[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]





                   CHINA'S ADVANCE IN LATIN AMERICA 
                           AND THE CARIBBEAN

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

                             JOINT HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                         THE WESTERN HEMISPHERE

                                AND THE

                  SUBCOMMITTEE ON ASIA AND THE PACIFIC

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 10, 2015

                               __________

                           Serial No. 114-95

                               __________

        Printed for the use of the Committee on Foreign Affairs


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                      COMMITTEE ON FOREIGN AFFAIRS

                 EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey     ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida         BRAD SHERMAN, California
DANA ROHRABACHER, California         GREGORY W. MEEKS, New York
STEVE CHABOT, Ohio                   ALBIO SIRES, New Jersey
JOE WILSON, South Carolina           GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas             THEODORE E. DEUTCH, Florida
TED POE, Texas                       BRIAN HIGGINS, New York
MATT SALMON, Arizona                 KAREN BASS, California
DARRELL E. ISSA, California          WILLIAM KEATING, Massachusetts
TOM MARINO, Pennsylvania             DAVID CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina          ALAN GRAYSON, Florida
MO BROOKS, Alabama                   AMI BERA, California
PAUL COOK, California                ALAN S. LOWENTHAL, California
RANDY K. WEBER SR., Texas            GRACE MENG, New York
SCOTT PERRY, Pennsylvania            LOIS FRANKEL, Florida
RON DeSANTIS, Florida                TULSI GABBARD, Hawaii
MARK MEADOWS, North Carolina         JOAQUIN CASTRO, Texas
TED S. YOHO, Florida                 ROBIN L. KELLY, Illinois
CURT CLAWSON, Florida                BRENDAN F. BOYLE, Pennsylvania
SCOTT DesJARLAIS, Tennessee
REID J. RIBBLE, Wisconsin
DAVID A. TROTT, Michigan
LEE M. ZELDIN, New York
DANIEL DONOVAN, New York

     Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director
              Jason Steinbaum, Democratic Staff Director




                 Subcommittee on the Western Hemisphere

                 JEFF DUNCAN, South Carolina, Chairman
CHRISTOPHER H. SMITH, New Jersey     ALBIO SIRES, New Jersey
ILEANA ROS-LEHTINEN, Florida         JOAQUIN CASTRO, Texas
MICHAEL T. McCAUL, Texas             ROBIN L. KELLY, Illinois
MATT SALMON, Arizona                 GREGORY W. MEEKS, New York
RON DeSANTIS, Florida                ALAN GRAYSON, Florida
TED S. YOHO, Florida                 ALAN S. LOWENTHAL, California
DANIEL DONOVAN, New York

                                 ------                                

                  Subcommittee on Asia and the Pacific

                     MATT SALMON, Arizona Chairman
DANA ROHRABACHER, California         BRAD SHERMAN, California
STEVE CHABOT, Ohio                   AMI BERA, California
TOM MARINO, Pennsylvania             TULSI GABBARD, Hawaii
JEFF DUNCAN, South Carolina          ALAN S. LOWENTHAL, California
MO BROOKS, Alabama                   GERALD E. CONNOLLY, Virginia
SCOTT PERRY, Pennsylvania            GRACE MENG, New York
SCOTT DesJARLAIS, Tennessee












                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Evan Ellis, Ph.D., author, China on the Ground in Latin America..     5
Enrique Dussel Peters, Ph.D., director, Center for Chinese-
  Mexican Studies, School of Economics, National Autonomous 
  University of Mexico...........................................    31
Ms. Serena Joseph-Harris, chief executive officer, Sirius 
  International (Caribbean) Defense Contractors Ltd. (former High 
  Commissioner of the Republic of Trinidad and Tobago)...........    41
Ms. Margaret Myers, program director, China and Latin America, 
  Inter-American Dialogue........................................    63

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Evan Ellis, Ph.D.: Prepared statement............................     8
Enrique Dussel Peters, Ph.D.: Prepared statement.................    33
Ms. Serena Joseph-Harris: Prepared statement.....................    43
Ms. Margaret Myers: Prepared statement...........................    65

                                APPENDIX

Hearing notice...................................................    88
Hearing minutes..................................................    89
The Honorable Christopher H. Smith, a Representative in Congress 
  from the State of New Jersey, and chairman, Subcommittee on 
  Africa, Global Health, Global Human Rights, and International 
  Organizations: Prepared statement..............................    90

 
           CHINA'S ADVANCE IN LATIN AMERICA AND THE CARIBBEAN

                              ----------                              


                      THURSDAY, SEPTEMBER 10, 2015

                       House of Representatives,

               Subcommittee on the Western Hemisphere and

                 Subcommittee on Asia and the Pacific,

                     Committee on Foreign Affairs,

                            Washington, DC.

    The subcommittees met, pursuant to notice, at 2:22 p.m., in 
room 2172, Rayburn House Office Building, Hon. Jeff Duncan 
(chairman of the Subcommittee on the Western Hemisphere) 
presiding.
    Mr. Duncan. A quorum being present, the subcommittee will 
come to order.
    I would now like to recognize myself for an opening 
statement.
    And this is a joint subcommittee hearing between Asia-
Pacific and the Western Hemisphere Subcommittees, and so we 
will allow opening statements from both chairmen as well as 
ranking members.
    In 1793, President George Washington warned a young America 
that a reputation of weakness could lead us to a loss of 
America's rank among nations and that if we desired a secure 
peace it must be known that we are at all times ready for war. 
Washington also believed a uniform and well-digested plan was 
vital to meeting these objectives.
    While the need for strategic planning to pursue a position 
of strength and keep the peace finds relevance today, the 
United States seems to have forgotten Washington's counsel. 
Broken promises, faded red lines, budget constraints, a lack of 
support for traditional allies, and an increasing reliance on 
tactics rather than strategy have communicated U.S. weakness to 
a watching world.
    In 2013, Secretary John Kerry affirmed that the era of the 
Monroe Doctrine is over, effectively putting other countries, 
such as China, on notice that the United States would no longer 
contend their actions in our neighborhood, the Western 
Hemisphere.
    In contrast to Roosevelt's policy of the Good Neighbor in 
1933, the U.S. has drifted instead toward benign neglect toward 
the very countries that have the greatest potential to impact 
the daily lives of the American people--those in Latin America 
and the Caribbean. China has taken notice, and China has 
stepped up into this vacuum of leadership.
    Today, China is weaving an intricate web of alliances in 
the Western Hemisphere through a vast array of diplomatic, 
economic, and military ties with multiple countries in the 
region. Although the United States remains the largest trading 
partner for Latin America--and I want to emphasize this--China 
is now the region's second-largest trading partner and has 
free-trade agreements with Chile, Peru, and Costa Rica.
    This year, China hosted the first-ever China-CELAC summit 
in Beijing for Latin American and Caribbean nations. This 
organization expressly excludes both Canada and the United 
States.
    Since 2005, China has provided over $100 billion in credit 
to the region. Last year, China announced it would give nearly 
$35 billion in loans to the region in coming years. And, this 
year, China promised its investment in the region would hit 
$250 billion over the next 10 years.
    These are not just empty assurances. According to the 
Inter-American Dialogue, China has provided 16 loans valued at 
over $56 billion to Venezuela, 10 loans valued at $22 billion 
to Brazil, 10 loans valued at $19 billion to Argentina, and 12 
loans valued at almost $11 billion to Ecuador.
    In particular, Chinese banks have effectively provided a 
lifeline to these governments, whose economic mismanagement and 
corruption prevent them from accessing Western institutions. In 
return, China receives oil, in the case of both Venezuela and 
Ecuador. In addition, China has been buying up land and 
companies in the region, investing heavily in infrastructure 
and ports, as well as gobbling up a lot of rare earth minerals.
    From 2008 to 2012, the 10 largest Chinese mergers and 
acquisitions occurred in Brazil and Argentina, and other deals 
have occurred in Ecuador, Venezuela, and Peru.
    Of significant interest are two specific infrastructure 
projects: First, a proposed Chinese-funded and Chinese-
controlled Nicaragua Canal, estimated to cost nearly $7 
billion, which would rival the Panama Canal and provide greater 
access for Chinese ships and potentially submarines to the 
waters near U.S. shores. Second, a Chinese-funded Twin Ocean 
railroad project connecting Peru and Brazil would also project 
greater Chinese influence and presence in Latin America.
    On a more troubling front, Brazil has provided the Chinese 
with access to its satellite tracking facilities, which could 
allow China to gain a more comprehensive picture of the flight 
paths of U.S. satellites.
    In addition, Chinese security ties to the region continue 
to deepen, with the Chinese arms sales to Bolivia, Venezuela, 
Ecuador, and Argentina. Reportedly, China has even expanded its 
arms sales beyond traditional nation-states through providing 
military-caliber weapons to non-state actors such as the FARC 
terrorist organization in Colombia and drug trafficking 
organizations in Mexico. This activity has only served to 
increase the number of weapons in the hands of paramilitary 
forces and transnational criminal networks.
    It should be of grave concern to all Americans that the 
Chinese maintain a military presence in Cuba, specifically 
Lourdes, Bejucal, and Santiago de Cuba, all of which were 
former Soviet-era monitoring facilities.
    Clearly, China has big plans right here in our own 
hemisphere. And what are we doing about it?
    Traditional thinking about China's engagement in the 
Western Hemisphere was that it was largely being done to 
counter diplomatic efforts in Taiwan and the region or as a way 
of paying for extractives or buying energy commodities to fuel 
their ever-expanding economy.
    Some have complained that China uses the region as a 
dumping ground for goods, such as steel, textiles, footwear, 
consumer electronics, and tires, and a visit to the 
marketplaces of the Caribbean and South America would seem to 
confirm some of those suspicions.
    Chinese companies operating in the region often bring their 
own workers, which they have no real effect on economic growth 
or jobs in places where they operate, creating a source of 
friction between China and the countries in the region.
    So, in conclusion, the U.S. cannot continue to simply 
ignore China's presence in this hemisphere. The U.S. must 
engage more deeply in a sustained way with countries in the 
Western Hemisphere. It should serve as a jarring wake-up call 
that just a few days ago five Chinese Navy ships were spotted 
off the coast of Alaska.
    This hearing will be a comprehensive overview of China's 
activities in the Western Hemisphere and consider how the U.S. 
can better balance those actions with more effective engagement 
in the region. So I look forward to hearing from today's expert 
witnesses.
    And, with that, I will turn to the ranking member, Mr. 
Sires from New Jersey, for any opening statement he may have. 
And then I will come to the gentleman from Arizona.
    So, Mr. Sires, you are recognized.
    Mr. Sires. Thank you, Mr. Chairman.
    Good afternoon. Thank you to our witnesses for being here 
today.
    Today, we are examining China's continuing effort to assert 
influence in Latin America and in the Caribbean.
    Over the past decade, China's engagement with Latin America 
has grown significantly, both economically and diplomatically. 
Chinese leaders have made several trips throughout the region, 
including Argentina, Brazil, Venezuela, Colombia, and Cuba.
    Their engagement comes, by the way, with foreign direct 
investment, loans, and increased economic ties. Specifically, 
they have pledged $250 billion in investment in the region over 
the next 10 years. China's interest in the region is a result 
of their constant search for new markets to procure natural 
resources such as various oils and minerals and agricultural 
products to feed their domestic needs. Over the past 12 years, 
trade between Latin America and China has grown from $17 
billion to $262 billion. By many estimates, China is the third-
largest source of foreign direct investment in Latin America 
and the Caribbean.
    While this can mean greater investment for an emerging 
Latin American economy and a boost in trade with the region, 
there are also pitfalls. Chinese investments come with 
baggage--with the baggage of dubious funding, environmental 
disregard, and poor labor and health conditions for workers.
    Proposed agreements like the $50 billion, 172-mile canal in 
Nicaragua risk displacing indigenous communities, destroying 
ecological preserves, and isn't guaranteed to be completed. 
Mines and factories run by Chinese companies have reported 
dangerous working conditions, where laborers are overworked, 
mistreated, and constantly operating in unsafe environments.
    For too many years, the United States has focused on other 
parts of the world, which has led to neglect our own 
neighborhood. While many have viewed China's increasing 
engagement in the region as a positive contributor to the 
region's economic growth, we must remain vigilant of what the 
long-term consequences might be and reaffirm our own commitment 
to the region. If China wants to continue to engage our 
neighbors, we must insist that they comply with international 
labor, health, and environmental standards.
    I look forward to hearing from our panelists.
    And thank you.
    Mr. Duncan. Mr. Salmon, the former chairman of the Western 
Hemisphere Subcommittee in the last Congress, now-chairman of 
the Asia-Pacific Subcommittee, he is recognized for 5 minutes.
    Mr. Salmon. I am a lot of former things, and I am not going 
to admit to them all today.
    But I would like to thank my good friend Chairman Duncan 
for convening this joint hearing with me today on China's 
presence and influence in Latin America and the Caribbean, what 
I believe to be an understudied yet strategically important 
trend. I am glad we have a distinguished panel here today to 
help shed light on this very important issue. We are here today 
to examine the extent of Chinese political, economic, and 
military influence in the region, as well as how that may 
affect U.S. strategic interests.
    China's bilateral trade with this hemisphere grew from $15 
billion in 2001 to $288.9 billion in 2013. These numbers are 
staggering and indicative of China's dedication to bolstering 
its presence in the region.
    This January, China pledged to invest $250 billion in Latin 
America over the next 10 years, serving China's strategic 
interests of securing access to energy, agriculture, and 
consumer markets and serving developing Latin American 
countries' needs for infrastructure development and 
technological innovation.
    While China's presence in Latin America and the Caribbean 
has been largely limited to trade and investment, there is a 
movement toward greater military relationships. Nuclear 
cooperation, shared space assets, and arms sales not only 
provide China with economic and military leverage in the region 
but also may expand China's ability to mitigate one of our 
major advantages: Our relative geographic isolation.
    China will continue to allege that it has no foreign bases, 
meaning that their military posture is inherently defensive. 
But China's non-explicitly military partnerships with countries 
in strategic geographic locations like Brazil to share space 
and satellite assets for Earth observation may raise some 
eyebrows. ``No foreign bases'' does not mean ``no foreign 
presence,'' and we should be wary of any potential military 
implications of Chinese presence in our neighborhood.
    In lending billions of dollars to service legitimate needs 
in developing countries in the Western Hemisphere, China has 
secured not only lucrative contracts but also diplomatic 
support. In the 1970s and the 1980s, China made similar inroads 
in economic assistance to Africa, propelled by the mutual 
benefit of resources for China and development of African 
nations. Today, Chinese infrastructure has expanded throughout 
the continent, and its presence there dominates.
    China's involvement in Africa has also marked many African 
nations' turn-away from formally recognizing Taiwan. In the 
Western Hemisphere, we currently have 12 states out of 22 total 
that have formal diplomatic relations with Taiwan, including 
Nicaragua, Paraguay, and Haiti. Consider China's political 
benefits from stronger relations with Latin America and the 
Caribbean countries and what that would mean for the 
recognition of Taiwan. I am wary of whether China leverages its 
economic and political sway to further isolate Taiwan.
    China's growing economic, trade, military, and diplomatic 
relationships with countries in Latin America and the Caribbean 
certainly have implications for U.S. foreign engagement in the 
region. We welcome China's presence in the region and hope that 
they will yield mutual benefit for all countries involved. 
However, we hope this does not come at the expense of the rule 
of law and good governance and further entrenching inequality, 
corruption, illicit commerce, and violence.
    As the United States continues to look eastward toward 
Asia, a vital part of our strategic economic future, we must 
not forget the relationship with our closest neighbors. I look 
forward to the hearing today about China's strategy within the 
Western Hemisphere and how we can more effectively manage our 
presence and our strategy and balance our relationship with our 
neighbors in the region and China.
    Thanks a lot, and I yield back my time.
    Mr. Duncan. Thank you, Chairman Salmon, for your great 
leadership and work on these issues in both hemispheres. And it 
is so important to the American people, so I appreciate that.
    Before I recognize you, the bio for each of the witnesses 
was provided beforehand; I am not going to read that.
    You have a lighting system in front of you. We are going to 
try to maintain a 5-minute rule. If you will, when it gets to 
yellow, just start trying to wrap up. When it gets to red, we 
are going to allow a little leeway, but we are going to move 
on.
    So I will go ahead and recognize Dr. Ellis first for 5 
minutes. And thank you for being here.

STATEMENT OF EVAN ELLIS, PH.D., AUTHOR, CHINA ON THE GROUND IN 
                         LATIN AMERICA

    Mr. Ellis. Thank you very much, Chairman Duncan, Chairman 
Salmon, Ranking Member Sires, distinguished committee members. 
Thank you very much for the opportunity to share my analysis 
with you today. I will summarize my written remarks for the 
committee.
    Chinese engagement with Latin America, while producing some 
benefits for some actors in the region, is generating negative 
consequences, and not only for the region but also for the 
strategic position of the United States. Moreover, these 
consequences are evolving but not abating with China's current 
economic deceleration.
    PRC trade with the hemisphere today is 20 times greater 
than it was in 2001, with China primarily purchasing low-value-
added commodities while selling higher-value-added manufactured 
products and services. China has also loaned more than $119 
billion to the region since 2005, with approximately three-
quarters going to Argentina and the regimes of ALBA.
    The physical presence of Chinese companies in the region 
has taken off in the last 5 years, particularly in mining and 
petroleum, construction, manufacturing, telecommunications, 
logistics, and banking. This presence has given China a greater 
stake in the internal affairs of the countries in which they 
operate.
    With Taiwan, the PRC has generally honored its 2008 
informal agreement not to woo countries, recognizing the others 
to change their diplomatic position. Yet leaders of countries 
recognizing Taiwan has regularly expressed interest in 
establishing relations with the PRC. Thus, if current Taiwan-
ROC rapprochement breaks down, I believe that the PRC could 
rapidly eliminate the remaining basis of ROC diplomatic 
legitimacy in the hemisphere.
    I see the near-term objectives of the PRC in the hemisphere 
as principally economic, yet no less impactful for the U.S. and 
the region. Primary products: Food stuffs, markets, and 
technology.
    China's President Xi has clearly engaged the hemisphere 
more boldly than his predecessors, including important trips in 
May 2013 and July 2014. The latter included the first China-
CELAC summit and, indeed, as Chairman Duncan pointed out, an 
important Chinese choice to frame its multilateral engagement 
with the hemisphere around an institution that excludes the 
United States and Canada.
    The current deceleration of the Chinese economy is likely 
to decrease PRC commodity investments and the value of 
commodity imports but will also likely expand Chinese efforts 
to sell its goods and services to the region and to pursue more 
loan-backed infrastructure projects, increasing tensions in an 
already-troubled relationship.
    I am concerned that the PRC engagement is indirectly 
undermining democracy and good governance in the region, as 
loans to populist regimes weaken the accountability of their 
leaders to citizens and institutions and facilitate corruption.
    In addition, PRC military activities in the Western 
Hemisphere, as acknowledged, are significant and growing. 
Chinese defense conglomerates, such as Norinco, are selling 
increasingly capable military goods to an ever-broader array of 
clients. In addition to the well-known sales to Venezuela, 
Ecuador, and Bolivia, the Peruvian Army just last month 
received 27 Chinese artillery vehicles, while Argentina plans 
to purchase Chinese ocean patrol vessels and armored personnel 
carriers, among other items.
    Chinese military personnel attend courses in Colombia's 
Tolemaida military base and at Brazil's Jungle Warfare School 
in Manaus. The PLA has progressed from participation in 
multilateral forces, such as MINUSTAH in Haiti, to bilateral 
engagements, including a November 2010 medical exercise with 
Peru and the December 2011 deployment of its hospital ship, 
Peace Ark, to the Caribbean. In October 2013, for the first 
time, Chinese warships conducted combat exercises in the 
region, including engagements with Chile, Argentina, and 
Brazil.
    My recommendations to the committee respectfully include: 
Number one, working with our regional partners to strengthen 
their government institutions for engaging with the PRC so that 
all get a fair and constructive deal; two, ratifying an 
effective transpacific partnership open to China in the future 
is one step in constructing a multilateral rule-of-law-based 
regime across the Pacific; three, facilitating ties between the 
Western Hemisphere and Asian partners who share our values, 
including Japan, South Korea, Australia, and India; four, 
expanding theater security cooperation to bolster the U.S. 
position as partner of choice in the region; five, prioritizing 
a functional inter-American system in which the OAS and not 
CELAC or UNASUR is the multilateral vehicle to engage China and 
resolve regional security issues; six, articulating a clearer 
vision of what the U.S. stands for in the hemisphere and why 
the U.S. approach best advances broad-based development, 
prosperity, and human dignity.
    Respectfully, the U.S. cannot and should not block China-
Latin American engagement, but we must, I feel, work to ensure 
that it is consistent with our own security, while advancing 
the wellbeing of those with whom we share this hemisphere.
    Thank you very much for your time.
    [The prepared statement of Mr. Ellis follows:]
    
    
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    Mr. Duncan. Okay. Is it ``Dussel Peters'' or just 
``Peters''?
    Mr. Dussel Peters. ``Dussel Peters.''
    Mr. Duncan. All right. Dr. Dussel Peters is recognized for 
5 minutes.

STATEMENT OF ENRIQUE DUSSEL PETERS, PH.D., DIRECTOR, CENTER FOR 
    CHINESE-MEXICAN STUDIES, SCHOOL OF ECONOMICS, NATIONAL 
                AUTONOMOUS UNIVERSITY OF MEXICO

    Mr. Dussel Peters. Okay. Thank you very much, Mr. Chairman 
and members of the subcommittees.
    I would like to share with you the work of the last 15 
years we have been doing on the Mexico and Latin America-China 
relationship. And I also invite you to participate next 
Wednesday in a presentation of a report we will do with the 
Atlantic Council exactly on this topic, no?
    I would like to share with you three topics.
    First, the first issue, the increasing relationship of 
Latin America and China in all the topics that we have been 
mentioning is no coincidence, which means China has been in the 
last at least 10 years releasing a group of white papers 
regarding this relationship. I would invite you to go through 
the cooperation plan of CELAC and China, the first ministerial 
meeting that was published in January 2015, which establishes 
very clear goals regarding trade, investment, infrastructure 
projects, and funding, respectively.
    There is no single Latin American country that so far has 
established a short-, medium-, and long-term strategy vis-a-vis 
China. This results in a substantial disadvantage for Latin 
America.
    Second, as you mentioned, China has become the second-
largest trading partner of Latin America. Latin America has a 
huge trade deficit, and particularly relevant is the difference 
in the group of topics and of products that the region is 
exporting to China. Less than 5 percent of Latin American 
exports to China are of medium- and high-technological level. 
There is a huge gap with what China is exporting to the region, 
and this has also reflected and explains the region's 
increasing disenchantment with its most dynamic partner.
    Finally, the third topic I would like to share with you is 
that, while it is well known that China has participated 
importantly in the NAFTA region and displaced also Mexican 
exports to the United States, probably the United States has 
been the main loser in this new triangular relationship between 
the United States, Latin America, and China.
    In the paper I submitted to you, we calculate that 72 
percent of the United States exports to Latin America are 
threatened by Chinese exports. And probably much more important 
is that, if we assume the share of the United States in Latin 
American imports of 2001 when China became a member of the 
World Trade Organization, if we assume the same share of Latin 
American imports in 2014, the United States would have exported 
to Latin America more than $145 billion additionally.
    If we take this $145 billion in 2014, according to the 
Department of Commerce, this $145 billion accounts for 840,000 
jobs that the United States would have gained, maintaining the 
same share in 2001. Again, this is a substantial and critical 
topic not only for Latin America and for Mexico but for the 
United States.
    I finish with two recommendations.
    First, I invite very much both subcommittees and the House 
of Representatives, A, to support, fund, and create academic 
and private institutions in the United States to promote 
detailed understanding of a dialogue on the global reemergence 
of China, especially in Latin America and the Caribbean, since 
it also affects U.S. trade, production, and employment, 
especially in manufacturing and particularly in the automobile 
and auto parts sectors.
    Secondly, I invite you to actively participate in and 
support the important work that has been done in Latin America 
and the Caribbean on the many issues related to this new 
triangular relationship. Institutions such as CELAC, the 
Economic Commission for Latin America and the Caribbean, and 
the Inter-American Development Bank are some of the 
institutions where you could participate.
    Thank you very much for your time.
    [The prepared statement of Mr. Dussel Peters follows:]
    
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                              ----------                              

    Mr. Duncan. Thank you very much for your testimony.
    And the Chair will now recognize Ms. Joseph-Harris.
    Thank you so much.

STATEMENT OF MS. SERENA JOSEPH-HARRIS, CHIEF EXECUTIVE OFFICER, 
   SIRIUS INTERNATIONAL (CARIBBEAN) DEFENSE CONTRACTORS LTD. 
   (FORMER HIGH COMMISSIONER OF THE REPUBLIC OF TRINIDAD AND 
                            TOBAGO)

    Ms. Joseph-Harris. Thank you very much. And a very good 
evening to you, Chairman Duncan, Chairman Salmon, and Member 
Sires.
    My contribution comes at a very----
    Mr. Duncan. Could you pull that microphone down just a 
little bit? There you go.
    Ms. Joseph-Harris. Is this better?
    Mr. Duncan. There you go.
    Ms. Joseph-Harris. Thank you very much.
    My contribution comes at a very fortuitous time. It is the 
culmination of a 4-year inquisition that has just concluded in 
relation to the formidable strategic progress that China has 
been making in both hemispheres, so that the statement on hand 
will be confined to the following: I shall describe China's 
engagement with the Caribbean, why Caribbean countries are 
interested in Beijing, its objectives in the Caribbean and 
success to date, a description of the economic relations, and 
recommendations to the honorable Congress.
    China is now the third-largest investor in the Caribbean, 
with the United States and the European Union occupying the two 
top spots. Its share of foreign investment regionally is an 
estimated 9 percent with trade volume of U.S., which is $156 
billion.
    Given this fairly modest quantum, in order to make sense of 
the region's magnetism to Beijing, we need to take stock of its 
strategic and ideological significance, bearing in mind that 
the Caribbean is part of the wider inter-American landscape, 
the history and character of which is uniquely circumscribed by 
legal and political instruments in principle and practice that 
has helped to shape this environment.
    The PRC is, in contrast, unconversant with these aphorisms. 
If only for this reason, their engagements will have serious 
repercussions, potentially so, that can very well challenge the 
political culture and democratic traditions and values of our 
hemisphere.
    In order to understand Beijing's ambitions, we need to 
keyhole its interests. And these are essentially as follows in 
11 short points: Sourcing and consolidating cheap supplies of 
food to sustain its burgeoning population.
    Gaining comparative advantage along key trading routes. The 
Caribbean, as already alluded, takes the form of the port 
development projects, and it forms part of key chokepoints that 
are vital to Western Hemisphere trade and defense concerns.
    Gaining access to raw materials and vital resources in 
anticipation of the looming problem of a worldwide resource 
scarcity in fuels, metals, and minerals.
    Infiltrating fuel markets through asset acquisition, as 
demonstrated in parts of the mainland, like Colombia and 
Venezuela.
    Securing access to reserves of natural gas, which positions 
Trinidad and Tobago an ideal strategic partner.
    Accessing and utilizing large areas of fertile land in 
promising locations, such as mainland Guyana, Suriname, and 
Belize.
    Diversifying and consolidating its commercial portfolio to 
attain competitive advantage and market supremacy.
    Introducing more enticing economic structures for countries 
to adopt. And this avenue provides a counterweight to the 
classical neoliberal model.
    Gaining a foothold on the U.S. market indirectly through 
frontline jurisdiction, such as Bahamas and Jamaica.
    And opening employment opportunities abroad for its tens of 
thousands of nationals that have been migrating to the urban 
areas in China in search of jobs.
    I shall now get into the main areas in which the Caribbean 
has been more or less lured toward engaging with Beijing. These 
are the constraints that governments in the Caribbean have been 
constructed with, which causes them to look to Beijing and 
partner with it: Inflexible fiscal policies; low gross domestic 
product growth rates; high levels of violent crime and illicit 
traffic; the inability of our governments to attract 
development assistance; the increased liberalization of global 
trade, which has diminished market access; the small size of 
countries, which depletes from the full benefits of economies 
of scale; and the failure of intraregional single market 
arrangements; as well as the increasing costs of energy in the 
face of fluctuating prices.
    Chairman, what I would recommend is that the U.S. and the 
Caribbean consolidate our deepening strategic relationships, 
which began in 2010 under the Caribbean Basin Security 
Initiative. This would essentially mean strengthening the 
regional security architecture through continued engagement 
with the United States, similar that has been done under the 
CBSI initiative, through more deepened security arrangements 
with our military, with our security and intelligence agencies, 
as well as interoperability and asset-sharing.
    As a result of constraints of time, I would invite you, 
Chairman, and the rest of the listeners to refer to my most 
recently published inquisition, which provides compelling 
support in terms of statistical detail on those areas in which 
Beijing has been making inroads into the hemisphere. The study 
is called ``The Twilight of America's Omnipresence,'' and it 
gives an in-depth analysis of the military inroads, economic 
inroads, and political inroads being made by Beijing and makes 
suggestions as to how the United States could strengthen and 
build its relationship with the Caribbean in order to rebalance 
itself within the hemisphere.
    Thank you, Chairman, for your time.
    [The prepared statement of Ms. Joseph-Harris follows:]
    
    
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    Mr. Duncan. I want to thank you.
    And now Ms. Myers is recognized for 5 minutes.
    Thank you.

 STATEMENT OF MS. MARGARET MYERS, PROGRAM DIRECTOR, CHINA AND 
             LATIN AMERICA, INTER-AMERICAN DIALOGUE

    Ms. Myers. Thank you, and good afternoon. I would like to 
thank the committee and subcommittee chairmen and ranking 
members and other esteemed committee members for the 
opportunity to be here today. I will be summarizing my written 
testimony, which I have submitted for the record.
    Let me begin by saying that this hearing, ``China's Advance 
in Latin America and the Caribbean,'' is very appropriately 
titled. As we have discussed, China's presence in Latin America 
and other regions has grown at a remarkable rate in just over a 
decade.
    Latin American and Caribbean exports to China have 
increased 23 percent per year, on average, since 2000, although 
that has slowed rather considerably in recent years. We have 
talked a lot about the $119 billion in finance that China has 
given to Latin America since 2005, and most of that is going to 
Venezuela, Ecuador, Argentina, and Brazil. There are numerous 
investors now present in Latin America--small private ones, 
large SOEs, banks, both commercial and policy banks, and also 
China's sovereign wealth fund, although China's foreign direct 
investment in the region is still fairly low.
    China's growing presence, as we have mentioned, in Latin 
America is also apparent in cultural, educational, military, 
and political spheres, although over the past decade and a half 
so much of overall engagement has supported the objectives of 
China's so-called ``going out'' strategy. And these include 
securing access to raw materials, establishing new markets for 
Chinese exports, promoting Chinese brands--and there are many, 
many Chinese brands in Latin America now--and 
internationalizing Chinese firms.
    And much of what we see China doing in the region today can 
still be viewed as supporting these objectives. In this sense, 
China's interest in the region has been rather static. But the 
relationship has also evolved in some very important ways, and 
I would like to use my remaining time to briefly highlight 
three examples.
    We have, first of all, seen some important changes in the 
way in which Chinese firms are investing in the region. 
Especially in the agriculture and energy sectors, there are 
growing efforts to invest not only in crop cultivation and 
mining and drilling, for example, but across entire supply 
chains--in production, processing, logistics, and marketing--
this in order to better control supply and pricing and also to 
compete with other multinationals and also U.S. firms.
    Like in Asia, Latin America has also seen growing interest 
from China in the development of cross-regional transportation 
infrastructure, such as the proposed Brazil-Peru railway, but 
there are many, many other examples. These projects are largely 
intended to facilitate the transport of raw materials to port, 
especially along the Pacific coast. Pacific maritime routes are 
often favorable to those that go through the Gulf of Aden or 
other areas--transport security, in other words.
    Second, there is a perceived change or a growing focus on 
the part of China in region-wide diplomatic initiatives in 
Latin America and the Caribbean. And we have mentioned already 
the China-CELAC forum, which was established in 2014 and which 
excludes the U.S. and Canada. China has also recently announced 
several new regional credit lines and investment funds. China's 
central bank announced this month that it will establish a $10 
billion fund for investment in Latin American manufacturing or 
production capacity.
    And, finally, we have seen some important changes in 
Chinese firm operations. Recent case study analysis suggests 
that Chinese companies have made real advances in community 
relations and adherence to local, environmental, and labor 
standards. But complaints about Chinese companies continue to 
surface, and the environmental standards of China's top lenders 
to Latin America are still weaker than those of other 
international financial institutions. There are also 
indications, troubling indications, that some Latin American 
governments have intentionally weakened standards and 
regulations in order to attract Chinese and other investment or 
to facilitate cross-Pacific trade.
    And China's ongoing financial support for certain 
governments in the region, to include Maduro in Venezuela, is 
thought to enable continued economic mismanagement and to 
facilitate corruption and standards erosion.
    So I would conclude simply by saying that China is and will 
continue to be an important economic partner for many countries 
in the region, even as economic growth slows on both sides of 
the Pacific. Whether China-Latin America relations are, in 
fact, a win-win and mutually beneficial, as China indicates, is 
debatable. Chinese economic engagement has certainly 
contributed to growth in some countries in the region, and 
Chinese investment could be helpful for some Latin American 
industries or sectors. But mutual benefit requires the regions' 
governments to negotiate effectively and maintain necessary 
environmental, labor, and other standards. And I think that the 
U.S. has a real role in potentially facilitating these 
developments.
    Thank you very much.
    [The prepared statement of Ms. Myers follows:]
   
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    Mr. Duncan. I want to thank all the witnesses for their 
testimony. That was excellent and kind of a great segue into my 
line of questioning.
    I will now recognize myself for 5 minutes in the first 
round.
    So I spoke in my opening statement about John Kerry's 
words, that the end of the Monroe Doctrine was upon us. And we 
have kind of seen a U.S. disengagement in the region. It just 
doesn't rest with this President; it actually transcends a 
number of Presidents.
    So do you believe--and I am asking all witnesses--do you 
believe the lack of U.S. leadership and engagement in Latin 
America and the Caribbean and Secretary Kerry's comment there, 
the Monroe Doctrine is over, has impacted China's objectives 
and actions in Latin America?
    Dr. Ellis?
    Mr. Ellis. It is a wonderful and very important question.
    Mr. Duncan. Is your microphone on there?
    Mr. Ellis. A wonderful and very important question, Mr. 
Chairman.
    I have the opportunity to interact regularly with 
colleagues in China, and I remember at least three colleagues 
shortly after Secretary Kerry's speech before the OAS actually 
called me or emailed me saying, did he really mean it?
    Clearly, China looks for signals, and I think that was an 
important signal that, at the very least, China should not 
decelerate its pursuit of economic and strategic objectives in 
the region.
    And, certainly, while our Department of State has done some 
very credible and very good work and thinking on the topic, 
clearly, with some of the difficulties with respect to U.S. 
embassies and some of the lack of Presidential-level engagement 
on this topic, respectfully, I think Latin America has clearly 
perceived that lack. And, in that vacuum, I think, as well, 
when one takes a look at the relative lack of definitions for 
what the United States has to offer the region, that China's 
seemingly value-neutral, you know, ``Take our money, we will 
help you develop,'' fills that vacuum.
    Mr. Duncan. Yeah.
    Dr. Dussel Peters?
    Mr. Dussel Peters. Yes. I would agree very strongly with 
you that we perceive on the one hand this lack of a U.S. 
commitment and interest in Latin America in general and 
particularly regarding this new triangular relationship, no?
    This is why I proposed at the end that the United States 
should actively participate in these institutions that already 
exist in Latin America, such as CELAC, among others, but that 
the U.S. should also try to create new institutions and to 
create new knowledge in academic, public, and private 
institutions in the United States.
    We have a lack of interest from the United States, a lack 
of active participation, and, as I stated in the beginning, a 
very clear long-term strategy from the perspective of the 
Chinese public sector.
    Mr. Duncan. Okay.
    Ms. Joseph-Harris, I am going to ask the question to you 
little bit differently. And let me first say that--a very 
impressive resume, and I look forward to reading some of your 
works.
    So let me ask you the same question just kind of a 
different way. Do you think if the U.S. was engaged more and 
looking for trade opportunities and reaching out, spending more 
time focused on this hemisphere and working with our neighbors 
and friends here, do you think that would create less of an 
opportunity for China?
    Ms. Joseph-Harris. Thank you very much, Chairman.
    Firstly, what escapes us sometimes is that the U.S. does, 
in fact, have a fairly strong trade relationship with the 
Caribbean and Latin America. That is a historic relationship. 
However, the engagement appears to have weakened immediately 
after the events of 9/11. There was a dropping of the ball, as 
it were, as America, and rightly so, needed to redirect much of 
its interest to the Middle East. And that is the period in 
which China saw as a strategic opportunity. And there is where 
many of the inroads have been made diplomatically, 
economically, and culturally.
    However, we have a very strong history of interoperability 
between our respective militaries, you know, and that is 
something that we should seize upon and consolidate. And one of 
the things that I had said in my original text is that without 
security and good governance there could be no chance of 
economic sustainability.
    So we need to revisit that strong history of 
interoperability, continue to properly fortify the CBSI 
initiatives, and then build from there in terms of exploring 
areas that have been falling off in trade, like the CBSI, begin 
to explore those areas and see how we could improve.
    But I am pretty hopeful that it can be done. We have a 
recent change in political administration in Guyana and 
Trinidad and Tobago recently, and those very countries had been 
instrumental in the early 2000s in bringing together a robust 
security architecture.
    So we continue to look to the United States and our 
colleagues in the military and the security industries to 
invigorate those types of relationships.
    Thank you, Chairman.
    Mr. Duncan. Thank you.
    Ms. Myers, do you think the lack of U.S. engagement opens a 
void? And do you think that China would not have this 
opportunity if the U.S. was more engaged?
    Ms. Myers. Absolutely. I believe the U.S. disengagement in 
the region has provided considerable space for China and other 
partners, economic partners, to engage quite a bit over the 
past few years.
    But I think this also has to do with what many Chinese 
scholars are calling diplomatic transformation. And this is not 
a well-defined concept, but I think the general idea is the 
development of a diplomacy or a diplomatic presence that is 
consistent now with China's global growing role and the ``one 
road, one belt'' strategy, as described in this forum, as are 
new initiatives over the past couple of years, like the China-
CELAC forum in Latin America.
    So there is kind of an enhanced interest also in, basically 
during the Xi Jinping administration, in promoting a new form 
of diplomacy, more or less.
    Mr. Duncan. All right.
    My time is just about up. I just want to ask Dr. Dussel 
Peters, what do you think about the railroad between Peru and 
Brazil?
    You know, China is investing this kind of money. You know, 
with the lack of any sort of highways and other ways other than 
the Amazon to move goods and services and people around, the 
railroad could be a game changer.
    What are your thoughts about that?
    Mr. Dussel Peters. Look, I would say, in general, this 
proposal and this project goes hand-in-hand with what China has 
been proposing in the last 2 years under this heading, also, of 
the ``New Silk Road,'' the ``one belt, one road'' strategy, 
which means focusing development on infrastructure, no? So 
there are a group of fundings. We have added up more than $150 
billion U.S. dollars that China has been committing for 
infrastructure projects, and this project could be one of 
these.
    By the way, you have to be careful also that not all the 
partners of this project have been informed of the project, no? 
Which means this project was launched in Brazil, and other 
countries such as Peru were also informed by the news, no? 
Usually you would think that you would work the other way 
around, which means you would work 2 years and then you inform 
about this publicly, no?
    Mr. Duncan. Right.
    Mr. Dussel Peters. It is not the only project that has been 
launched this way. And there are a group of big projects all 
over Latin America that can change the geo-strategy in this new 
triangular relationship very profoundly, particularly the Canal 
of Nicaragua that is very close to the United States.
    Mr. Duncan. Thank you very much. My time is up.
    We were there in November last year, Congressman Yoho, 
Congressman Salmon, with Chairman Royce. And just knowing the 
geography and watching that, it is fascinating to me that they 
would do that. I look forward to talking more about that.
    I recognize the ranking member for 5 minutes.
    Mr. Sires. Thank you.
    Thank you for your comments.
    Getting back to these projects, you know, you read about 
these projects--$100 billion, $50 billion. How realistic are 
some of these projects? I mean, this canal, how realistic is 
this, or is this just propaganda?
    Ms. Myers, we will start with you. You are shaking your 
head. You don't think it----
    Ms. Myers. I have strong beliefs about the canal.
    Well, since it was first discussed in 2013, there has been 
really no progress, either in terms of construction or in terms 
of finance, as far as we know. There is a considerable lack of 
transparency surrounding this entire project, so it is 
difficult to tell.
    The general consensus is that, in order for this to 
proceed, it needs to be funded by a government, and 
specifically in this case China. But there is no clear evidence 
at this point that China is backing this project in particular. 
In fact, China has tried to distance itself from the Nicaragua 
Canal, unlike all of these other major infrastructure projects 
that it has proposed throughout the region. And these others 
are big, too, and extremely expensive.
    So I don't see much progress in the coming years. We have 
seen the construction of an access road, a gravel road, some 
lights. There are many, many promises of additional milestones, 
but they tend to never come to pass.
    Mr. Sires. Dr. Dussel Peters?
    Mr. Dussel Peters. I agree that there has been little 
progress in this project in the last months, but I would take 
it very seriously, very seriously in terms that, A, it has not 
been disregarded by the Chinese public sector; B, the public 
sector and the central government in China have massive 
resources for this kind of project, as in the case of Brazil, 
as in other projects in Mexico and others, and I can imagine 
that this might be a concrete bargaining coin for the future 
for some kind of other negotiations, no?
    Thank you.
    Mr. Sires. Dr. Ellis?
    Mr. Ellis. I think an important point which you raised by 
this is the fact that perhaps 80 percent of all of the projects 
that we commonly talk about do not ultimately happen, but those 
20 percent and also the expectations raised by this are 
reshaping the region.
    I concur that the Nicaragua Canal project is probably about 
6 months behind schedule and is probably on the point of 
falling apart. We can mention other projects, from investment 
in Pampa de Pongo, the mine in Peru, Rio Blanco, others, the 
failed Dragon Mart project in Mexico, the Mexico City-Queretaro 
railroad. The list goes on and on.
    And the fact is that not only do the Chinese have 
difficulty in engaging with the region, but, for that reason, 
many of the projects fall apart. However, the fact is that the 
projects that do go through--approximately $55 billion in 
investment to Venezuela, about $12 billion to Ecuador--reshapes 
and keeps alive those ALBA countries.
    The net effect on trade relationships is we are moving 
toward what experts call the reprimatization of the region, 
which actually makes them much more vulnerable, the region much 
more vulnerable, as we see declining commodity demand right 
now.
    We are seeing a shift in the institutional balance of the 
region. When we say, well, what keeps UNASUR alive, what keeps 
CELAC alive, and why are countries pulling away from the inter-
American system, the OAS, one has to look at the impulse, the 
inspiration of being able to turn to Chinese markets even if 
some of those key projects are indeed in doubt.
    Mr. Sires. Thank you.
    Ms. Joseph-Harris, I don't read about too many projects in 
the Caribbean from the Chinese. What are they doing in the 
Caribbean?
    Ms. Joseph-Harris. Thank you so much, because I did have a 
list of very, very specific projects in the region, and I am 
glad I have the opportunity now to elaborate on it.
    Just bear with me. Okay. Here we are.
    In terms of the specific projects----
    Mr. Sires. Still working on it.
    Ms. Joseph-Harris. I think I have it here. Yeah.
    In relation to Jamaica, the Bahamas, Trinidad and Tobago, 
Grenada, and Barbados, I have made some very, very specific 
pointers identifying where these projects were.
    In the case of Trinidad and Tobago, the Chinese have built 
a children's hospital. They have built a national arts 
performing center.
    In the case of Jamaica, they have made huge investments in 
the sphere of what you will call ``investment critical 
infrastructure hoteliering.''
    In the area of the Bahamas, they have also gone into 
critical infrastructure, port, and hoteliering.
    In Grenada, they have invested considerably in what you 
will call cultural centers and so.
    In Guyana, they have also invested in the bauxite industry, 
in terms of writing off at least nine major loans.
    In Suriname, they have gone into mining.
    And it is a long list. And what I am saying, essentially, 
is that some of these countries, we have to look at the 
strategic importance. Trinidad and Tobago is a provider of 
natural gas to the United States. In the case of Guyana, you 
have gold. In the case of Suriname, you also have gold. In 
Jamaica, you have bauxite. And this is a materializing of the 
Chinese quest to go after resources, raw materials, in 
anticipation of the global looming shortage that is around the 
bend.
    In addition to which, there are ALBA members, members of 
the Bolivarian Alliance that are also CARICOM, Caribbean 
community members. And as China allies with many of these 
countries, it may be very inadvertently empowering the 
alliance, which is ideologically adverse to American and 
Western-style neoliberalism and institutions.
    So one has to look at the Chinese asymmetric approaches, 
the way in which they model their diplomacy. They are trading 
with members of the Caribbean community who are members of the 
Bolivarian Alliance, empowering them, splitting allegiances, 
and thereby tilting the balance in terms of the U.S. influence 
within the region.
    Another very interesting area is in what I would look at as 
the currency wars, asymmetric types of warfare. You may or may 
not be aware, Chairman, that recently, in July of this year, an 
agreement was signed with the Bahamian Government and the 
Chinese to go into arrangements with trading the renminbi. And 
the possibilities are that other members of the Caribbean 
community may be able to access trade through that form of 
currency as distinct from trading with the U.S.
    So one has to look at the matrix of indirect relations--
currency diplomacy, port diplomacy--and the very unique types 
of modeling that the Chinese are using that are by no means 
normal. And these are the areas in which the U.S. influence is 
gradually being eroded.
    Thank you, Chairman.
    Mr. Sires. My time is up. Thank you very much.
    Mr. Duncan. I thank the ranking member.
    I will now turn to Chairman Salmon for 5 minutes.
    Mr. Salmon. Thank you.
    I would like to kind of follow along the same line of 
questioning as the chairman, Chairman Duncan, started, with 
U.S. involvement, U.S. presence in the region.
    And I am going to turn to you, Dr. Ellis, first. I believe 
that Chairman Duncan is frustrated--I know we have had 
conversations--that, while the U.S. presence in the region 
seems to be not as strong as it could be, where there has been 
a vacuum--I think, Ms. Myers, you referenced that--and while 
China's influence seems to be growing in the region, my 
question is: If we could get a TPP agreement, would China's 
influence in the region grow, would the United States' 
influence in the region grow, or would it diminish on either 
side?
    Mr. Ellis. Thank you very much, Chairman Salmon. I think 
you raise an excellent question. And I, indeed, in my own 
writings, have been a strong advocate of a TPP, but certainly 
an effective and well-negotiated final TPP.
    What I see is for both our Asian partners and our Latin 
American partners, the question is this emerging importance of 
the trans-Pacific. What are the rules that governs economic 
interactions? Will it be a Pacific in which the states which 
are larger and better able to coordinate their government and 
financial and commercial institutions can kick open the door, 
bring away intellectual property, impose their labor laws and 
workers on others? Or is it a rule-of-law Pacific environment 
in which there is respect for labor laws, in which there is 
respect for intellectual property, in which all states have the 
opportunity to reap the fruit of their hard work and good 
policies, whether Japan or China or otherwise?
    I certainly am a strong advocate of a future TPP which 
remains open to China but one in which we have a prosperous 
Pacific, in which China and the other players play by the 
rules. And I believe that that creates a bigger pie for all 
parts of the Pacific community.
    Mr. Salmon. Well, in some parts of the Western Hemisphere, 
there still are some serious governance and rule-of-law 
concerns, issues----
    Mr. Ellis. Yes.
    Mr. Salmon [continuing]. Some corruption issues, human 
rights abuses, lack of environmental consciousness, and 
organized violence in some parts of the Western Hemisphere.
    So is that political and economic climate in the region, is 
it going to hamper China's ability to be able to function 
effectively or navigate in the region? Or are they pretty adept 
at navigating with these types of relationships? Could they 
serve as a model for greater government accountability and 
respect for the rule of law for these countries, or does China 
perpetuate these problems?
    Mr. Ellis. An excellent question.
    China is very careful not to impose its own concept of a 
model but very happy to allow others to draw from China the 
lessons that they will.
    What concerns me is, in many ways, there is a new 
ideological struggle that I see of the 21st century, 
represented to some degree by the model of states such as the 
ALBA states, a very statist concept of how you negotiate with 
Asia, versus that which is represented by, for example, our 
partners, the Trans-Pacific Partnership, but, as well, the 
Alliance of the Pacific.
    What concerns me in states like Nicaragua and Ecuador and 
others, to a certain extent Bolivia, et cetera, is that the 
opportunity to have Chinese money allows populist leaders to do 
direct relationships, which gets them away from accountability 
and oversight as previously imposed by institutions such as the 
Inter-American Development Bank, et cetera.
    And, in many ways, the reason why China has loaned so much 
to Venezuela, over $55 billion, but has had very little success 
in the projects that they have pursued very hard in countries 
like Mexico and Colombia and elsewhere is that those countries 
have established laws and institutions and strong bureaucracies 
and are less willing to bend to the Chinese rules, whereas 
countries such as Venezuela have been more willing to do state-
to-state deals.
    And, at the end of the day, that disadvantages not only 
Western businesses but, I believe, disadvantages the rule of 
law in the region. It encourages corruption and bad governance. 
And, really, it prejudices the people of the region and their 
long-term democratic interests and development, I believe.
    Mr. Salmon. I am going to paraphrase then. What I am 
hearing you saying is that if the United States isn't deeply 
engaged through activities like TPP, if we are not leaders in 
the region, then there is a vacuum that is filled by others.
    Is that something others on the panel would agree with? 
That if we are not actively engaged in determining what the 
rules of the road are for engagement in the Western Hemisphere, 
if we are not the leader through things like TPP, then 
countries like China have greater authority to dictate those 
rules of the road? Is that--it looks like most of you agree 
with that.
    The other question I wanted to ask is, with some of the 
economic woes that are happening in China domestically, is that 
going to impact their ability to be able to interact in the 
region, with the financial crisis that they have been going 
through?
    Do you think, Ms. Myers, that is going to impact their 
ability to be able to complete the agenda?
    Ms. Myers. Certainly, we have already seen a pretty 
remarkable decrease in trade with Latin America, especially in 
South America, commodities trade over the past year, in 
particular, but also before that. Also, turbulence in Chinese 
markets and the Shanghai Stock Exchange and then the recent 
devaluation of the yuan has had effect on global markets, 
obviously, and then so also has affected Latin America quite 
considerably and, especially, again, commodities exporters--
Chile, Peru, and others.
    And so, in the short term, yes, there is a considerable 
effect on Latin America, and this is troubling to many.
    In the medium to long term, I think--well, in the medium 
term, at least, we will see considerably more demand still for 
Chinese goods, for Chinese commodities--or, I am sorry, for 
Latin American commodities, in particular, and for Chinese 
goods in Latin America. These things aren't going to change 
immediately. Growth has slowed in trade, but it is still 
growing.
    And China very much is looking not only to Latin America 
but to other regions for raw materials, of course, but also to 
help it facilitate its reform process. So many of these 
investments promote, for example, economic upgrading, which is 
a major element of reform, or the use of excess steel in China, 
and that is a major problem in the domestic Chinese economy.
    So we will see more, absolutely.
    Mr. Duncan. Thank you, Chairman.
    We will now go down to Mr. Rohrbacher from California.
    Mr. Rohrabacher. Thank you very much.
    When we are discussing China and its influences, this is 
not just a situation where the United States wants to dominate 
the world and we want to make sure that people are listening to 
rock and roll instead of Chinese instruments playing their 
style of music.
    I just note that in China there has been no political 
reform whatsoever. Although we had a promise that if we 
increased our economic ties to China, increased our investment, 
increased our involvement, that there would be a liberalization 
of their system. And there is no opposition party, opposition 
press. There are no people who are permitted to openly organize 
and criticize the government.
    China has also, at the same time that it has no political 
reform, has become ever more aggressive in its many territorial 
claims, territorial claims which we have ignored for a long 
time, but now they seem to be reemerging. Plus, you have 
military action taken by China over dubious claims in the South 
China Sea.
    So as we are discussing the issue of China's influence, it 
is not just another country versus our country as our 
influence. It is whether or not this totalitarian power will be 
expanding its area of influence, but in some ways control.
    And let me also note this. Years ago there was--I first 
noted this when--and the Chinese targets and how they handle it 
economically--when the Panama Canal, as it exists today, a 
Chinese company was able to buy--Hutchison Whampoa was able to 
buy terminals on both sides of the canal, thus putting the 
Panama Canal in a position of being dominated by this Chinese-
owned company, and how that company received that contract 
after the actual Panamanian Government had been notified, an 
American company, that they had won the contract, and they were 
there to accept the contract. In the middle of the 
conversation, a phone call comes in. And I think it was the 
Vice President had to leave the office. And when he came back, 
he said: Oh, there was a mistake made. The contract went to 
somebody else.
    And the question, what I am leading into is, it was always 
my belief that somebody had been paid off. In the United 
States, we put our people in jail if they make bribes to 
foreign leaders. Is there any such rule of thumb for the way 
the Chinese companies deal with these Third World countries 
that we are talking about and developing countries?
    Mr. Ellis. Well, certainly China does have rules. However, 
its understanding of how those rules restrain it and the degree 
to which it enforces those rules, especially with respect to 
companies overseas, is a gray area. Indeed, many fear that one 
of the sources of a reduction in Chinese foreign overseas 
investment may be that the crackdown on SOE heads in China 
itself may make China's leaders reluctant to pursue deals which 
would lead to their personal enrichment in places in Latin 
America.
    But certainly the deeper question that you raise is a very 
important one, and that is that to the extent that you do not 
have an analog of the Foreign Corrupt Practices Act, those type 
of deals increase corruption in the region at two levels.
    Mr. Rohrabacher. When you come from a society that doesn't 
have a rule of law, doesn't have an independent judiciary, 
doesn't have stated rights in terms of people's relationship 
with legal procedures and who owns what property, et cetera, 
you would expect that in that country there would be some major 
problems in dealing with the citizens and companies from that 
country.
    Let me ask you this about those companies that are dealing 
with these nations that we are talking about. Many of the 
companies in China that are making profits, et cetera, are 
actually companies that are owned by the People's Liberation 
Army. Are any of the companies that you are talking about owned 
by the People's Liberation Army?
    Mr. Ellis. Probably one of the best examples that comes 
up--and of course ownership is a difficult concept. We talked 
about the Nicaragua Canal. And when we take a look at the 
mysterious Mr. Wang Jing, although he is basically a defense 
contractor in the Chinese parlance, the offices that he has in 
the region and Hong Kong are filled with, you know, patriotic 
paraphernalia, however, when one actually looks at his primary 
company, a telecommunications company called Xinwei, which is 
involved in building a system-of-systems type of infrastructure 
for the PLA, the way that he got to be a very young 47-
something-year-old billionaire is because he made a leveraged 
buyout to this company and then miraculously that company began 
getting billions of dollars of contracts from the PLA.
    And so certainly aside from Hutchison and your very good 
point about Hutchison's relation--and Hutchison, of course, was 
just recently bought by a mainland Chinese company--but I think 
one of the things that worries me about Wang Jing is the fact 
that those ties through Xinwei indicate that certainly there 
are certainly interests. If there are commercial interests, 
there are interests behind those interests. And I think, you 
know, that that needs to be a concern as we look at the nature 
of the relationship in the future.
    Mr. Rohrabacher. Anybody on the People's Liberation Army?
    Ms. Myers. I just wanted to add that Wang Jing's company, 
Xinwei, just declared bankruptcy. So it kind of bodes poorly, I 
think, for the canal operation as well, considering that he is 
funding much of the first sort of elements of that.
    Mr. Dussel Peters. In our experience, the public sector in 
China is omnipresent in qualitative terms. It is not sufficient 
to go very concretely regarding one public institution, but you 
have the central government, you have cities, you have 
municipalities, and the mixture of these governments, the 
public sector.
    To have an idea, more than 86 percent of Chinese FDI, 
according to the work we have been doing from 2000 to 2013, has 
been pursued 86 percent by the Chinese public sector. So there 
is an omnipresent public sector participating in FDI.
    And I would briefly relate to the question that was posed 
regarding TPP by the chairman and Mr. Salmon. I think TPP is 
not sufficient as a Latin American strategy. TPP is dividing 
Latin America, a group of Latin American countries are not 
geographically related to the Pacific. And I would highlight 
how important it would be to modernize, to rediscuss, for 
example, a topic such as NAFTA, which has been completely left 
aside. I would very strongly propose to upgrade, to modernize--
--
    Mr. Duncan. In the essence of time, I am going to need you 
to wrap up. Try to respect the other members' time. I know Ms. 
Joseph-Harris wants to respond.
    If you could do it briefly. This gentleman has somewhere 
else to go and I want to try to get to him. So, Ms. Joseph-
Harris, if you will just respond briefly.
    Ms. Joseph-Harris. Thank you. I will get to the crux of it.
    What we are looking at, Chairman, is that we are in an 
ideological war. The member is quite correct, it is 
ideological. And I would even go so far as to say that the 
whole idea, the whole notion of a China-U.S. dynamic is 
ideologically based. And I would cite what I mean by it.
    America's ideological apparatus, represented by its 
globally dispersed network of central banks, international 
monetary system, multilateral corporations, vis--vis a Chinese 
facade, where you have no democracy, no rule of law, that 
brings us in what you call a juxtaposition, it is an 
ideological face-off.
    This is what we are looking at, and that whatever we are 
looking at ties back to ideas and ideology. And what makes the 
Caribbean, in particular, vulnerable is the fact that we lack 
that strong ideological base, save and except for the 
institutional formidability of the OAS, which is the only 
strong and true multilateral forum. And that is where we need 
to look at the institution within the Americas as a 
countervailing effect against China.
    Thank you, Chairman.
    Mr. Duncan. Great points.
    Mr. Yoho.
    Mr. Yoho. Mr. Chairman, I appreciate it.
    I appreciate you all being here today.
    And it is disheartening to see that we are losing our 
influence with our closest allies, our closest countries, and 
that China is kicking our rear end again.
    And I wanted to ask you, before I ask any questions, Dr. 
Dussel Peters, I am glad to hear you say that the TPP really 
wouldn't help the area. It would be us negotiating a strong 
trade agreement with all of Latin America. And you would agree 
with that?
    Mr. Dussel Peters. Yes, very strongly.
    Mr. Yoho. Okay.
    And then the other thing is what I see as a stale 
relationship, it is like a relationship between people, the 
United States and Latin America, it has become stale. We need 
to revitalize that. And from what I have heard from you, it is 
from a lack of engagement. And I know after 9/11 there was a 
cause for that, but we need to move on. And we need to reinvest 
in our closest allies before other people.
    And I think we need to restate the Monroe Doctrine. I think 
that is something that we need to stand for what the Western 
Hemisphere stands for. Because what we have seen over the 
course of the last 20 years is a slip or a slide into 
socialism. They are lining up with Iran. They are lining up 
with Russia and China. And we are losing that influence.
    And what I wanted to ask you is, why is that, and what has 
caused that? Is it because America, our country, meddles too 
much in telling other countries how to live, the kind of rule 
of law they should have, and our ideologies? And I know China 
doesn't do that as much. They kind of just go with the flow and 
invest in the infrastructures.
    What are your thoughts on that, Dr. Ellis? Are we meddling 
too much in telling people how to live?
    Mr. Ellis. I think that to some degree the right kind of 
meddling is useful. One of the dilemmas that China finds itself 
in right now, for example, with the change in government in 
Guyana, the new, very effective government of Dr. David 
Granger, China suddenly finds that the dirty deals that it 
makes with one government, when it is replaced by another 
government, it now finds problems. It faces the same dilemma--
--
    Mr. Yoho. I am glad they find that.
    Mr. Ellis. But I think also, with all respect, one of the 
things that I believe that we need more of--and it is ironic 
because it is a point that is made I think very effectively in 
the most recent defense and diplomacy review document that the 
State Department has put out--is value-based leadership.
    In my respective judgment, what we have done--what we have 
not done sufficiently is explain why the U.S. concept of rule 
of law and free markets in democracy will bring broad-based 
development and why it is the best deal, why going with the 
easy deal with the Chinese money does not bring sustainable 
development, why going with particularistic negotiations 
between a leader and a Chinese company is not the best way to 
bring value added in the company involved. And I don't think 
that we do that effectively enough in explaining our case to 
the region.
    Mr. Yoho. And I am glad you brought that up because what I 
have seen in other countries, especially in Africa and some of 
the other countries, China puts money into there, but then they 
suck the resources off and they leave. You are not getting a 
Chinese company. You are getting the Chinese government, their 
military, their secret service, and all that in one. It is not 
a Chinese company. I mean, it is a facade. We have seen that 
over and over again and we know that for a fact.
    But I have to give them credit. They are making headway. 
They go in there and they get the trace minerals, the rare 
earth minerals, and they are smart at doing that. And we need 
to tighten up our strategy and our foreign policy.
    Let me ask you, does the OAS, are they courting the 
Chinese? Are they shunning us, Ms. Joseph-Harris?
    Ms. Joseph-Harris. Member Yoho, I really, really welcome 
this part of the discussion. I would like to tag onto what my 
colleagues said.
    Mr. Yoho. Yeah, sure. You have got a minute and 18 seconds.
    Ms. Joseph-Harris. We do, in fact, have a very robust 
inter-American institutional system under the OAS, and it is 
very open, sort of poised, positioned to do exactly that, sell 
the inter-American ideal to the community. And I think there is 
where we probably dropped the ball and we need to focus there 
on rebuilding that past. Thank you.
    Mr. Yoho. Ms. Myers, do you have anything you want to add 
into that? Did I catch you off guard?
    Ms. Myers. Not on the OAS. But I would say that, I mean, at 
the very least, there was a Pew study, a Pew Research study 
that was done a couple of years ago on perceptions of China and 
the U.S. In Latin America. And it was very clear that the 
perceptions of the U.S. are still extremely strong. China is 
rising in certain respects. But we have a very strong 
relationship with Latin America and there is much to build on 
in that respect.
    But, yes, in terms of finance, no-conditions finance is 
very appealing to many countries in the region. And for that 
reason, not only in terms of investment, but also in finance, 
there have been cases when Chinese companies and banks have won 
out over American companies and banks, and that is problematic.
    Mr. Yoho. I appreciate everybody's answers.
    Mr. Chairman, thank you for the opportunity.
    Mr. Duncan. I want to thank the gentleman for staying 
around. I know you have got other places to be.
    We will go to Mr. Smith from New Jersey.
    Mr. Smith. Chairman Duncan, thank you very much for the 
hearing, as well as for my good friend Matt Salmon, and, of 
course, Albio Sires. This is a very important subject, and I 
thank you for bringing some light and scrutiny to it.
    A similar type of Chinese hegemony is actually occurring in 
Africa as well. I chair the Africa Committee. And I am very 
concerned, you know, sometimes, what is China's interest in 
Latin America, we also have to ask what is Latin America's 
interest in China? Increasingly for despotic regimes in places 
like Sudan, it is Bashir who greatly cherishes his relationship 
with Beijing. And, of course, Evo Morales and so many others, 
the FMLN in El Salvador, increasingly.
    My first trip to Latin America was three times during the 
FMLN wars and saw upfront and close the terrible devastation. 
But who was providing those funds? It was all coming from the 
Soviet Union, usually by way of Cuba, and violence was being 
used for political means.
    Now China is stepping into that void with the demise of the 
Soviet Union, and they are doing it all over the world. The bad 
governance model, as you know, is being very aggressively 
promoted.
    I was in Bolivia twice in the last couple of years working 
on behalf of an American who was being held captive in 
Palmasola prison. Went to the prison. No charges were brought 
against him. Eighteen months in that hellhole. And Evo Morales 
and his government, and I while there became even more 
sensitized to it, just loved Tehran and just loved China 
because it is a source of legitimacy, for money, and trade.
    So my concerns are, you know, we will have Xi Jinping 
coming to the United States and visiting with President Obama 
in just a few weeks, very, very shortly. I am doing a hearing 
before he comes on China's race to the bottom with North Korea 
on human rights abuses. They have gotten far worse. Name the 
issue, trafficking, torture, the crackdown on religious belief. 
And then you see that they are having additional and enhanced 
influence in the Caribbean, as well as in the rest of Central 
and South America. A very, very disturbing trend because 
dictatorships, whether it be in Venezuela or elsewhere, thrive 
on that kind of cooperation with a dictatorship like China.
    So my first question or big question is, what is Latin 
America's interest? Why are these, these guerilla movements now 
turned, you know, whether it be FMLN or the FSLN in Nicaragua, 
finding such a friend in Beijing? Twelve countries in Central 
and South America and the Caribbean still support the Republic 
of China on Taiwan. Is there pressure being put on them to 
sever those ties or downgrade that recognition?
    And, again, when it comes to providing arms, from AK-47s to 
everything else, when it comes to using the Internet to surveil 
dissidents and people who espouse real democracy, what is 
China's influence there? Because they have literally written 
the book on how to find good people, dissidents and others, 
track them down, and throw them into prison.
    Mr. Ellis. I think they are very good questions. China's 
interest, in my judgment--I am sorry, Latin America's 
interest--ranges from the legitimate and the commercial to the 
less legitimate. I think it is reasonable for many Latin 
American businessmen and leaders to see opportunities in 
Chinese markets, to see opportunities in attracting Chinese 
investment, to see new possibilities for funding sources.
    Not all of those interests are illegitimate. However, it is 
a spectrum. Because as we move into other types of things, the 
opportunity of a Hugo Chavez and now Nicolas Maduro to be able 
to escape good financial oversight and democratic institutions 
and things like that because he can get the quick Chinese loan 
or now the $10 billion in new Chinese loans in the runup to the 
December 6 congressional elections in Venezuela.
    And it goes into the personal as well. One takes a look at 
one of the sons of Daniel Ortega, Laureno Ortega, who was 
instrumental in putting together the Nicaragua Canal deal, as 
well as the telecom financing deal in Nicaragua with Xinwei.
    And the fact is that the Chinese deal, in part because of 
the lack of oversight, provide both personal enrichment 
opportunities, as well as opportunities for leaders who don't 
want to have to adhere to the types of values that the United 
States is promoting, democracy, labor rights, free markets, 
transparency, to be able to get away from that.
    But only get away from that for a time because ultimately 
it leads to a greater collapse, because of the economic 
contradictions, because of the poor governance. But when that 
collapse comes, it prejudices us because it is we in this 
hemisphere who are geographically, physically, economically, 
and by ties of family related to the hemisphere, whereas the 
consequences are much more indirect in terms of what happens 
when those deals go bad for China.
    Mr. Smith. I yield back my time.
    Mr. Duncan. I thank the gentleman from New Jersey.
    We will go to Mr. Chabot from Ohio.
    Mr. Chabot. Thank you very much, Mr. Chairman.
    I will ask probably just one question here unless I have a 
follow-up. And I will address it to the whole panel to the 
extent you would like to answer it.
    My question is in regards to China's objectives with 
respect to Taiwan and Tibet. In your opinion, is China 
strengthening its diplomatic relations with countries in the 
Western Hemisphere at least partly in an effort to isolate 
Taiwan and to some degree Tibet or a free Tibet some day? If 
yes, how successful have they been so far? And specifically 
what are the benefits that China offers to Latin American 
countries in exchange for their support in this effort to 
isolate especially Taiwan, but also to some degree Tibet? 
Whoever wants to take it first.
    Ms. Joseph-Harris.
    Ms. Joseph-Harris. Member Chabot, thank you very much. In 
the case of the Caribbean, it has been a rather interesting 
scenario. Within the CARICOM community, which is a 15-member 
coalition, we have a situation where there is an absence of 
what is called an Asian policy. And the Chinese have been very, 
very successful in penetrating that absence of policy by 
literally purchasing diplomatic relations in terms of inducing 
countries to split their allegiance and remove their 
relationship with Taiwan in favor of Beijing.
    And the inducements have been large sums of money, 
donations, and cash. Less than diplomatic, one would say, but 
they have been extremely successful in it. So that, currently, 
there are, I would say, there are still four countries out of 
CARICOM left, and the Chinese are very aggressive in terms of 
getting them to withdraw that allegiance with Taiwan. So I 
would say that they have been very good at it thus far.
    Mr. Chabot. Thank you very much.
    Yes, Dr. Peters.
    Mr. Dussel Peters. We have been working in the last years 
on the Central American countries and their relationship with 
China, and it has been very interesting how as a result of the 
improvement in the relationship between Taiwan and China, China 
has been extremely pragmatic regarding the issue of this 
diplomatic relationship and recognition, which means that China 
has been able to accept delegations from countries without a 
diplomatic relationship. They have been doing turnkey 
investments, trade, and a big group and an interesting 
dialogue, political dialogue also.
    And I would tell you finally that in the region China has 
also increasingly stated that while it has offered a group of 
projects to Costa Rica who broke these relationships in the 
region, this will not happen again in the region. Also, again, 
this pragmatism even in the diplomatic arena is very important.
    Mr. Chabot. Thank you.
    Dr. Ellis.
    Mr. Ellis. Yes. As you know, in 2008, then newly elected 
Taiwanese President Ma Ying-jeou formed an informal agreement 
with then Chinese President Hu Jintao to basically suspend this 
politics of the checkbook.
    What has happened in general is that they have honored that 
relationship. But I also look toward the importance of the 
future. In other words, in that time since 2008, just about 
every Central American and Caribbean president who has 
recognized Taiwan has expressed an interest in changing. We saw 
it with President Lugo, then president of Paraguay. We saw it 
with President Funes in El Salvador. We saw it with President 
Zelaya and later President Lobo in Honduras. We saw it with 
President Martinelli in Panama, et cetera, et cetera.
    The Chinese have said no. But the way I look at it is that 
they have prioritized the resolution of their dispute between 
brothers over any short-term gains that they could get from 
Central America and the Caribbean. In that sense, I think it 
has been a lesson for where their priorities actually lie.
    But what concerns me about that is that if that truce ever 
breaks down, it is very clear that China has been advancing its 
commercial engagement offices of CPIET, et cetera, so that if 
China decided to start accepting that interest in changing, 
very, very rapidly Taiwan would find itself without diplomatic 
recognition and in a grave situation diplomatically in the 
region.
    Ms. Chabot. Thank you, Doctor.
    Ms. Myers, I have a little time left.
    Ms. Myers. Sure, just very briefly. I mean, there is a 
possibility that Tsai Ing-wen, the new candidate who is part of 
the DPP party, could win the next election. And, of course, she 
and her party are more supportive of Taiwanese independence 
than the KMT.
    If that were the case, then we could see a sort of 
reemergence, there has been a diplomatic truce so far, but we 
could see a lot more competition between China and Taiwan in 
the region, especially in Central America and the Caribbean. I 
am not sure how that would play out, but there is a good 
possibility there.
    And then just on the Dalai Lama, you see both sort of 
direct opposition to Dalai Lama visits, for example, and 
indirect. For example, you have a Confucius Institute in your 
university and you are receiving a lot of funding from China 
for that Confucius Institute, are you going to invite the Dalai 
Lama even though you might want to? Maybe not, because it 
certainly risks complete removal of all of that funding.
    So you see certainly that sort of influence happening very, 
very indirect, very sort of under the table. But it is 
happening.
    Mr. Chabot. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Duncan. I want to thank the gentleman from Ohio. Great 
questions.
    The Chair will now go to Mr. Sires from New Jersey for I 
think the final round of questions here.
    Mr. Sires. I have two observations. One of the observations 
that I have is that one of the reasons that our two regions are 
so tied together is the fact that this is a region where they 
have had many revolutions and the only country that really has 
opened their doors to all those people over the years has been 
this country. So it has developed an umbilical cord type of 
relationship that I think for China is going to be very 
difficult to break. I don't know if you agree with that or not.
    And the other observation that I have is the OAS, Ms. 
Joseph-Harris, I disagree with you. I think it is completely 
ineffective. I think it is an organization that doesn't speak 
up enough on the abuses in this region. And if you are there to 
represent these countries, you are just too influenced by some 
of these countries not to speak up on the abuses that are going 
on. I mean, I haven't seen the OAS talk about Venezuela and the 
abuses of Venezuela at all. So when you tell me that you have 
an institution that could be a vehicle, I am sorry, I really 
don't see it as a vehicle. Not to mention the abuses in China, 
but, you know.
    Ms. Joseph-Harris. I agree with you on the ineffectiveness 
of the OAS. I don't want to be misunderstood. But I am saying 
that there is an institutional framework. It needs to be 
empowered. It needs to be made effective. I am familiar with 
the framework because years ago I have been part of experts 
teams. But I am agreeing with you that a lot needs to be done 
in order to empower the OAS so that it can be effective. Thank 
you.
    Mr. Dussel Peters. I believe that, in fact, CELAC has been 
very successful in this dialogue with China. And I believe it 
would be very relevant for the United States to participate in 
CELAC. For whatever reason, OAS has not been active in this 
area.
    Mr. Ellis. Mr. Sires, I think you raise a very, very 
important question. Thank you for the opportunity.
    To me, I agree with you that the OAS has deep, deep 
difficulties. When I look at this from a strategic perspective, 
though, I ask myself, is it in the interest of the United 
States to try to empower a debilitated institution or to let it 
die or be ineffective.
    And when I look at the alternatives, it worries me. For 
example, China chose to engage with CELAC, which excludes the 
United States. Other states in the region, one could say 
Brazil, have interests in the empowerment of UNASUR to fight 
the region's interests as opposed to the OAS.
    But if the OAS remained ineffective, we, in my judgment, do 
not have an effective vehicle. China was an observer member of 
the OAS since 2004, but they chose to work through CELAC. Our 
Colombian friends came asking for help from the OAS to resolve. 
To me, if we allow the OAS to be ineffective, and that goes 
down to leadership on our part, then we prejudice ourselves 
respectively strategically in the hemisphere. That is my 
respectful opinion.
    Mr. Sires. Ms. Myers, what do you think?
    Ms. Myers. We are hosting a meeting with the OAS today, and 
they have done a fantastic job of helping us out.
    But, no, I mean, I would actually agree with Enrique that 
U.S. participation in some form in CELAC--I mean, it was the 
brain child of Hugo Chavez and so it almost intentionally did 
not include the U.S. and Canada. But I think at least in the 
initial observer capacity, whereby, you know, facilitating in 
some form some of the technical cooperation that has been 
proposed could be a good thing.
    The OAS, obviously there is much to do there to improve its 
function. But I agree that it is also a useful organization to 
the extent that it can be more effective in the region.
    Mr. Sires. Mr. Chairman, thank you very much.
    And thank you very much.
    Mr. Duncan. I want to take this opportunity to thank the 
witnesses. I thought this was an excellent discussion. I don't 
know that we have solved any problems, but I don't know if that 
was the goal. But I learned a lot. And I think this dialogue 
about U.S. engagement and opportunities to allow others to get 
a foothold in our hemisphere is so critical.
    And so I want to thank you. And I look forward to 
continuing this dialogue. I look forward to reading some of 
your material as well.
    So pursuant to Rule 7, the members of the subcommittee will 
be permitted to submit written statements to be included in the 
official hearing record.
    Without objection, the hearing record will remain open for 
5 business days to allow statements, questions, and extraneous 
materials for the record, subject to the length limitation of 
the rules.
    There being no further business for the committee, we will 
stand adjourned. Thanks so much.
    [Whereupon, at 3:40 p.m., the subcommittees were 
adjourned.]

                                     

                                     

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