exponentially.
    These markets and the jobs and economic growth that will 
bring our country to the forefront require a set of enabling 
policies and programs in research and development, in 
manufacturing and commercial deployment here in America. So we 
believe that H.R. 5156 is an important policy step in 
addressing this challenge, and I am pleased to be here today to 
voice our support for this proposal and legislation.
    But there are many more policy steps required to ensure a 
vibrant ecosystem that supports America's capacity. For next 
generation R&D, and battery storage, carbon capture 
sequestration, and nuclear reactors, to increasing energy 
productivity and efficiency. We must engage in this intense 
global competition in Asia, Europe, the Middle East and the 
Americas.
    As an example of what is at stake, within the past decade, 
the United States has fallen from first to fifth among top 
solar manufacturing companies and now imports solar cells from 
the EU and Asia. China now is doing assembly work for solar 
cells in the United States.
    I cannot emphasize enough the importance of taking a 
systems approach to our energy sustainability and economic 
policies. We have to understand the linkage between policies 
and how we integrate them into a holistic strategy, everything 
from domestic tasks and fiscal policies to regulatory issues 
to, of course, global standards and trade policy.
    Let me highlight quickly four areas in our energy 
sustainability report that captures the essence of what you are 
trying to accomplish in this legislation with respect to 
expanding U.S. exports.
    The first is that we must remove tariffs and non-tariff 
barriers for sustainable energy products and services while not 
creating a dual track for preferential trade liberalization. We 
have to ensure that tariff reduction and removal of barriers 
are transparent, reciprocal, and provide access to all national 
markets where strong worker and consumer protections are 
provided.
    Two, we have to ensure intellectual property rights for all 
industrial products and services, copyrights and sustainable 
energy solutions are protected. This is a huge issue with 
China, India, and Brazil and other parts of the world.
    Three, we must ensure our continued U.S. technological 
leadership for the breakthroughs and commercializations. The 
Council has proposed that we need a long-term stable source of 
funding. And in the future, we argue that 30 percent of any 
revenue from carbon pricing should be allocated to R&D 
including the demonstration of clean energy technologies.
    And four, to insure that the technologies of tomorrow will 
be manufactured in the United States, we should allocate 40 
percent of revenues derived from any future carbon pricing 
program to manufacturing initiatives, Federal, State or local 
clean manufacturing zones, pilot projects as well as immediate 
expensing and depreciation of the costs of retooling for 
production and qualified products, and dedicating high-
performance computing assets to the clean energy manufacturing 
revolution.
    In conclusion, Mr. Chairman, the Council believes that the 
transformation to a low-carbon economy will unleash American 
innovation, it will create new industries, revitalize and 
rebuild manufacturing jobs across our Nation and keep and grow 
high-skilled jobs for this generation and the next. But we have 
to come together around an integrated manufacturing policy and 
to accelerate this growth, stewardship, and security for all. 
Thank you, and I am welcome to answer any questions.
    [The prepared statement of Ms. Wince-Smith follows:]


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    Mr. Rush. Thank you very much.
    Mr. Herrnstadt.

    STATEMENT OF OWEN E. HERRNSTADT, DIRECTOR OF TRADE AND 
   GLOBALIZATION, INTERNATIONAL ASSOCIATION OF MACHINISTS & 
                       AEROSPACE WORKERS

    Mr. Herrnstadt. Thank you, Mr. Chairman.
    The International Association of Machinists & Aerospace 
Workers is one of the largest manufacturing unions in the 
United States representing thousands of workers who produce 
goods for exports every day. We strongly believe in the 
importance of the clean energy industry and we welcome the 
opportunity to appear before you today.
    Support for domestic manufacturing goods related to clean 
energy is a critical component for our economic recovery, and 
it is urgently needed. U.S. workers continue to be mired in the 
economic crisis while the official unemployment rate hovers at 
around 10 percent, the unofficial unemployment rate is 
approaching 20 percent. Some 8\1/2\ million workers have lost 
their jobs since December 2007 with a significant number 
directly working in manufacturing.
    Today, there are over 15 million workers who are 
unemployed. Almost half of all of those who are unemployed have 
been without work for over 6 months.
    The IEM continues to argue for the adoption of 
comprehensive policies that will address this jobs crisis. In 
order to be effective, we urge that these policies establish a 
framework for rebuilding our manufacturing base and ensuring 
its sustainability for the future.
    H.R. 5156, the Clean Energy Technology Manufacturing and 
Export Assistance Act of 2010 represents one element of an 
overall program that is so desperately needed. If enacted, the 
bill would assist U.S. companies in exporting clean energy 
products and services. The bill would also require the 
Secretary of Commerce to submit a report to Congress which 
would assess the extent to which the program has been 
successful in creating jobs in the United States.
    While H.R. 5156 represents an incredibly important step 
towards addressing the need to support manufacturing jobs in 
the clean energy sector, we urge an even more aggressive 
approach to ensure that Federal support for companies to export 
clean energy technology and services does, in fact, result in 
the creation or maintenance of jobs here at home.
    A direct verifiable requirement that Federal support for 
clean energy exports results in the creation of U.S. jobs is 
essential. It appears that some companies are only too willing 
to produce clean energy goods and equipment in other countries. 
For example, as reported in The Washington Post, BP announced 
this spring that it would be laying off 320 workers and closing 
its solar panel manufacturing plant in Frederick, Maryland, the 
final step in moving its solar business out of the United 
States to facilities in China, India and other countries. In 
making the announcement, BP's CEO stated that BP was ``moving 
to where we can manufacture cheaply.''
    We offer four specific suggestions for moving ahead and for 
building on H.R. 5156.
    One, detailed employment impact statements should be a 
required factor in any decisionmaking process for government 
assistance. The employment impact statements would contain 
information pertaining to employment that would be mandated, 
created, or lost if the program in question were approved. We 
also suggest that capital equipment related to production as 
well as goods to be exported must be domestically made and 
contain domestic materials.
    Strong domestic content requirements uniformly implemented 
and enforced could be specifically contained in current 
legislation.
    Export assistance should also be sought by the U.S. Export-
Import Bank who has also developed expertise in these areas.
    And last but not least, domestic production for exports 
must be based on a fair and level field of global competition.
    Clean energy exporters must be able to prosper, and they 
can only do so if they are able and are able to compete fairly. 
That means trade barriers removed when dealing with countries 
like China. Those barriers must be challenged and removed. 
Demands for transfer of technology and production in return for 
market access must also be curtailed. Currency manipulation 
must be formally recognized and addressed, and relatedly 
subsidies to the industry by other countries like China should 
also be challenged in a number of forums, including trade 
complaints.
    As mentioned at the outset, U.S. manufacturing workers are 
in a crisis and not, coincidentally, so is our country's 
economy. Promoting U.S. clean energy companies to export 
domestically manufactured goods with U.S.-made materials and 
products represents one important solution to this crisis.
    Again, we very much appreciate the opportunity to appear 
before you today and we would obviously be happy to answer any 
further questions.
    [The prepared statement of Mr. Herrnstadt follows:]


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    Mr. Rush. Mr. Crawford, you are recognized for 5 minutes.

STATEMENT OF JACK CRAWFORD, JR., CHIEF EXECUTIVE OFFICER, JADOO 
                             POWER

    Mr. Crawford. Thank you, Chairman Rush, Ranking Member 
Whitfield, members of the Committee on Energy and Commerce for 
inviting me to speak here today about ways to increase global 
competitiveness of small and medium-sized clean technology 
companies. I would also like to thank Representative Matsui for 
her kind welcome and applaud her efforts to boost 
competitiveness of clean technology companies in Sacramento, in 
the Sacramento area and the Nation.
    I am Jack Crawford, Jr., the CEO of Jadoo Power, a small 
alternative energy technology company based in Folsom, 
California. I have the experience of starting and investing in 
and growing several technology companies in my career. I would 
like to talk about the challenges facing a clean energy 
technology startup and its efforts to market its clean products 
internationally.
    Jadoo Power is an industry leader in advanced power and 
energy storage solutions. Jadoo has used its technology to 
develop and deliver demonstration products to the military, 
government and commercial sectors such as portable power for 
medical devices to support wounded soldier in war zones, 
emergency response communication solutions, and surveillance 
and security applications.
    Fuel cells such as those manufactured by Jadoo also advance 
this other advancement of other clean technologies such as 
solar, LED lighting and wind power solutions. Whatever the 
energy source, fuel cells save energy and reduce emissions.
    Jadoo's technology is being productized for military and 
commercial uses and additional support to scale or 
manufacturing will enable us to deliver a future large volume 
order of our products.
    It has been the case for many years that American science 
and engineering has been pre-eminent in the world. The U.S. is 
the unequivocal leader in energy innovation just as we have 
been in such sectors as semiconductors, biotechnology, and the 
Internet.
    As we strive to become a global leader in clean technology, 
one area of innovation where our advantage is most threatened 
is manufacturing. While breakthrough technology occurs here in 
the U.S., we are losing out to countries like China and Germany 
when it comes to energy manufacturing and exporting in part 
because these countries are providing hosts of tax incentives 
and export financial incentives and advantages for their clean 
technology companies.
    Selling our clean energy companies to foreign markets will 
be imperative to the future growth and sustainability of the 
clean technology industry in America.
    Like all other sectors of our economy, small businesses are 
the cornerstone of the clean technology industry. However, when 
it comes to exporting products and services, small businesses 
are at a disadvantage. Unlike large U.S. companies, small- and 
medium-sized clean technology companies do not have the 
financial resources, the expertise, or the relationships to 
navigate through and succeed in foreign markets.
    According to the trade promotion coordinating committee, 
about 30 percent of nonexporting small- and medium-sized 
companies would consider exporting if they had more access to 
international market information and assistance in pursuing 
export opportunities. Jadoo Power is one of those companies.
    This legislation being discussed today will help clean 
energy technology place clean energy technology at the 
forefront of our national export strategy and help small 
businesses find new customers and markets abroad.
    A greater level of support from the U.S. Federal Government 
would level the playing field, particularly for small- and 
medium-sized businesses and accelerate the ability of U.S. 
clean technology companies to meet global demand and better 
compete in the clean energy marketplace.
    I commend Representative Doris Matsui of Sacramento, along 
with Bobby Rush, John Dingell, and Anna Eshoo for introducing 
H.R. 5156, the Clean Energy Technology Manufacturing Export 
Assistance Act of 2010. This bill sets out a national strategy 
to assist U.S. clean energy technology companies with export 
assistance to find new markets for their products and services 
and to better compete in the international marketplace.
    This bill also provides domestic manufacturing assistance 
to find new ways to reduce production costs and increase 
productivity in the clean technology sector.
    For Jadoo, H.R. 5156 would provide tangible benefits as the 
company works to advance its manufacturing clean technology 
products and secure access and growth in the international 
marketplace.
    In addition to providing a robust business environment for 
Jadoo Power, the Sacramento region is well positioned to be a 
national leader in producing clean energy technology. Along 
with Jadoo Power, there are more than 100 other Sacramento-
based small- and medium-sized clean technology companies that 
would benefit from H.R. 5156, as well as other clean technology 
companies in California and around the U.S.
    Representatives Matsui and Lungren, Governor Schwarzenegger 
and Sacramento's mayor, Kevin Johnson, have been actively 
supportive of clean technology companies both locally, 
Statewide and their continued support will be important to this 
emerging industry along with new support of government 
policies.
    The emerging global market for clean energy products is 
ever growing, and it is now time we look to market and sell our 
U.S. made clean energy products to foreign markets. With a 
clear opportunity of clean energy technology, the United States 
can catch up and be a leader of the world with technology in 
American-manufactured products.
    As we look at innovation and entrepreneurship in our 
country, it is time for us to go green and go global.
    Thank you for inviting me to today's legislative hearing 
and allowing me to present my perspective.
    [The prepared statement of Mr. Crawford follows:]


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    Mr. Rush. The chair now recognizes Mr. Kim for 5 minutes.

 STATEMENT OF ANTHONY KIM, POLICY ANALYST, HERITAGE FOUNDATION

    Mr. Kim. Chairman Rush, Ranking Member Whitfield and 
members of the committee. It is my privilege to testify today 
concerning the Clean Energy Technology Manufacturing Export 
Assistance Act of 2010. My name is Anthony Kim. I am a policy 
analyst at the Heritage Foundation. The views I express in this 
testimony are my own and should not be construed as 
representing any official position of the Heritage Foundation.
    In recent years, clean energy has become a shorthand sum 
for the bold policy today on how to achieve green growth and 
enhance our energy security. The proposed legislation offers a 
timely opportunity to discuss better ways to trigger innovation 
in our clean energy technology sector.
    Recognizing the urgency of developing a more competitive 
American clean energy technology sector, the proposed 
legislation intends to encourage innovation, investment and 
productivity, particularly via Federal subsidies. However, for 
the United States to regain economic leadership in the global 
clean energy industry, our strategy must be driven by real 
market conditions--not by government financial assistance that 
may serve as a temporary feel good action and delay more 
meaningful advancement of the clean energy sector.
    Government-mandated funding has often resulted in 
unbalanced development and lasting government interference in 
the private sector which dampen dynamic growth and innovation. 
It also invites the question as to whether government has the 
expertise to effectively help private companies navigate 
through rapidly evolving clean energy markets.
    The proposed bill also fails to acknowledge that there are 
existing government resources and market incentives to increase 
production of efficient or tentative clean energy.
    In advancing the competitiveness of our clean energy 
sector, there are more practical policy alternatives that can 
and should be implemented. At the top of the list should be 
further globalization of international trade. Free trade 
fosters economic efficiency, and economic efficiency is the 
basis for innovation, growth, and competitiveness.
    Over the past decades, the most practical improvements in 
energy efficiency and protecting environment have not come from 
government mandate funding. As chairman of the analysis of the 
Heritage Foundation's index of economic freedom, most progress 
has been driven by advances in freer trade and economic 
freedom. These unleash greater economic opportunity generating 
a purchase cycle of investment, innovation, and dynamic growth.
    Comprehensive globalization provides the most efficient 
export promotion strategy. Such trade globalization can be 
achieved by advancing freer trade through multilateral as well 
as bilateral trade pacts. Free trade agreements have spurred 
competition and economic growth. In recent years, the FTAs 
currently enforced accounted for more than one trillion in two-
way merchandise trade. FTAs also include provisions that 
safeguard American businesses from discrimination and protect 
and enforce intellectual property rights for U.S. firms.
    The pending FTA with Colombia, Panama, and South Korea will 
result in significant new market access and lower types for 
American businesses, including our clean energy producers.
    There is no doubt that accelerating innovation and 
production of clean energy technology has become an economic 
necessity for our future. The best strategy to make this happen 
is not through special subsidies, but rather through dynamic 
leadership in opening markets and spurring innovation 
technology.
    In conclusion, I want to emphasize that we need a strategy 
that conforms to conditions in the international marketplace, 
not one that struggles against it by subsidizing technologies 
that cannot stand on their own. We know one sure way of doing 
this, and that is through open markets, not closing them with 
protectionist measures.
    Thank you again for the opportunity to testify before this 
committee today.
    [The prepared statement of Mr. Kim follows:]


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    Mr. Rush. The chair thanks all of the witnesses for your 
testimony, and the chair recognizes himself now for 5 minutes 
for the purposes of asking questions.
    And I am going to ask all of the witnesses to answer 
``yes'' and ``no'' to the following questions. I only have 5 
minutes. If you could please restrict your answer to ``yes'' or 
``no,'' that would be appreciated.
    Seizing clean energy export opportunities accelerate U.S. 
Recovery and become an engine of growth.
    You answer ``yes,'' or ``no.''
    Beginning with the first witness, Ms. Saunders.
    Ms. Saunders. Yes.
    Ms. Wince-Smith. Yes.
    Mr. Herrnstadt. Yes.
    Mr. Crawford. Yes.
    Mr. Kim. Yes.
    Mr. Rush. Dollar for dollar, clean energy investment will 
create more jobs than investments in conventional energy 
sector.
    Ms. Saunders. I can't answer that officially.
    Ms. Wince-Smith. It depends on how you define ``clean 
energy.'' I am on the edge.
    Mr. Herrnstadt. I don't know.
    Mr. Crawford. Can you ask the question one more time?
    Mr. Rush. Dollar for dollar, clean energy investment will 
create more jobs than investments in conventional energy 
sector.
    Mr. Crawford. I agree it is difficult to answer without 
specifically defining ``clean energy.''
    Mr. Kim. It depends. Potentially yes.
    Mr. Rush. With new jobs created in the clean energy sector 
will create new jobs and provide good wages. Yes or no.
    Ms. Saunders. Yes, in particular to export-related jobs 
which pay more than the average job.
    Ms. Wince-Smith. Yes, because they take new skills and new 
capabilities.
    Mr. Herrnstadt. I hope so.
    Mr. Crawford. Yes.
    Mr. Kim. Yes.
    Mr. Rush. Outside the U.S. borders, there is a promising 
market for U.S. green products.
    Ms. Saunders. Absolutely.
    Ms. Wince-Smith. Yes.
    Mr. Herrnstadt. Yes.
    Mr. Crawford. Yes.
    Mr. Kim. Yes, sir.
    Mr. Rush. Trade barriers are not the only obstacles to 
increasing exports of American products.
    Ms. Saunders. Yes, I agree.
    Ms. Wince-Smith. Yes.
    Mr. Herrnstadt. Yes.
    Mr. Crawford. Yes.
    Mr. Kim. Yes.
    Mr. Rush. Last question. Other countries, especially our 
main competitors like China and other European countries and 
Japan, have a more aggressive export policy platform.
    Ms. Saunders. Typically exports account for a larger 
percentage of those economies, and I would agree they strongly 
support the exports.
    Ms. Wince-Smith. Absolutely.
    Mr. Herrnstadt. It appears so.
    Mr. Crawford. Yes, and it's leading to a significant 
advantage for them.
    Mr. Kim. Yes. I think they are in favor of free trade.
    Mr. Rush. You also have policies that protect their 
domestic production.
    Ms. Saunders. In specific areas, that is correct.
    Ms. Wince-Smith. Yes. For instance, China's new policy on 
indigenous innovation is very worrisome.
    Mr. Herrnstadt. Yes.
    Mr. Crawford. Yes.
    Mr. Kim. Yes and no.
    Mr. Rush. The U.S. needs to have a more robust export 
assistance policy to its manufacturing industry.
    Ms. Saunders. We are operating within our current 
appropriated levels.
    Ms. Wince-Smith. Yes.
    Mr. Herrnstadt. Yes.
    Mr. Crawford. Yes, particularly for small- and medium-sized 
businesses.
    Mr. Kim. Yes, but to get there it is open to debate.
    Mr. Rush. Compared to other countries, the U.S. pays far 
less on export promotion. Yes or no.
    Ms. Saunders. It is hard to take an overall average 
compared to specific areas. The European Union, for example, 
that is correct.
    Ms. Wince-Smith. Yes.
    Mr. Herrnstadt. Yes. I think particularly with some 
countries. I am not an expert on the others.
    Mr. Crawford. Yes.
    Mr. Kim. Yes, but I think it depends.
    Mr. Rush. Thank you very much.
    The chair now recognizes the gentleman from Kentucky, Mr. 
Whitfield.
    Mr. Whitfield. Thank you, and I thank all of you for your 
testimony. We appreciate you being here today.
    Ms. Saunders, I was just curious, you have been so generous 
with your time today and you have testified that you didn't 
testify, you said you were not going to make any comments about 
this legislation. I was just curious why is that or why was 
that?
    Ms. Saunders. The administration has not taken a position 
on H.R. 5156.
    Mr. Whitfield. So you have no position.
    Ms. Saunders. No position.
    Mr. Whitfield. Mr. Crawford, I noticed in your testimony 
you were talking about, particularly in clean energy companies, 
particularly in manufacturing, it is very difficult to obtain 
financing; is that correct?
    Is that one of the reasons you support this legislation is 
because of the grant program that it would establish the $75 
million grant program?
    Mr. Crawford. Yes. I feel like as a country between the 
venture capital investments and the stimulus, we have seeded 
innovation in R&D around clean technology. We have gotten to 
demonstrable products. And now the next logical steps are to 
scale manufacturing and begin to sell those protects both here 
and abroad.
    Mr. Whitfield. This legislation on page 3 says specifically 
that the Secretary shall administer the funds to promote 
policies that will reduce production costs. Is that--it seems 
odd to me.
    Mr. Crawford. That is a significant issue for small and 
medium-sized companies, and here's why.
    Mr. Whitfield. I thought that you said that primarily you 
needed it for financing.
    Mr. Crawford. Part of investing and financing in the 
manufacturing process is to reduce the overall costs of 
producing those products. And so as you deliver demonstration 
units, they are oftentimes pretty expensive to manufacture and 
the logical next step is to invest and finance the 
manufacturing process to reduce the costs of those parts so you 
can compete in those commercial markets.
    Mr. Whitfield. Mr. Kim, I noticed in your testimony that 
you seem to be diametrically opposed to what Mr. Crawford is 
saying. Your general testimony seems to be you don't think the 
government should be involved in providing funds for private 
enterprise.
    Mr. Kim. That is correct, sir. I think government can play 
a much bigger role through free trade, through enhancing free 
trade agreements via multilateral or at a bilateral level. So 
there are things they can do, but not through Federal 
subsidies.
    Mr. Whitfield. So you think the free trade agreements will 
play a vital role?
    Mr. Kim. I think free trade is vital. For example, the 
current pending U.S.-South Korea FTA. South Korea has a huge 
market for green energy technology.
    Mr. Whitfield. You said the proposed legislation fails to 
identify specific policies to be pursued and risks becoming 
little more than a financial subsidy grab bag for politically 
connected special interests.
    Mr. Kim. There is no monitoring mechanism that we can 
follow. So I think we will have to see how this bill is 
actually implemented and then the entire process regarding this 
will be processed. But there is a political risk and then it 
can invite other problems, too.
    Mr. Whitfield. Mr. Herrnstadt, I notice that you all--
certainly your union certainly favors the intent of this 
legislation, but I think you are specifically saying that it 
does not go far enough. And one of the things that you 
mentioned that needed to be done was to any grant that goes to 
any company that there be an EIS, as you call it, an employment 
impact statement, which actually I think is a pretty good idea.
    Have you all been successful in getting EIS requirements in 
other government programs?
    Mr. Herrnstadt. Not yet. But we're still trying. I think 
it's a really commonsense solution to what we're talking about. 
It really started off with an idea dealing with government 
procurement and the billions we spend on it. The government 
should know what it is getting for its money, and if a specific 
program is directed towards creating jobs, we need to calculate 
that with precision and that's something I am not sure the 
Commerce Department is doing yet.
    Mr. Whitfield. That sounds like that would certainly 
improve this bill from your perspective.
    Mr. Herrnstadt. It is one area that would, but I also want 
to point out that the bill itself is a real acknowledgment that 
there's a link between clean energy and U.S. jobs and I think 
that by itself is a real step forward.
    Mr. Whitfield. I know I only have 3 seconds.
    Mr. Crawford, the XM bank is very much involved in 
exporting technology, environmental technological products 
abroad. Has your company utilized the XM bank for----
    Mr. Crawford. We haven't. My perception is the difference 
here is we're talking about a focus on one particular industry 
sector that's of critical importance to our country and small- 
and medium-sized businesses so the combination of those two 
things with this policy would not only provide us with access 
to greater expertise focused on our company but also set up 
relationships that could be helpful in getting traction in the 
international marketplace.
    Mr. Rush. The chair now recognizes the author of the bill, 
Ms. Matsui, for 5 minutes.
    Mr. Matsui. Thank you all for being here today.
    As I mentioned in my opening statement, my home town is 
Sacramento, is home to 110 clean tech companies, many of them 
are small. And medium-sized companies are just now supporting 
ways to expand their businesses by exporting their products to 
foreign markets. But as you know, like large companies, they 
don't have the resources, time, and manpower to effectively 
promote their products abroad. And they do need assistance, and 
I do doubt that many of them have asked for help with 
Department of Commerce and small business and other entities 
that we can all think about.
    But I particularly have a question, several questions for 
Mr. Crawford with you being a small business person. Is Jadoo 
Power currently looking to expand by exploring ways to explore 
technology products abroad?
    Mr. Crawford. We're looking at new markets. In particular, 
international markets.
    Ms. Matsui. What are the current barriers you face in 
exporting?
    Mr. Crawford. Access to expertise in how best to export 
relationships and effectively resources, the time.
    Ms. Matsui. So how do you go about it now?
    Mr. Crawford. Right now it is independent market research. 
It is trying to identify people who have expertise in 
international market places. It's consultants. It's research on 
the Internet. Those types of efforts.
    Mr. Matsui. As you know, this legislation authorizes about 
$50 million a year for 5 years. Now as a small business person 
who is really concerned about expenses and resources, do you 
feel that this legislation, this amount of money is a 
responsible use and so that this country can actually establish 
a national clean tech export strategy to boost the 
competitiveness of small and medium-sized businesses?
    Mr. Crawford. As a small business owner and taxpayer, I 
think you can make the case that this is one of the best case 
uses of taxpayer money. What we're talking about with regard to 
our company and others across the country is something that can 
impact our energy security, our environmental security and have 
a positive impact on our economy. Those are driving issues in 
our country today, and this is the type of bill that could have 
a positive impact on taking small companies effectively that 
are the cornerstone of our economy and growing them.
    So my question actually is why aren't we, as a body, 
considering 10 or 20 times the amount because this is something 
that's addressing all of the relevant issues of today.
    Mr. Matsui. Thank you.
    Ms. Saunders, do our international competitors, like in the 
EU and Asia, help their small and medium-size businesses, 
particularly clean tech businesses, facilitate exports to the 
U.S.?
    Ms. Saunders. Yes, they do.
    Mr. Matsui. How do they do that?
    Ms. Saunders. They do that through export promotion 
programs very similar to the ones we operate out of the 
Department of Commerce and other trade agencies.
    Mr. Matsui. But they have more emphasis on it?
    Ms. Saunders. As I said earlier, specific countries in the 
European Union and other parts of the world have exports that 
are a larger part of their economy and they allocate a large 
portion of their government resources to promoting those 
exports.
    Mr. Matsui. If this legislation were enacted, what are your 
rough estimates on the amount of increased Euros clean tech 
exports in dollar amount or in other measurements?
    Ms. Saunders. We can always do more with more resources. We 
believe we're actively servicing this industry as a current 
priority of the Secretary and the administration. As far as 
dollar amounts, it is difficult to speculate as technology and 
services and actual products being exported have different 
values assigned to them. I would say generally from the 
International Trade Administration we have data that estimates 
that for every dollar invested in International Trade 
Administration programs, we generate $56 worth of exports.
    Mr. Matsui. Ms. Wince-Smith, now the President has 
repeatedly stated that he wants the U.S. to be the leader in 
exporting clean tech to other Nation's. However, international 
competitors like China and Germany are exporting substantially 
more clean tech energy products. I know I look at solar fuel 
cells and all of that.
    In your opinion, would this legislation provide the tools 
and resources to boost clean tech for its competitiveness in 
exporting their products and services?
    Ms. Wince-Smith. Like my colleagues, I believe it's a very 
important first step, and many of the provisions in the 
legislation in addition to the grant program that's been 
mentioned are really to accelerate the tools, the practices, 
the networks that small, medium-sized businesses need.
    I think one of the other issues that we really have to 
address still is how do we stimulate the production in the 
United States on a viable scale that it can go out globally. 
And you know that is a very, very serious part of this because 
in order for these new clean tech innovators to have a scale, 
they really have to have access to deep equity and debt capital 
and that gets into a whole broader set of issues.
    Ms. Matsui. Understood. And I think Mr. Crawford has been 
experiencing that himself.
    But as a small business person, you are excited about the 
fact that we are having a focus on clean tech exporting as I 
understand, because it does--it is part of the picture so to 
speak, it is not the complete picture obviously, but it is part 
of the picture.
    Anyway. Thank you very much and I yield back the balance of 
my time.
    Mr. Rush. The chair thanks the gentlelady.
    The chair thanks all of the witnesses who have participated 
in today's hearing, and the chair particularly thanks Ms. 
Saunders. You have been very patient with us and you have been 
very giving of your time and your contributions as it relates 
to your expertise. And some of your statements are very 
provocative and certainly we will take all of your statements 
to heart as we proceed with this legislative process.
    The chair thanks you and appreciates you very much. Thank 
you and God bless.
    [Whereupon, at 12:49 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]


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