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


    AMERICA AS A PACIFIC POWER: CHALLENGES AND OPPORTUNITIES IN ASIA

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

                                 HEARING

                               BEFORE THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 28, 2016

                               __________

                           Serial No. 114-202

                               __________

        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
                            
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page

                                WITNESS

The Honorable Antony J. Blinken, Deputy Secretary of State, U.S. 
  Department of State............................................     2

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

The Honorable Antony J. Blinken: Prepared statement..............     6

                                APPENDIX

Hearing notice...................................................    48
Hearing minutes..................................................    49
The Honorable Edward R. Royce, a Representative in Congress from 
  the State of California, and chairman, Committee on Foreign 
  Affairs: Material submitted for the record.....................    51
Written responses from the Honorable Antony J. Blinken to 
  questions submitted for the record by:
  The Honorable Ted Poe, a Representative in Congress from the 
    State of Texas...............................................    52
  The Honorable Eliot L. Engel, a Representative in Congress from 
    the State of New York........................................    58
  The Honorable Matt Salmon, a Representative in Congress from 
    the State of Arizona.........................................    70

 
    AMERICA AS A PACIFIC POWER: CHALLENGES AND OPPORTUNITIES IN ASIA

                              ----------                              


                        THURSDAY, APRIL 28, 2016

                       House of Representatives,

                     Committee on Foreign Affairs,

                            Washington, DC.

    The committee met, pursuant to notice, at 10:08 a.m., in 
room 2172 Rayburn House Office Building, Hon. Edward Royce 
(chairman of the committee) presiding.
    Chairman Royce. Committee will come to order.
    Some of the world's most dangerous flash points are in 
Asia, as are some of our closest allies and these are critical 
relationships to foster. Deputy Secretary of State Blinken is 
just back from the region. We welcome him to the committee. 
America is a Pacific power, and we must act like one.
    This committee has played a leading role in shaping U.S. 
policy toward Asia. We took the lead imposing tough sanctions 
on North Korea, on highlighting human rights in Southeast Asia, 
and in strengthening our alliances with democracies in the 
region.
    Since North Korea's January nuclear test--its fourth--Kim 
Jung Un's belligerence has only increased. This rogue regime 
poses a direct threat to the United States. Last weekend the 
regime launched a missile from a submarine; reports suggest 
another nuclear test could be on the horizon. The good news is 
that earlier this year the President signed into law sanctions 
legislation this committee pushed to aggressively target North 
Korea's cash. This strong, bipartisan measure, authored by 
myself and Mr. Engel, helped the administration get a sweeping 
U.N. Security Council sanctions resolution through.
    So the administration has the tools it needs to tackle the 
North Korean threat and keep Americans safe. But will it use 
them? A recent U.N. report found several countries still 
pushing cash to Kim Jung Un's regime through prohibited arms 
deals. They must be pressed to stop, forced to stop, and 
frankly, through this legislation we can force them. The 
administration must designate more companies, more banks, and 
more individuals. North Korea is a human rights house of 
horrors. So how is it that not one North Korean official has 
been sanctioned specifically for human rights abuses?
    Looking south, the Beijing Government continues its 
aggressive push into the South China Sea with land reclamation 
and militarization of contested islands. Our allies are 
increasingly alarmed. And while these disputes must be resolved 
peacefully, that will be best done with a policy of strength, 
resolve, and clarity--rejecting Beijing's apparent moves toward 
de facto control over international shipping lanes.
    In Southeast Asia, Vietnam's poor human rights record 
continues. Bloggers and journalists are harassed and jailed. 
When myself or other members of this committee--Chris Smith--
when we have traveled to Vietnam we have visited with political 
prisoners. We have visited with dissidents. When the President 
travels to Vietnam next month, President Obama could send a 
clear and unequivocal message to the Communist government and 
firmly stand by that country's brave dissidents, unlike he did 
in Cuba. I would also urge the President to stress the 
importance of restoring the Bien Hoa Military Cemetery, the 
resting place of many South Vietnamese soldiers who fought to 
preserve their freedom, a cause especially important to the 
Vietnamese-American community.
    And while there is hope for the new government in Burma, 
and we have been pushing for many years on this committee for 
democratization in Burma, it is making progress and it must now 
perform for all Burmese, including the Rohingya population. I 
hope to hear that we are making the protection of this 
persecuted minority one of our priorities.
    Finally, no discussion of Asia is complete without 
mentioning its dynamic economies. We must continue efforts to 
open new markets for our businesses and build the capacity of 
tomorrow's trade partners. Trade can play a key role in 
strengthening U.S. alliances.
    The United States has played a critical role in Asia. Our 
power and presence helped shape the economic miracles. When we 
think about what happened in Japan and in South Korea and in 
Taiwan, all vibrant democracies today, but that proud legacy 
has to be protected through constant vigilance and engagement.
    Mr. Engel will be here momentarily. We'll move to introduce 
Mr. Blinken, we'll have your testimony and then we will hear 
from the ranking member when he arrives.
    Thank you, Tony.

STATEMENT OF THE HONORABLE ANTONY J. BLINKEN, DEPUTY SECRETARY 
               OF STATE, U.S. DEPARTMENT OF STATE

    Mr. Blinken. Mr. Chairman, thank you very, very much and to 
members of the committee, thank you for having me here. It's 
very good to be back to discuss our rebalance to the Asia 
Pacific region.
    I just got back from my sixth visit to the region in a 
little over a year and with each trip I have to tell you I've 
seen growing dividends of this effort to balance our focus on 
the region and to strengthen a rules-based, institutions-based 
order that is advancing our interests and increasingly not only 
in the region but globally.
    Chairman Royce. Secretary Blinken, could you--could you 
pull the microphone just a little closer. Some of the members 
were having trouble hearing you.
    Mr. Blinken. Sorry about that. Is that better?
    Chairman Royce. Yes.
    Mr. Blinken. Thank you.
    Chairman Royce. Thank you, Tony.
    Mr. Blinken. As you said, Mr. Chairman, really nowhere in 
the world are economic and strategic opportunities clearer or 
more compelling than in the Asia Pacific region, home to four 
of our top ten trading partners, five of our seven treaty 
allies, the world's largest and fastest-growing economies 
including 40 percent of overall global growth, nearly two-
thirds of the global middle class and, of course, some of the 
most wired and innovative people in the world.
    Over the last 7 years, this rebalance to Asia that is 
deepening our strategic, economic and diplomatic ties with the 
region commensurate with its importance has helped shape a 
positive trajectory in the region.
    We have given substance to the rebalance by bolstering our 
treaty allies, deepening engagement with emerging powers, 
strengthening regional institutions, promoting trade and 
investment, enhancing our military posture, advancing 
democratic reform and creating new networks of trilateral and 
multilateral relationships.
    There are multiple pillars to the rebalance. I just want to 
briefly go through--go through those pillars. First, we've 
invested in strengthening and modernizing our core alliances 
with Japan, with Korea, the Philippines, and Australia.
    We've updated our guidelines for our defense cooperation 
with Japan, included new host nation support agreements with 
both Japan and Korea, signed a forced posture agreement with 
Australia, and included a landmark enhanced defense cooperation 
agreement with the Philippines.
    Second, we've deepened engagement with emerging countries 
in the region. We've built a relationship with China defined by 
broader practical cooperation on global challenges while at the 
same time directly engaging our differences to try to resolve 
or narrow them while avoiding conflict. And we've worked to 
deepen the bonds between the people of the United States and 
Taiwan.
    Our partnerships with Indonesia, Malaysia, and Singapore 
have grown to reflect our increased cooperation on regional and 
global challenges, everything from countering climate change to 
violent extremism and we've forged new relations with Vietnam 
and Burma as they start to turn the page on the past.
    I just saw this again for myself in Vietnam last week. 
Thanks in part to the bipartisan leadership of this committee, 
the U.S. and Vietnam are deepening and broadening our ties in 
areas that we couldn't even imagine a decade ago, even a few 
years ago, from military cooperation to human rights to 
peacekeeping.
    Third, we sustained an increased engagement with the 
institutions of the region like the East Asia Summit, APEC, 
ASEAN, including by sending our first dedicated Ambassador to 
ASEAN, hosting the first ever U.S.-ASEAN summit here in the 
United States, and hosting APEC in 2011.
    These are important forums for promoting collective action 
and facilitating the peaceful resolution of differences. They 
advance a regional economic, political, and security 
architecture in which the United States is a vital and 
permanent player.
    Fourth, we have vigorously promoted trade and investment 
opportunities designed to unlock growth for the United States 
as well as for our allies and partners in the region. We've 
implemented a free trade agreement with South Korea. We've 
worked with Burma to modernize and strengthen legal and 
regulatory regimes, helping set the stage for major American 
companies to enter that market.
    And, of course, the heart of our engagement in the region 
economically is the Trans-Pacific Partnership, which will bring 
12 APEC economies and 40 percent of global GDP together. TPP 
will eliminate more than 18,000 taxes on American exports and 
help level the playing field for American workers while 
solidifying an economic arena in which every participant, 
regardless of its size, agrees to fight bribery and corruption, 
abide by international labor standards including the formation 
of independent trade unions, and commits to enforcement of 
environmental safeguards.
    Fifth, we've enhanced our military posture in the Asia 
Pacific, deploying nearly 60 percent of our Navy in the region 
by the end of the decade and some of our most advanced 
capabilities. We are increasing the maritime security capacity 
of our partners and we are rotating American personnel into new 
and more places like northern Australia and new sites in the 
Philippines.
    Sixth, we are standing up for our values, for the basic 
rights and freedoms of individuals throughout the region. In 
Indonesia and the Philippines we are working with our partners 
to tackle corruption and strengthen institutions. And then, of 
course, in support of Burma's historic elections and peaceful 
transition of power, we helped establish the nation's first 
nonpartisan independent election observation organization. We 
trained over 11,000 political party members to improve their 
ability to effectively communicate with voters. We continue to 
stress the importance of upholding the rule of law and express 
our strong concern about discrimination experienced by ethnic 
and religious minorities including the Rohingya.
    In response to our engagement and demands from the 
Vietnamese people, Vietnam has taken some positive steps on 
human rights including releasing political prisoners, ratifying 
the Convention Against Torture and the U.N. Convention on the 
Rights of Persons with Disabilities, and agreeing to allow 
independent trade unions for the first time in modern history. 
Significant reforms remain to bring Vietnam's domestic laws 
into sync with international human rights obligations and, 
indeed, with its own constitution.
    Seventh, and finally, we've invested in a new geometry of 
trilateral and multilateral networks to encourage cooperation 
among and between countries in the region. At the core of these 
efforts is a very robust trilateral partnership with South 
Korea and Japan, under which we convened the first ever 
trilateral meeting at the vice minister or deputy level. I've 
now done that three times, and the benefits of this 
relationship are crystal clear in the face of the region's most 
acute challenge--the challenge from North Korea and its 
provocative acts in the nuclear missile domain. We are stepping 
up trilateral cooperation on sanctions implementation, 
including under the new U.N. Security Council resolution.
    We are working trilaterally to increase the capabilities of 
other countries to implement that resolution and our three 
countries will continue to shine an intense light on North 
Korea's deplorable human rights violations and pursue 
accountability for them.
    We are also intensely focused on maritime issues, 
especially China's assertive and provocative behavior in the 
South China Sea that is challenging respect for international 
law, freedom of navigation, and the peaceful resolution of 
disputes.
    We've also deepened our commitment to the U.S.-Australia-
Japan trilateral strategic dialogue, hosted the inaugural of 
the U.S.-Japan-India trilateral ministerial dialogue.
    These bilateral, trilateral, and multilateral relationships 
are not aimed at any particular country. They are not 
exclusive. We welcome any kind of flexible geometry of 
collaboration among countries that share important goals 
including steps toward greater China-Korea-Japan cooperation 
and the growing unity of the ASEAN community.
    And we are building interconnected relationships not just 
among countries but among people. The YSEALI community, now 
67,000 strong, connects dynamic young people throughout the 
region to the United States and to each other.
    Mr. Chairman, these efforts represent a small but important 
slice of the work that we are currently undertaking. Seven 
years after President Obama rebalanced our sight on the Asia 
Pacific, we are leaders of a region increasingly bound by 
common ideals, shared prosperity, and a collective sense of 
global responsibility.
    I thank you very much.
    [The prepared statement of Mr. Blinken follows:]
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    Chairman Royce. Thank you, Mr. Blinken.
    I think without objection the witness' full prepared 
statement will be made part of the record and members are going 
to have 5 calendar days to submit statements and questions and 
extraneous materials for the record.
    I think what we'll do is proceed with some of the questions 
from the committee and then when the ranking member arrives 
he'll make his statement and ask the Deputy Secretary of State 
the questions that he has as well.
    If we could start, Mr. Blinken, with the North Korea 
sanctions and the administration of those sanctions, an issue I 
brought up in the opening statement. This is a strong North 
Korean sanctions bill that we passed and this bill did help get 
that U.S. resolution in place. But you're just back from the 
region.
    What has been the reaction to this new law? How has the 
pressure been turned up? I raised the fact that no one has been 
sanctioned yet on human rights. I think it is high time that 
happened. And I know there's a new U.N. report that points out 
that several countries are still purchasing North Korean 
weapons. If you would speak to that issue. European luxury 
goods are still making their way to Kim Jung Un and are we yet 
to hit any Chinese banks facilitating transactions as we did in 
the past with Banco Delta Asia which was, frankly, very 
effective at the time, if you'll recall. It cut off the hard 
currency, stopped the production of the missile program at the 
time because they didn't have the hard currency to proceed.
    Mr. Blinken. Thank you, Mr. Chairman.
    First, I want to thank the committee for the very important 
work that it did. I think the combination of the U.N. Security 
Council resolution, which is the strongest tool we've had to 
deal with North Korea, the legislation from Congress, and the 
Executive order that have put those into effect really puts us 
in a different position.
    We now have the ability if implemented--and that is the 
key--to maximize pressure on North Korea to try to get it to 
change its conduct. For the first time through the U.N. 
Security Council resolution we require that all cargo going in 
and out of the country be inspected. For the first time we have 
sectoral sanctions that limit or in some cases ban the export 
of critical materials--coal, iron, gold, rare earth materials 
that are what they use to finance their activities. And we have 
financial sanctions that go at banks and assets and we also 
have a ban on all dual-use nuclear and missile-related goods.
    The critical component now is implementation and we are 
looking principally at China as well as other countries to 
follow through on implementation. China played an important 
role in getting the Security Council resolution. It is our 
expectation that it will now implement it. It's too soon to say 
whether that is the case. We've seen some encouraging 
developments including regulations that its promulgated, 
statements that it's made but we are now watching intensely.
    But at the same time, it is not enough, and what we are 
focused on besides the implementation of the Security Council 
resolution is relentlessly building pressure on North Korea, 
working principally with our key allies Japan and Korea.
    We are working in various ways to cut off all the revenues 
going to the regime. For example, they have, as you know, 
overseas workers whose remittances are not going back to their 
families but are going to the regime. We are working to cut 
those off. We have so-called diplomats engaged in illicit 
activities procurement but also even in illicit businesses that 
were the restaurant workers who defected from China. We are 
seeing this in different countries around the world. They set 
up businesses and the money goes back to the regime. We are 
working relentlessly to find those places and to get countries 
to cut them off. We are working to further isolate North Korea 
by getting their diplomats who are, again, not engaged in 
diplomatic activities sent home.
    We are making sure that people don't go out to North Korea 
including for the Worker's Party Congress or invite them to 
international events and we are working as well to get 
countries to make sure that they're doing exactly what you 
alluded to--making sure that the ships that go to North Korea 
don't dock in their countries and that the planes don't land.
    So right now we are working on enforcing all of that.
    Chairman Royce. And I have been part of the dialogue--our 
committee has on each of these fronts and all have been helpful 
but there is one final step that needs to be taken. Banks are 
concerned about the reputational risk of what will happen if 
they have to make a choice between doing business with North 
Korea or doing business with the United States, and we've seen 
in the past for those dozen banks that were affected back 
during the sanctions regime put in place when North Korea was 
caught counterfeiting our $100 bills.
    Just how concerned they are about reputational risk, even 
when--even when those sanctions were reported listed by State 
at the time Banco Delta Asia still wanted to know yes, but has 
the U.S. Treasury Department really signed off on this because 
otherwise we are not going to move the hard currency into North 
Korea.
    Without that hard currency, they find it very difficult to 
move forward with their nuclear program and their missile 
programs. So it is essential that decision be made and we are 
going to continue to dialogue on that. But that is a decision 
you need to make and I am sure you raised that in Beijing.
    Mr. Blinken. Appreciate that.
    Chairman Royce. The last two--again, I'd raise that issue 
about the Rohingya people. We'll need to be working with that 
new government, frankly, in Burma to shape attitudes toward the 
Rohingya and you're going to have to continue to lean in on 
that.
    On the Vietnam human rights issue, I've just got to share 
with you--we've got the case of a human rights--Nguyen Van Dai, 
who was arrested in December for his advocacy of human rights 
and advocacy of democracy. According to his wife, he was 
severely beaten by the police. He's been in solitary 
confinement since his arrest. He was denied access to his 
lawyers and to his family. Will the President push for his 
release? I think this is very, very necessary.
    Mr. Blinken. Mr. Chairman, I very much appreciate those 
comments. First, on the Rohingya, we have been very focused on 
working the get the government in Burma to protect their 
rights. When I was there most recently a couple of months ago I 
raised this repeatedly including with Aung San Suu Kyi. We are 
looking to the government to give them genuine freedom of 
movement so that they can work, so that they can go to school, 
so they can get health care, and the discrimination. We are 
working on that.
    With Vietnam, absolutely. I think the President will 
certainly engage with that community. When I was there last 
week, I met with civil society activists and lawyers and 
others, indeed, to express the concern that we have.
    Vietnam has made real progress, as you know. They released 
a lot of political prisoners. They're working to conform their 
laws to the constitution. But work remains to be done.
    Chairman Royce. Thank you, Deputy Secretary Tony Blinken. I 
appreciate it. We'll now go to our ranking member, Mr. Eliot 
Engel from New York, who has an opening statement first to make 
and then he'll have question.
    Mr. Engel.
    Mr. Engel. Well, thank you. Thank you very much, Mr. 
Chairman. Thank you for calling the hearing and Mr. Deputy 
Secretary, I've known you a long time. Welcome to the Foreign 
Affairs Committee.
    It's been a pleasure working with you over the years in the 
various roles in which you've served and we are very fortunate 
to--I want to say this publicly--we are very fortunate to have 
such a dedicated and capable person as the number two in the 
State Department. So thank you for all you do.
    I was encouraged that the President and Secretary Kerry 
charged you with focusing on Asia during your time as Deputy 
Secretary--that is a focus we badly need--and I think you're 
the right person for the job.
    Half the world's population calls Asia home and the nations 
of Asia now account for more than a third of global GDP. From 
India to Japan, from Indonesia to Micronesia, Asia has a 
greater impact on global affairs than ever before.
    As a Pacific power, the United States faces no shortage of 
foreign policy challenges in Asia, from North Korea's reckless 
behavior, to the impacts of climate change, to the recruitment 
of fighters into violent extremist groups.
    The way we manage the rise of China in the years ahead may 
well be the most consequential foreign policy issue of the 21st 
century. The decisions we make today will determine whether the 
value and the norms we championed in Asia after World War II 
will continue to thrive.
    That's why this has been called this America's Pacific 
century and that is why there is no better time to focus on 
this dynamic part of the world.
    The so-called Asia rebalance has hatched a number of 
important diplomatic achievements. We've strengthened our core 
regional alliance with Australia, Japan, Philippines and South 
Korea.
    With our ally Japan we've established new trilateral forums 
with Australia, South Korea and India. We've ramped up our 
engagement with ASEAN and demonstrated a clear commitment to 
the East Asia Summit, and we have normalized relations with 
Burma as that country has emerged from decades of isolation and 
begun the hard work of moving toward a more open democratic 
society.
    Yet, despite all these efforts, I regularly hear concerns 
from our allies and partners in the region that the rebalance 
is more a shift in military strategy than about diplomatic 
engagement.
    So this morning I hope we can drill down and look at other 
ways the State Department is making Asia a priority in areas in 
where the department's approach could be more robust.
    I'll start with a question that sounds more like it should 
be on a geography quiz. As far as the State Department is 
concerned with respect to the Asia rebalance, what do we 
consider to be Asia?
    I ask this because in my view the world's largest 
democracy, India, should be an integral part of our Asia 
policy. As the world's third largest economy, India has the 
potential to become a major economic player in East Asia and is 
already playing a constructive role in maritime issues.
    China regards Asia as a strategic hole with its One Belt, 
One Road policy aiming to expand Chinese influence beyond East 
Asia through Central Asia to the Caspian.
    Yet, the State Department structure with three different 
bureaus responsible for South and Central Asia and East Asia 
and the Pacific I believe creates an artificial barrier to 
cooperation across the entire region.
    So I would like to hear about what the State Department is 
doing to overcome obstacles and deal with Asia as a whole 
single strategic priority that includes South and Central Asia.
    Staying for a moment with structural issues at the State 
Department, I'd like to discuss if we are doing all we can from 
a resource standpoint to ensure our Asia policy will succeed.
    The East Asia bureau is the smallest regional bureau in 
terms of personnel and the region accounts for the second 
lowest level of foreign assistance. Now, obviously any 
questions about State Department resources has to start here on 
Capitol Hill.
    I strongly support investing more in diplomacy and 
development across the board. Our international affairs budget 
gives us tremendous bang for the buck. But I also wonder 
whether anything can be done in Foggy Bottom so that the 
rebalance is adequately resourced.
    We've heard again and again that this is a priority and 
that should be reflected in the investments we are willing to 
make.
    Lastly, I'd like to turn to the South China Sea. We expect 
the Law of the Sea Tribunal to issue a decision in the next 
month or so involving the claims of China and the Philippines. 
China's response to the ruling could ratchet up tensions.
    While the United States doesn't take a position on the 
specific claims made by various parties, we do want to see 
China play by the same rules as everyone else.
    So I support the ideas behind the Pentagon's Southeast Asia 
Maritime Security Initiative which aims to help our Southeast 
Asian partners know what China is doing off their coastlines 
and to share that information with each other.
    If the U.S. and our partners are on the same page we can 
work together to keep China in check and make sure China 
doesn't threaten our strategic and economic interests in the 
region.
    But it is not clear to me why the Defense Department is 
leading the way on this instead of the State Department. DoD's 
new authorities for this program are entirely duplicative of 
existing State Department authority.
    I worry that putting such a program under DoD's control 
could erode State security cooperation responsibilities. Our 
diplomats are responsible for overseeing security assistance 
and it should stay that way, and whatever level of cooperation 
exists between State and DoD on this matter, I am concerned 
that this is another example of what some call the 
militarization of foreign policy. This feeds into those 
concerns that the Asia rebalance is a military policy even in 
areas that have traditionally been diplomatic responsibilities.
    So, Mr. Deputy Secretary, I am interested in hearing your 
views on these issues as well as some other areas I'll be 
touching on as well. I thank you again for your service and 
commitment. I look forward to your testimony.
    I want to raise two questions in conjunction with my 
statement and it is--the first one's about India. It's been 
characterized by U.S. officials as an indispensable partner of 
the United States.
    As I mentioned before, it is the third largest economy in 
the world by purchasing power parity and is the largest 
democracy in the Asia region. The U.S.-India relationship is 
important. It's growing in particular on the defense side and 
Prime Minister Modi will be coming to Washington again in a 
couple of months to meet with President Obama.
    From a strategic perspective, India is a potential 
counterweight to China's growing regional influence in Asia. 
They've become increasingly vocal on issues like freedom of 
navigation in the South China Sea and Indian Ocean region.
    Additionally, Central Asia occupies critical geography in 
Asia sandwiched between China, Russia and Iran. The Chinese 
recognize this potential of Central Asia for what has been 
historically a strategic crossroads at the doorstep of the 
great powers and a transit point for trade and culture between 
the East and the West, and the Chinese are aggressively seeking 
to expand their influence there.
    Yet, in your written testimony there's only one mention of 
India in the context of a U.S.-Japan-India trilateral 
ministerial and there are no other mentions of South or
    Central Asia at all.
    So my question is does South and Central Asia not fit with 
the administration's larger rebalance to Asia strategy and how 
can we be rebalancing to Asia without a strategic framework 
that considers Asia as a strategic whole?
    Thank you.
    Mr. Blinken. Thank you very much.
    We strongly share your view on the importance of India both 
in and of itself but also as part of the region and as an 
increasingly vital regional actor.
    India has its own regional policy that dovetails very 
nicely with the work we are doing on the rebalance. So we are 
working increasingly to integrate India into these efforts and 
you mentioned the one thing that I did point to in the 
statement--I think there may be more in the written statement--
this U.S.-Japan-India trilateral effort at a ministerial level. 
Also we included Japan in the Malabar exercise, which was a 
significant development which we hope to continue to carry 
forward.
    But we are doing two things. We are building our own 
relationship with India as evidenced by the extraordinary level 
of high-level engagement, including Prime Minister Modi's 
return visit here, the President being received for the first 
time as the honored guest at Republic Day but also in very 
concrete collaboration across the board, everything from 
climate and Smart Cities to improving the business climate to 
defense cooperation to production cooperation even in the 
defense area. But intelligence sharing, information sharing, 
counterterrorism, countering violent extremism--across the 
board the relationship has been elevated.
    But critical to this is exactly what you're pointing to, 
which is integrating India into these regional frameworks so 
that we are working together jointly and, again, the example 
with Japan is a very good. But this is exactly the direction 
that we want to go in.
    Mr. Engel. Thank you.
    I am wondering if you could comment on the South China Sea. 
I just want to ask you, the Philippines has brought an 
arbitration case against China's claims in the South China Sea 
under the United Nations Convention on the Law of the Sea.
    If the ruling goes in the Philippines' favors it is 
expected, and if China refuses to abide by it what are the 
implications for the Philippines and other claimants in the 
South China Sea, and how would this change the U.S. approach in 
the South China Sea?
    Mr. Blinken. Thank you.
    Well, first I'd say this is--South China Sea is incredibly 
important to us and to all of our partners in two ways.
    First of all, 25 percent of all traded goods, 25 percent of 
all that travels by sea goes through the South China Sea and, 
indeed, one-third overall of liquefied natural gas.
    We have no position, as you know, on the sovereignty 
claims. We are not a claimant ourselves. But we have a very 
strong interest in the way these claims are prosecuted by an 
claimant and a very strong interest in maintaining freedom of 
navigation, in making sure that disputes are resolved 
peacefully and the countries abide by international law and 
these are the very interests that China has been challenging 
with some of its actions, including the massive reclamations 
and militarization of these land features as well as various 
assertions that are not justified under international law.
    The case that you refer to is a very important moment. This 
is an arbitration case brought by the Philippines with China 
and we expect a decision by the tribunal in the coming months.
    China knowingly agreed to the provisions in the Law of the 
Sea Treaty when it signed up. Five independent arbitrators 
said--unanimously rejected China's claim that it wasn't bound 
by the arbitration mechanism--that the jurisdiction was 
lacking.
    And the convention provides that its rulings are binding on 
the parties to the convention. So we have worked very hard to 
establish across the region an understanding that this is 
appropriate mechanism--arbitration to resolve these disputes 
and that the ruling of the tribunal should be binding on the 
two parties.
    We said to the Chinese, if you're given satisfaction on any 
aspect of the decision we'll be the first to stand up and 
defend it. But, of course, if the Philippines is you'll have to 
respect that.
    China has a decision to make depending on how the ruling 
comes out. It will either decide to abide by the ruling and 
that gives us a great opportunity, I think, to narrow the scope 
of areas that are in dispute in the South China Sea. That would 
be good to get countries to work cooperatively together, for 
example, joint ventures on the exploitation of resources and to 
then work to resolve their disputes that remain peacefully. 
That's one path.
    The other path is it ignores the decision, and then I think 
it risks doing terrible damage to its reputation, further 
alienating countries in the region and pushing them closer to 
the United States.
    China will have to decide depending on what the results of 
the arbitration are. We are watching that very, very closely.
    Mr. Engel. Thank you.
    Chairman Royce. We go to Ileana Ros-Lehtinen of Florida, 
our chairman emeritus.
    Ms. Ros-Lehtinen. Thank you so much, Mr. Chairman. Thank 
you to the ranking member.
    Secretary Blinken, for over a month I have been trying to 
get a hold of you by phone to discuss the problem between 
Morocco and Ban Ki-moon. You've not had the courtesy to return 
my call.
    But at a hearing 10 days ago, Secretary Anne Patterson 
promised to work with me and the members of our Middle East 
Subcommittee regarding the draft U.N. resolution that would 
renew the mandate of MINURSO.
    It was obvious that this was going to be a problem for 
weeks and I would have appreciated a call back. As you know, 
the draft in its current form could very well jeopardize our 
relationship with Morocco and our important military and 
intelligence cooperation.
    There's got to be a way that we can find a compromise here 
and we can do it without including the controversial 
provisions, including the one that will allow Ban Ki-moon yet 
another opportunity to insult Morocco and do further damage. So 
I strongly urge you to work with the Moroccans today and to fix 
it.
    What can you tell us about the draft resolution and what 
progress have we made?
    Mr. Blinken. Thank you.
    First, let me--let me apologize to you if I didn't get back 
to you. I am sorry about that. I'd be very happy to follow up 
immediately this afternoon----
    Ms. Ros-Lehtinen. Thank you, sir.
    Mr. Blinken [continuing]. If that is convenient to you. So 
I am very sorry about that.
    Ms. Ros-Lehtinen. That would be great. Thank you, sir.
    Mr. Blinken. Second, with regard to the situation, we've 
been deeply engaged in this since this problem first emerged 
and that was the Secretary General's visit to the region.
    We worked very closely with Morocco and the U.N. to see if 
we could de-escalate the problem and get them working together. 
I immediately saw the foreign minister from Morocco. I was on 
the phone with him immediately. He came to visit me in my 
Office. Secretary Kerry saw him. We've had calls to--to the 
king.
    Here's where we are. Morocco was very concerned with some 
of the things the Secretary General said during his visit to 
the region. We worked to ask the Secretary General to clarify 
what he meant and he did that.
    We said to our Moroccan friends that we hope that as we 
were looking at renewing the MINURSO mandate we wanted to renew 
it for 1 year without any changes. Unfortunately, one of the 
things that Morocco did in response to the Secretary General's 
visit is they unilaterally decided to reduce and ask for the 
removal of members of the MINURSO mission.
    That creates a problem for us because as a member of the 
Security Council we also have an important stake in making sure 
that U.N. peacekeeping missions' integrity is upheld and if we 
allow a precedent by which a country can unilaterally decide 
whether to accept or shut down a mission or change its 
composition that is going to be a real problem potentially in 
other areas with countries that, unlike Morocco, are not close 
friends or partners.
    Ms. Ros-Lehtinen. But when the Secretary General of the 
U.N., sir, makes such a provocative statement and accusation 
against Morocco it really pinned them against the wall.
    Mr. Blinken. And I think that is exactly why we worked with 
the Secretary General's office to get a clarification of what 
he meant and what he didn't mean.
    Our hope is that we can now get this resolution to a place 
where Morocco's concerns are answered but also the integrity of 
the peacekeeping missions are upheld and that it can go back to 
fully functioning as it was before.
    That's what we are trying to achieve. But I want to assure 
you we share your commitment to the relationship with Morocco. 
This is one of our closest partners in the region and indeed 
around the world.
    Ms. Ros-Lehtinen. It sure is. We need more Morocco.
    Mr. Blinken. So I thank you--I thank you for that.
    Ms. Ros-Lehtinen. And moving on. Thank you, sir.
    At a hearing of the Middle East and North Africa 
Subcommittee, GAO testified that the State Department is not in 
compliance with the Iran, North Korea and Syria 
Nonproliferation Act, or INKSNA, a law that I authored several 
years ago.
    INKSNA is an important nonproliferation tool. GAO told us 
that State's noncompliance has probably undermined the 
credibility of our sanctions.
    We learned that State took almost 3 years to prepare one 
report and then implement sanctions and that your predecessor 
sat on the report for more than a year as it awaited approval.
    So given that precedent, do you have an INKSNA report that 
you're sitting on and have you signed off on it and what's the 
status of that report, sir?
    Mr. Blinken. I believe the next report is being actively 
worked on and processed. It has not come to me yet. I can 
assure you that as soon as it does I will move it out of my 
inbox as quickly as possible.
    Ms. Ros-Lehtinen. Thank you so much. Thank you, Mr. 
Chairman.
    Chairman Royce. Thank you, Ileana.
    We go now to Mr. Brad Sherman of California.
    Mr. Sherman. Mr. Blinken, congratulations on the new 
position. It's good to hear that you'll have a policy of 
returning members' phone calls and I hope that doesn't just 
apply to the lady from Florida.
    Asia's important. That's why it's important that we not 
enter into bad trade deals or unnecessary military 
confrontations in Asia.
    Now, anyone who questions the adventures that are planned 
is patted on the head and told, well, you just don't understand 
how important Asia is.
    No, Asia is so important that we better think carefully 
about our policy. When it comes to trade, we are given straw 
men. We are told well, if you don't like TPP then we could have 
no trade, or we could continue the unbalanced trading system 
that we have now without every discussion about a radical 
departure from our current trade system designed to achieve 
balance trade.
    And when we are told that maybe we shouldn't be seeking a 
new cold war over some islets, we are told that 25 percent of 
the world's trade goes through the South China Sea. The vast 
majority of that goes in or out of Chinese ports, meaning that 
if China had military control of these islets that may actually 
belong to them anyway, they would be able to blockade their own 
ports. I don't think that is something we have to spend a lot 
of money preventing.
    There is a tendency when making policy to yield to the 
interests of the most powerful entity in this country that 
cares about that policy, and that is why when it comes to trade 
policy, Wall Street is in the driver's seat.
    But the deal is so bad that it has to be sold as a China 
containment policy because it is certainly not a jobs creation 
policy. But China enshrines the standard that currency 
manipulation goes hand and hand with trade deals. So they're 
the big winner. But they're even a bigger winner in the roles 
of origin where goods that are admitted to be 60 percent made 
in China and actually it'd be 95 percent made in China can then 
get a polish in Japan or a few parts added in Vietnam and be 
fast tracked into the United States.
    So when it comes to the geopolitics, the Pentagon is very 
powerful in crafting American national security policy. What 
meets their needs now is a worthy uniformed adversary. Every 
time our military has gone up against a ragtag uniformed 
adversary it has been an unpleasant experience since the 
Philippines insurrection. Every time we have gone up against a 
uniformed foe it has been a relatively glorious experience, the 
most glorious perhaps winning the Cold War without a major 
confrontation with the Soviet Union.
    So it is not surprising that these islets which are not 
ours, that do not have oil, and if there were any oil it would 
belong to the people unwilling to spend their own money to 
defend these islands--that these are exaggerated into great 
importance.
    I am not saying that we don't care about navigation, we 
don't carry about--it obviously important. But to reconfigure 
the entire Pentagon to spend the lion's share of a $600 billion 
defense budget on confronting China, and you can't--it is a 
tough cost accounting job to determine what the defense budget 
is being spent on geographically.
    But is--but I want to go to a completely different 
question: North Korea. North Korea needs about 12 nuclear 
weapons to defend themselves from us. They have about 12 
nuclear weapons. They're creating enough fissile material for 
another two or three weapons a year. They need money. Iran now 
has--we can argue about it--$50 billion or $100 billion burning 
a hole in their pocket. North Korea sold the technology for the 
Al-Kibar Syrian-Iranian nuclear weapons program that the 
Israelis bombed in 2007.
    Is the administration working toward an understanding with 
China that a Iranian plane will not be allowed to fly to North 
Korea without stopping in China for fuel? And please don't tell 
me we intercept ships. Please don't tell me that North Korean 
planes might not be allowed to do this. I am talking about an 
Iranian plane going nonstop to Pyongyang and coming back with a 
bomb.
    Mr. Blinken. Thank you.
    First, let me just say before addressing the question, 
which I very much appreciate, with regard to South China Sea, 
we are not looking for conflict.
    We are looking to prevent conflict and what's at stake here 
is not just the transit of energy, oil and goods, as important 
as that is. There are larger principles at stake and these 
principles go to the entire foundation of the international 
order. If we don't defend those principles everywhere where 
they're being challenged the entire order that we invested so 
much in building over 70 years is at risk. That's why this is a 
big challenge.
    Mr. Sherman. Mr. Blinken, I'll agree with you. But at the 
same time, if an Argentine plane was getting too close to the 
Falkland Islands we wouldn't be talking about it here.
    Mr. Blinken. You know, we engage with the freedom of 
navigation operations around the world, not just in the South 
China Sea. Most of them are actually----
    Mr. Sherman. I know. This one is getting a lot more 
attention.
    Mr. Blinken. But leaving that aside, with regard to Iran 
and North Korea, this is something we are watching very 
carefully and you're right to, I think, raise the subject.
    They've had a history of political engagement. Some of the 
reports of military, missile, nuclear engagement have been much 
harder to verify. What we are doing----
    Mr. Sherman. Mr. Blinken, are you denying the reports that 
the Al-Kibar nuclear----
    Mr. Blinken. No, no. I am saying----
    Mr. Sherman [continuing]. Arms facility was North Korean 
technology?
    Mr. Blinken. I am just saying that what we are looking at 
is the concrete evidence of relationships across the board, 
beyond the political.
    What we are focused on is exactly what you pointed to. I 
think you make a very important point. What we are trying to do 
with regard to North Korea is to make sure that not only can 
its ships not dock but its planes. Air Koryo cannot land, not 
just in Iran but----
    Mr. Sherman. Mr. Blinken, my question was about an Iranian 
plane flying to North Korea.
    Mr. Blinken. And we are working to make sure under these--
--
    Mr. Sherman. Are we working to get China to say that they 
won't allow the plane to go across China without stopping for 
fuel where it could be inspected? That is the only question.
    Mr. Blinken. All of----
    Mr. Sherman. You're free to address others but that is the 
only question.
    Mr. Blinken. All of the members of the United Nations are 
bound by the Security Council Resolutions that say that there 
should be no military ballistic missile or nuclear cooperation 
with the DPRK.
    As a result, they have----
    Mr. Sherman. So the Iranian plane would--if it went to 
North Korea would be violating the U.N. resolution but if it 
flew nonstop over China no one would know about it. So you're 
relying on Iran's dedication to adhering to U.N. resolutions?
    Mr. Blinken. We are looking to every country involved to 
make that on its----
    Mr. Sherman. I would urge you to talk to Beijing about 
making that plane land because if your sole defense for what I 
laid out is that the Iranians wouldn't want to violate a U.N. 
resolution and they'd feel bad about violating international 
law, that is insufficient defense.
    If the Iranian plane going to North Korea does not stop in 
China then it may not have a trade delegation on it. It may 
have cash going one way and nuclear weapons going the other way 
and that is a very specific issue.
    I yield back.
    Chairman Royce. To the point that Mr. Sherman is raising, 
without objection I am going to put in the record a U.N. 
document that is drawn from some of our Treasury documents that 
show two suspected primary arms dealers from North Korea who 
visited the Islamic Republic of Iran and that information, 
because it goes to the point that was being made by the 
gentleman of California.
    Thank you, Mr. Blinken.
    We may be--we may have follow-up questions from the members 
on this specific issue.
    We now go to Mr. Chris Smith of New Jersey.
    Mr. Smith. Thank you very much, Mr. Chairman, and thank 
you, Mr. Blinken, for your presence here today.
    The wire service writers did an extremely disturbing expose 
last year--a series of investigative reports--that found that 
the Obama administration gave undeserved passing grades to 14 
countries with deplorable, and in many cases, worsening sex and 
labor trafficking records including China and Malaysia in Asia, 
Cuba, Oman, and others, making up 14 countries.
    I've had hearings on this. I actually did a hearing a few 
weeks ago that was titled ``Get it Right This Time,'' with the 
new TIP Report that is poised to come out shortly, being very 
concerned that when the administration does what it did, and 
that is give undeserved passing grades to countries that have 
deplorable records. It sells out the trafficking victims in 
those countries and those who are hurt by those countries' 
governments and it also is a deplorable, I think, abandonment 
of human trafficking concerns that we as a nation have in a 
bipartisan way.
    Will China's and Cuba's, for example, and the other records 
be whitewashed once again this year? Secondly, I met with 
Nguyen Van Dai in Hanoi in 2007. He is one of the greatest 
peaceful human rights lawyers that I have met and I have met 
many in dictatorships like Vietnam.
    Will the President raise his case and demand his release? 
He has done nothing wrong, as you know, as we all know here in 
the United States, and he needs to be released immediately to 
let his wounds heal from the beatings that he has suffered at 
the hands of the Vietnamese Government.
    Thirdly, India and Japan have engaged in, clearly, patterns 
of noncompliance with the Goldman Act on child abduction. I've 
had nine hearings on child abduction.
    We've had parents, men and women, moms and dads, tearfully 
tell their stories with regards to Japan as well as India. And 
yet, they have not been leveled, especially Japan, having a 
pattern of noncompliance.
    The April 30th deadline is fast approaching for that 
report. I hope that reality is contained in the report.
    Finally, President Xi is on a tear, crushing civil society 
with his new draft law and crushing religious freedom, and even 
the churches--the Patriotic Church and the others that have 
worked in cooperation with the government are finding that 
their buildings are being demolished, their pastors are being 
incarcerated.
    The G-20 will meet in Hangzhou in September. Our hope is 
that the President--and that is right where the crosses are 
being taken off churches, the bulldozing of churches is 
occurring--that the President will raise these.
    The sinofication of religion by Xi Jinping, announced last 
year and just most recently in a speech he made, is all about 
all the religious bodies having no contact outside the 
country's borders, and secondly and ominously, that everybody 
of faith has to serve the Communist Party. That will destroy 
religion or at least it will attempt to do it. If you could 
answer this. Thank you.
    Mr. Blinken. First, let me just express my own 
appreciation, the department's appreciation, for your personal 
leadership on these issues and the focus you brought to them. 
It makes a huge difference around the world and, indeed, I've 
heard in places I've gone that you've been there first and have 
been putting the spotlight on these issues and it really does 
make a huge difference.
    With regard to trafficking in persons, I want to assure you 
we will do our very best to produce a gold standard report this 
year. We are working on it very hard. We've heard concerns that 
were expressed last year.
    We've looked to makes sure that the process internally is 
as strong and effective as possible to produce the best 
possible report. People are working very hard on it and we hope 
that that is the conclusion you'll come to when you see it.
    With regard to Vietnam, I was just there and indeed met 
with a number of civil society activists, lawyers. We raise 
both individual cases and systemic problems that are--that 
remain at Vietnam at the highest levels on a regular basis.
    I can't talk to the President's schedule at this point but 
I am confident that he will be raising these issues. And I met 
with, I think, some of the same people that you've seen who are 
extraordinarily brave in what they're doing every single day.
    With regard to parental/child abduction, I was also just in 
Japan and raised this with foreign minister, with the vice 
foreign minister, with other senior officials and we have 
concerns about Japan's implementation of their commitments 
under the Hague Convention and that is something that I know 
you've been very, very focused on. We are working on that.
    Mr. Smith. And would you yield briefly?
    Also, those that were left behind from the date of 
ratification.
    Mr. Blinken. Yes.
    Mr. Smith. Those cases are heartbreaking and multi-yeared.
    Mr. Blinken. Yes, absolutely. We are focused on those as 
well as the cases that have arisen after the ratification.
    And then with regard to China, we very much share the 
concern that you expressed. We see across the board a crackdown 
on human rights and civil liberties.
    We've seen a crackdown against lawyers. I've met with a 
number of lawyers the last time I was in Beijing in January. I 
heard directly from them what that community is experiencing.
    I've met with religious leaders as well and have heard 
what's happening there. The laws that you refer to, we've been 
very much engaged on them whether it is the NGO law, the cyber 
security law, the national security law, or the 
counterterrorism law and we have real concerns about the 
substance of the laws as well as the way they may be 
implemented.
    The NGO law, as you know, they've moved the enforcement of 
that law to the Ministry of Public Security, which sends a 
terrible signal about how they see NGOs, which are actually 
acting to the benefit of China and its own people. So we share 
those concerns. I just want to assure you we will continue to 
put the focus on them and do what we can to make progress.
    One aspect of this is not just us but us bringing together 
other countries to express concern because there is some 
strength in numbers. At the Human Rights Council in Geneva we 
got a dozen countries to sign a statement expressing their 
concerns about the evolution of human rights and civil 
liberties in China.
    These things over time have an effect and, you know, we 
went through decades of Cold War with the Soviet Union. Members 
of Congress played leading roles in putting that spotlight on 
the Soviet Union and its human rights abuses. And for decades 
it didn't seem like anything was happening. There was no 
change, and then there was. So I think keeping at it as you are 
and as we are trying to do can make a difference. Thank you.
    Chairman Royce. For that to happen the administration needs 
to change its position on our legislation--myself and Mr. 
Engel's overhaul of the Broadcasting Board of Governors with 
the same mission--that Radio Free Europe, Radio Liberty used to 
have during that period of time. We need to get back to 
broadcasting that information in to these countries where a 
totalitarian system prevents people from having free access, 
either on the Internet or radio or television, to the truth.
    We go now to Mr. Gregory Meeks of New York.
    Mr. Meeks. Thank you, Mr. Chairman.
    Thank you, Mr. Secretary. China's economy has entered a new 
phase. It has to contend with slower growth for the first time 
in decade and we should expect China to manage this shift with 
domestic and international actions that are nationalistic and 
even provocative. I am convinced that our reactions should be a 
deepening of our ties regionally and multilaterally. As we do, 
it is critical that we remember that some of our strongest 
partners in the Western Hemisphere are also strong partners in 
the Pacific realm and that we should build upon those 
relationships to work together in Asia.
    And there is no question in my mind that economic and 
diplomatic engagement is our strongest means of influence 
globally and that certainly is the case in Asia. And I don't 
think militarily, when I consider any rise in tensions in the 
region as some do--I think about economic engagement instead, 
global rules and investment in cultural exchange.
    In fact, oftentimes people are looking at it and they say 
China--well, I think TPP and the last I looked China is 
actually not a part of TPP. So when we talk about TPP and China 
a threat as we do TPP, well, TPP is actually a counter to China 
and hopefully will get China to then adhere to global standards 
and rules which they may not, which is more reason why we 
should do TPP because it is leveling the playing field for 
businesses with strong rules in place where they were weak or 
nonexistent.
    But my question is from some of my colleagues that I, you 
know, hear issues back and forth as we debate this issue that 
even an agreement like TPP, that has high standards as you 
talked about, is only as good as its implementation and 
enforcement and that is what I keep getting back.
    For example, I even have some concerns about governments 
that developed state-owned enterprises to avoid living up to 
their TPP commitments and localization requirements that limit 
the competitiveness of U.S. companies' all over dollar 
security.
    So my question would be, first, how can the administration 
ensure that our TPP partners adhere to the rules of TPP, should 
we get it done, because that is always a question that some 
have. So how would we do that?
    And secondly, you know, I think we do have to make the 
geopolitical--there is a geopolitical argument to be made. 
Geopolitically, what happens in the region that we are so 
concerned about if we don't do TPP?
    Let me just ask those two questions first.
    Mr. Blinken. Thank you very much, Congressman.
    First, I think you're exactly right about the potential 
magnetic pull of TPP on countries that are outside of it 
including China. It so happened that I was in the region when 
the agreement was concluded and I was in Japan the day it was 
actually concluded. The Japanese were extremely excited because 
their own leadership had helped bring us to that point--Prime 
Minister Abe.
    The next day I was in South Korea. The first question I 
heard I heard was when can we join. The day after that I was in 
Beijing and what I saw was quite striking.
    They've done, if not a 180-degree turn at least a 90-degree 
turn including in state party media, saying oh, this is 
something that could benefit us because they don't want to be 
left behind.
    But, of course, to get in they have to raise their game. 
They have to go to the high standards, not a race to the 
bottom. Environment, worker protections, intellectual property.
    So this has the potential to pull countries up, not create 
a race to the bottom, including with China. Second, you asked 
very, I think, appropriately about enforcement, and Congressman 
Sherman brought up a very important point a moment ago some of 
the concerns we've had with past trade agreements including on 
rules of a region. I think that is a very well taken point. 
Unlike previous agreements, TPP actually includes a rule--a 
clear rule on rules of a region.
    We want to make sure that parties that are not part of TPP 
can't go to another country, have a few things done and then 
have the product benefit from TPP's rules. So, for example, 
China finishing something in Vietnam--that is exactly why we 
insisted this rule be part of the effort.
    But it has to be implemented and everything else has to be 
implemented. That's exactly why we've asked in our budget for a 
significant portion of resources to go to implementation. We 
want to make sure that it is done seriously.
    Finally, I also agree very much with you that, look, we can 
debate the economic merits of TPP and no trade agreement is 
going to be perfect. I think that the larger challenge that we 
face is 95 percent of consumers live outside the United States. 
We have to reach them, and the question is how are we going to 
do that, under what rules, and who writes those rules? And I 
think we are always better off, even if imperfect, if we are 
the ones doing it as opposed to letting someone else do it. 
That's more likely to benefit our companies and workers with a 
level playing field and make sure that the standards are high, 
not low. But we can debate the economic merits of it.
    Strategically, though, it sends a very important message. 
It sends to our partners in the region we are there to stay. 
It's not just a security issue that may come up and a challenge 
that may arise that gets our attention and then we lose our 
focus. We are tied to you economically as well as through 
security considerations. It has, again, this potentially 
magnetic pull on countries outside the agreement who want to 
join it to lift their standards. And it sets the standard for 
the values that we'd like to see throughout the region. If we 
don't have the agreement we jeopardize all of those interests.
    Thank you.
    Chairman Royce. We go to Mr. Dana Rohrabacher from 
California.
    Mr. Rohrabacher. Thank you very much.
    Mr. Chairman, and I appreciate your leadership, Mr. 
Chairman, and the fact that you have spent considerable time 
and effort focusing on these specific issues.
    And Mr. Secretary, I am a bit concerned maybe not about 
specifics as about as much as your admirable optimism. May be 
something that is admirable but it is also of concern to those 
of us who think things maybe are more serious than your 
optimism suggests.
    Spratly Islands is not--I hope it can be taken care of in a 
consistent way is what you and Chairman Royce and others have 
tried to put forward as a game plan that would put them into a 
position or pressure the Chinese into a position that would not 
permit this type--what I consider to be aggression--aggression 
of the world order because you had no sovereignty over the 
Spratly Islands and now you have a claim by a dictatorial 
government in Beijing over a hunk of territory in the middle of 
the most important trading patterns in the world.
    Japan and Korea are ultimate allies in that area--seem to 
be getting second shrift on this and I will have to say that 
this should be of great concern--a greater concern to us than I 
believe that the plan that is set would suggest because it is a 
pattern.
    Spratly Island is not just taking--take on its own I would 
agree with a less aggressive approach to the Chinese. But 
instead, this is part of a very alarming pattern. The Chinese 
still make major land claims against India, for example.
    I think their land claim against India is a big as Texas. 
You couple Spratly Islands with that, couple it with the fact 
that the Chinese are all over the world making deals with 
corrupt dictators in order to fence in the resources necessary 
for an industrial society, meaning cutting us off.
    We have--we still have--basically for those of us who are--
I think that the two-child policy still maintains the mass 
slaughter of innocent children in the womb and if not that--if 
you don't accept that about abortion at least you accept the 
fact it is a violation--an attack on women's rights to decide.
    And, of course, you still have the Chinese brutally 
suppressing the Falun Gong and engaged in the murder of 
prisoners in the sale of organs.
    So we are talking about a monstrous pattern here and the 
Spratly Islands should only be sort of the icing on the cake of 
how alarming this should be.
    So I would hope that--and by the way, during this whole 
time that I am talking, while these patterns have been going 
on, we have permitted them to make a massive profit in their 
relationship with us economically. Now, again, you've made your 
case on the Pacific trade agreement.
    It might give them some thought. But we are not withdrawing 
any of their ability to come here and make the profit they're 
already making.
    And one last thought, and that is I think that we ought to 
be more concerned about Japan and South Korea, but especially 
Japan, than we are about trying to remain in a stable 
relationship with China.
    And my question for you, while I still have a couple 
seconds left, and that is do we or do we not support President 
Abe's efforts to introduce him a new factor into the Pacific 
which might deter the Spratly Islands-type operation, meaning a 
rearming of Japan?
    Do we support that? And, quite frankly, I think Japan has 
been our best friend through this entire Cold War, never 
faltering. Maybe we should make sure we make it a more equal 
relationship with Japan and take Abe up on his answer.
    Mr. Blinken. Thank you very much.
    First, I'd like to just say with regard to optimism, I 
think it just may be an occupational hazard. But I appreciate 
the comment.
    Two things--first, let me also raise--quickly say that the 
various aspects of China's policies that you refer to we share 
your view and object to them. It was an improvement to go from 
a one-child to a two-child policy. But we object to any 
limitations that a government would impose.
    Second, we've called for the release of the more than 2,000 
Falun Gong prisoners in Chinese jails as well as other people 
who are repressed for religious views as well as political 
views. The Chinese have said that they have stopped the organ 
harvesting policy of prisoners as of last year. We have to see 
if that is actually being implemented. But they have apparently 
made a change in that policy.
    With regard to Japan and Korea, Congressman, we couldn't 
agree more. These countries--these two countries--are at the 
heart of everything we are doing in the region and I have to 
say from my experience at least not only over the last 7 years 
but particularly in this job over the last year where I've made 
four trips now to Japan and Korea, in my judgment at least the 
state of our alliances has never been stronger.
    We have worked very hard in both countries to strengthen 
what we are doing with them. With Japan, we have a major 
achievement with the revision of the defense guidelines that 
are now allowing Japan, along with the changes that it is made 
in its own laws, to play a much more significant role 
militarily throughout the region.
    This is something we worked very hard to achieve. It's 
going to allow us to expand our cooperation on everything from 
new realms like cyber and space but also intelligence 
surveillance and reconnaissance, missile defense, maritime 
security, logistics support, peacekeeping operations, 
humanitarian assistance--actually all of that as a result of 
this agreement.
    We have a new host nation support agreement, as you know, 
where Japan is contributing significantly to the support of our 
forces there. And throughout the region we are working more 
closely than ever with them.
    With the Koreans we have now an agreement that is 
conditions-based on the transition during wartime of 
operational control that we worked very hard on that.
    We got another host nation support agreement from them for 
5 years to support the presence of our forces there. We have a 
trilateral information-sharing agreement between us, Japan and 
Korea and I've worked very hard personally to build a 
trilateral cooperative relationship with us, the Japanese, and 
the Koreans because the three of us working together on these 
issues are a very significant and powerful force.
    So we share the view that these two countries are at the 
heart of everything we are doing. Those two alliances are our 
most important and increasingly we are actually managing to 
work together.
    Ms. Ros-Lehtinen. Thank you so much. Thank you, Mr. 
Rohrabacher.
    Mr. Sires of New Jersey.
    Mr. Sires. Thank you, Chairlady.
    You know, I am from New Jersey and we are a big 
pharmaceutical state, and I am very concerned about what goes 
on with the intellectual properties in this part of the world. 
It's not just stealing technological and intellectual 
properties but it is also some of the biggest research 
companies that we have in our state are constantly complaining 
that we don't seem to do enough about stopping the stealing of 
our intellectual properties.
    And now we have a couple of treaties coming up. I just want 
you to reassure me so when I go back and speak to these 
pharmaceutical companies that we are doing everything in our 
power to prevent this.
    I mean, so can you ease my pain here?
    Mr. Blinken. I hope so, Congressman. I do want to assure 
you this is an area of intense focus. It has been. It will 
continue to be for the duration of this administration. We have 
different agencies in the government that are intensely focused 
on this. We've made it a mission to both elevate intellectual 
property rights standards across the board, including through 
trade agreements like Trans-Pacific Partnership which would 
have the highest standards on intellectual property 
protections, as well as making sure that we enforce these 
protections.
    With China as well, one of the things that we've spent a 
lot of time on is the deep concern we had with the use of the 
cyber realm to steal trade secrets and to use cyber for 
commercial gain. This is an issue that the President engaged 
directly with President Xi on and we got an agreement with the 
Chinese that they will not do that. Now, obviously, that has to 
be enforced and implemented. But we are looking at that very 
vigilantly.
    At the same time, throughout the region and around the 
world we are trying to stand up every day for enforcing the 
intellectual property rights of our companies in every 
industry, including the pharmaceutical industry.
    So this is very much at the top of the administration's 
agenda and I think when I hear my colleagues from Treasury, 
from Commerce, from USTR, they are intently focused on this.
    So I do want to give you that assurance we are doing 
everything we can.
    Mr. Sires. Thank you.
    And I know North Korea keeps invading our computers and our 
systems here. I was just wondering, are we reacting back or are 
we just trying to put up walls so they can't do it?
    I mean, there's got to be a price to be paid for what 
they're doing.
    Mr. Blinken. We've made clear that not only are we 
strengthening every possible defense but that we reserve the 
right to respond at a time and place of our choosing in a 
manner of our choosing so we are looking at a variety of ways 
of responding to any cyber provocation.
    Mr. Sires. You sound like Donald Trump. Thank you. I don't 
have any more questions.
    Mr. Connolly. Would my friend--are you----
    Mr. Sires. Yes, I'll yield to you.
    Mr. Connolly. I thank my friend.
    Welcome, Mr. Blinken. I wanted to just follow up on my 
friend, Mr. Sherman's, statement against TPP and give you an 
opportunity.
    So let's say we pull the plug on TPP. Either the 
administration says we give up, you're right, it is flawed, or 
we in Congress decide there's no way we are going to give this 
our approval ever. What happens in a region to which we are 
pivoting and where China has its hungry eyes on trade 
relationships and economic ties as well?
    Mr. Blinken. Thank you, Congressman. I think a couple 
things happen.
    One is that in the immediate we'll lose market share and 
the trade barriers that are high for our workers and our 
products will remain where they are and maybe they'll even get 
higher.
    Second, we run the risk that other countries will try to 
take the mantle in writing the rules for how trade goes forward 
and I can almost guarantee you that if we are not the ones in 
the lead of that effort those rules will not be advantageous to 
our workers and to our companies and they certainly will not be 
advantageous to the standards. We want to set the highest 
possible standards when it comes to protecting labor, 
protecting the environment, protecting intellectual property, 
and good governance.
    So I think we are at real jeopardy, potentially, if we 
don't go forward in seeing an environment turn against our 
interests when, to the contrary, this is an extraordinary 
opportunity.
    Again, we have in the region, as people have pointed out, 
close to two-thirds of the global middle class by 2030. That 
has extraordinary potential as beyond what we see today as an 
export market for the United States.
    Mr. Connolly. Just one follow-up point. We hear lots of 
people rail against China and its trading practices and 
currency manipulation and so forth. For the record, do we have 
a free trade agreement with China?
    Mr. Blinken. We are working on a bilateral investment----
    Mr. Connolly. Do we have a----
    Mr. Blinken. We do not currently have a bilateral----
    Mr. Connolly. We do not have a free trade agreement with 
China?
    Mr. Blinken. So no. But we are working on a bilateral----
    Mr. Connolly. But you can't blame free trade in the case of 
China, since we don't have a free trade agreement. Is that not 
correct?
    Mr. Blinken. Well, I think it is--as you know--a very 
complicated picture over the last 30 or 40 years.
    I think if you look at the displacement in manufacturing, 
for example, over the last four or five decades, and something 
that we are deeply concerned about because of the impact that 
it has on our fellow citizens, much of this, of course, 
predates any of the free trade agreements of the 1990s. This 
started, really, in the 1970s. Technology--robotics--is 
probably more responsible for those developments.
    That said, it is vitally important that in the agreements 
we reach that the standards, particularly for protecting 
workers, are the highest possible and if the United States is 
not in the lead in forging those agreements those standards are 
not going to be the highest possible.
    Mr. Connolly. Thank you, and thank you, Ms. Chairman.
    Ms. Ros-Lehtinen. Thank you, Mr. Connolly, and I will move 
to Mr. Chabot of Ohio.
    Mr. Chabot. Thank you, Madame Chair.
    Let me begin with Taiwan, Mr. Blinken. Taiwan is going to 
be swearing a new President in May. The DPP will be coming back 
into power.
    Taiwan is, I believe, a very important U.S. ally and I 
would also expect the PRC in all likelihood to act up to try to 
throw its weight around. They are, after all, a classic bully. 
They want to show their displeasure, I think, in this election. 
They still have 1,600 missiles pointed at Taiwan. As Mr. 
Rohrabacher had mentioned, they're in the process of building 
islands, to the great dismay of all their neighbors.
    They're militarizing those islands now, and this is all 
occurring at a time when this administration unfortunately is 
reducing or trying to reduce the size of our military, 
including our Navy, which I think is just a terrible idea.
    We should, I think, clearly, first of all, make sure that 
Taiwan has a sufficient military and modernize that they are 
able to keep China from acting out.
    I think the only way China reacts is if they think that 
Taiwan is weak and that the United States lacks the resolve to 
defend Taiwan.
    What would you say on behalf of the administration to 
reassure Taiwan that the United States will have its back?
    Mr. Blinken. Thank you very much, Congressman.
    First, I think Taiwan has given the world a very vivid 
demonstration of what a democratic election is and what a 
democratic transition is.
    Mr. Chabot. I agree.
    Mr. Blinken. That was a very powerful message.
    Mr. Chabot. Very good point. I agree.
    Mr. Blinken. I met with the President--the new President. 
She came to visit Washington this past summer. We had a very 
good meeting with her at the State Department and we have 
strongly encouraged the Chinese to engage with her and with 
Taiwan in a manner of mutual respect, with flexibility to try 
to build on the positive developments in cross-strait relations 
over the last decade or so. We hope the Chinese will do that.
    Second, we very much agree with you that what has given 
Taiwan the confidence to engage with mainland China is the 
support from the United States, including arms sales. We have 
wanted to make sure, as have previous administrations, that 
Taiwan could not be coerced into doing things against the will 
of its people. I think we've notified something like $14 
billion in arms sales since 2010. We continue to look very 
actively at that. With regard to our own posture in the region, 
as I said earlier, we now have approaching 60 percent of our 
Navy in the region. We take very seriously that Taiwan must 
feel confident if it is to engage from a position of strength 
with the mainland.
    The other thing I think is important, and I know you've 
been a strong advocate for this, is we want to make sure that 
Taiwan and the talents of it is people are able to be employed 
around the world against global challenges. And so part of that 
is making sure that Taiwan can be represented in international 
organizations and we've been working very hard on that, to make 
sure that in organizations where recognitions of state is not 
required they be allowed in as members and where it is that 
they be able to participate irrespective of whether their 
statehood is recognized.
    So across the board we've been working to strengthen our 
ties to the people of Taiwan and support its efforts.
    Mr. Chabot. Okay. Thank you.
    Let me turn to another topic. I don't know that we've 
discussed Bangladesh at any length this morning. I think they 
clearly deserve more attention than they often have received, 
either by this administration or just in a whole range of 
things. But, first of all, as we all know, an election was held 
a while back and Sheikh Hasina was reelected, of course. 
Khaleda Zia and her party boycotted the election and so the 
political situation is, I think, a bit iffy there.
    But let me ask you this. Bangladesh has long been 
considered a moderate Muslim country and resisting Islamic 
radicalism. There have been a couple of incidences just within 
the last week where we've seen a gay activist who was murdered. 
We've seen an English university professor publicly murdered 
and it is believed that these are linked to extremist Islamic 
intolerant type groups. Could you comment on that and what 
could be done about it?
    Mr. Blinken. Yes. I am glad that you're putting the focus 
on that because that is a concern that we very much share. 
We've seen a series of terrorist attacks in Bangladesh over the 
last several months including the ones that you referred to, 
which Daesh or al-Qaeda have taken credit for.
    Now, the government has sometimes claimed that these 
attacks were actually the work of the opposition in one fashion 
or another. But what we've seen, based on the evidence to date, 
is in fact that extremist groups, whether they are indigenous 
or whether they really are affiliated with ISIL or Daesh, are 
responsible and this gives us concern about the potential for 
ISIL, for Daesh, to take root in Bangladesh which, as you 
rightly pointed out, has been an important country in terms of 
a Muslim majority country with a moderate orientation that can 
be an important player in dealing with the problem of violent 
extremism.
    So as a result of that, we have been both engaging with the 
government on this problem but also, for example, with India, 
given the relationship between India and Bangladesh, to raise 
the concern and to try to work together with them on countering 
violent extremism before it takes root in Bangladesh. That's 
the last thing we want.
    Mr. Chabot. Thank you.
    Ms. Ros-Lehtinen. Thank you, Mr. Chabot.
    And now we'll turn to my good friend, Mr. Deutch of 
Florida.
    Mr. Deutch. Thank you, Madam Chairman.
    Deputy Secretary Blinken, thanks for being here today. 
Thanks for you service to our country and thanks for always 
being accessible to this committee. We appreciate it very much.
    I would like to get back to talking about China. There's 
been a lot of discussion this morning about trade. I'd actually 
like to shift to foreign direct investment and in particular 
two areas: The area of security and the area of reciprocity.
    Through One Belt, One Road, and the Asian Infrastructure 
Investment Bank, China has demonstrated a significant interest 
and willingness to invest abroad both in private and public 
capacity. But the domestic ownership requirements in China and 
some security review that takes place I referred to, I think, 
as an opaque security review, in China continues to frustrate 
American investors there. So I'd just like to know, as they 
pursue more outlets for foreign investment, what are our 
options for encouraging reciprocity? Why don't you answer that 
first and then I'll get to the security issue.
    Mr. Blinken. Thank you.
    Two things on that, Congressman.
    First, with regard to their investments abroad, just on the 
first part of that equation, as a matter of principle, 
investments particularly in infrastructure in various parts of 
the world--Africa, Latin America, Central Asia, you name it--
are welcome and needed.
    But what has concerned us with regard to China is that 
those investments be made to high standards, not low standards, 
and again, worker rights, environment, intellectual property, 
good governance.
    So they've established the Asia Infrastructure Investment 
Bank. We are not a part of that, although if the bank now 
operates to those high standards we'd welcome finding ways to 
work with it and other existing institutions.
    But the key is those standards, and what I think we found 
with China investing abroad is that sometimes the bloom comes 
off the rose after a while because what tends to happen is this 
is usually commodities driven. They're trying to get 
commodities out of the countries that they're investing in. 
They do invest in infrastructure. They put a lot of money in. 
They have a lot more state money than we have to invest. But 
typically they import hundreds of Chinese workers to actually 
build the projects, as you know, and that doesn't sit well 
necessarily with the host governments.
    The quality of what's built may not be up to standards and 
that tends to turn things a little bit so I think they have to 
look at that a bit carefully.
    When it comes to our own investment and ability to invest 
in China, we are working across the board to get much greater 
access to get rid of some of the restrictions that inhibit our 
ability to do this.
    This is very much part of our agenda with them and part of 
the bilateral investment treaty that we are seeking to 
negotiate is focused on exactly that.
    Mr. Deutch. Great. Then on the--and particularly on the 
issue of Chinese direct investment in the United States, the 
Committee on Foreign Investment in the U.S.--CFIUS--has turned 
down a number of high-profile Chinese acquisitions on national 
security grounds.
    Other deals fell apart and they were abandoned in 
anticipation of difficulties with CFIUS. But CFIUS only reviews 
a small number of transactions every year and I have two 
questions.
    One, how might CFIUS alter their approach if there is a 
bilateral investment treaty with China and I guess the bigger 
question is with the really significant amounts of capital that 
the Chinese are looking to invest in the United States, does 
the CFIUS process still work?
    Is it sufficient, given what might be coming, to safeguard 
our national economic security interests, the cyber interests--
all of the sorts of things that we've been discussing already 
here today. Does this creation that has been around since the 
mid-70s still work or should we be looking at this in a new 
light?
    Mr. Blinken. I think it is an excellent question and one 
that deserves a lot of thought. I think the first point that 
you made is important. The CFIUS only winds up applying to a 
very, very small percentage of the investments that are made or 
sought to be made. So we are talking about a pretty narrow 
universe to begin with.
    Second, as a matter of principle, we welcome investment. 
This is good for our companies. It's good for all sorts of 
industries and it is something that as a general proposition we 
want to encourage. But it is vitally important that when it 
comes to national security we remain vigilant and that is what 
CFIUS is designed to do.
    Now, I think you're right to raise the question about 
whether in the event of a bilateral investment treaty the 
investment flow goes up significantly, is that going to put 
further strain on the process and do we need to look at it. 
That's something I'd like to come back to if I can because it 
is a very good question that I need to think through a little 
bit more.
    Mr. Deutch. Great. I would welcome that and happy to 
discuss that further with you, too. Thank you very much. 
Thanks, Madam Chair.
    Ms. Ros-Lehtinen. Thank you, Mr. Deutch.
    Mr. Poe of Texas.
    Mr. Poe. Thank you, Madam Chair. Thank you, sir, for being 
here.
    I have a couple observations and I want to spend most of my 
time talking about China.
    When I visited with Admiral Harris at Pacific Command I 
asked him this question--of these five entities--Russia, China, 
North Korea, ISIS, and Iran--I think those are threats to the 
United States--which of those five do you think is the most 
troubling at this point? And he responded North Korea. Would 
you agree with that assessment or not? I just need a yes or no.
    Mr. Blinken. Yes.
    Mr. Poe. Okay. I want to talk about China. China--they have 
1 billion more people than we do in the United States. I think 
some Americans don't realize how populated China is. And some 
facts about China--they are the number-one recipient of poached 
ivory from Africa. The elephants are dying off. They're being 
killed in Africa and the number-one recipient is China.
    They are thieves. They steal our intellectual property. 
Cyber attacks--I believe they're responsible for those. They're 
bullying Asia, trying to make new sovereign territory in the 
South China Sea and then claim the area around it. They're 
helping Pakistan with intercontinental ballistic missiles.
    And then you get to human rights--they're the worst 
offender I think in the world. They persecute Christians and 
other religious minorities and then they have this practice of 
putting people they don't like, like the Falun Gong, in prison 
and charging them with trumped up political crimes and then 
harvesting their body organs and selling those on the 
marketplace. That's probably the worst type of crime in the 
world, in my opinion.
    And, of course, we don't say this anymore because it is not 
the right thing to say but they are still a Communist nation 
and I think that is who we are dealing with. And we talk about 
pivoting to China and whether they're a threat and what we are 
doing about it and you talked about how we are increasing and 
focusing militarily.
    Let me just show you a few posters here. Here--I don't know 
if you can see this or not. I know you can't probably see that 
behind all this is China in the South China Sea and the 
Philippines. In 1999, this is the relative strength of China in 
the red and the United States in the blue. It's about equal.
    Let's go to the year 2015. This is the Chinese buildup with 
ships, submarines, and planes and the United States' military 
strength in the area in 2015--I got this from Pacific Command--
is about the same.
    And Pacific Command expects that in 2020--if I can get the 
poster--it is going to look like this--that China will have all 
of these planes, intercontinental ballistic missiles, ships, 
submarines, and the United States' strength in the area is 
still going to be just about the same.
    Without going into the details of how much of everything, 
do you agree that that is what is occurring in south China?
    Mr. Blinken. Thank you, Congressman.
    We've certainly seen a significant buildup in China's 
military capacity over the last couple of decades and in recent 
years.
    Some of that, I guess, on one level is not surprising as 
China grows and is more engaged in the region. It wants to 
protect its expanding interests and what we've seen though are 
two things.
    We've seen an investment in these new capabilities which I 
think the chart shows very well. Everything from cruise 
missiles, short and medium range ballistic missiles, high-
performance planes, integrated air defense and, of course, the 
Navy.
    They're investing in those capabilities. They're also 
engaged in trying to transform what had been a mass conscript 
ground-based force into a higher tech force as well.
    Mr. Poe. That's right. I don't even include the number of 
military soldiers and sailors and airmen in these poster.
    Mr. Blinken. Yes.
    Mr. Poe. Let me----
    Mr. Blinken. So but just to get to your, I think----
    Mr. Poe. So what is our response? That's my question.
    Mr. Blinken. Two things. First, of course, their budget is 
opaque. It's hard to know exactly what they spend on the 
military.
    Mr. Poe. What is our response? I am limited on time. What's 
our response?
    Mr. Blinken. So our response----
    Mr. Poe. This is taking place. What is the U.S. response to 
this, if anything? That's all I am asking you.
    Mr. Blinken. Sure. A few things. First, our military budget 
remains roughly three times what theirs is and they're, of 
course, starting from a much lower base. So that buildup is 
significant but they're trying to match something that is 
started at a much higher level and continues to invest at a 
significantly higher level. Second----
    Mr. Poe. But this is our presence in the area over here.
    Mr. Blinken. It'll be about 60 percent of our Navy by 2020. 
Our technological capabilities, our experience, our capacity 
remains greater by far than any nation on earth including China 
and, again, I would defer to my military colleagues. I don't 
believe that is going to be challenged anytime soon.
    Mr. Poe. So you're saying that even though this is our 
presence in the area--the theater, I think, is the word--that 
it really doesn't alarm you because we are building up our 
capacity in the future?
    Mr. Blinken. No, I would say that we are being very 
vigilant about the growth in China's military capacity. We are 
making sure across the board when it comes to any country that 
our own country remains unmatched.
    Mr. Poe. Okay. If I may have one question, and go back to 
North Korea, the biggest threat supposedly in the area. North 
Korean intercontinental ballistic missile capability--they're 
developing the concept not land to land--not sending something 
from North Korea over to Texas--their idea is build submarines 
and put intercontinental ballistic missiles on the subs and 
then float them around the Pacific and be the threat that we 
are. Is that a fair statement of what the North Koreans are 
trying to do?
    Mr. Blinken. Yes, that is part of their strategy.
    Mr. Poe. All right. Thank you, Madam Chair. I appreciate 
getting this time.
    Ms. Ros-Lehtinen. Thank you, Mr. Poe.
    Mr. Cicilline of Rhode Island.
    Mr. Cicilline. Thank you, Madam Chair. Thank you, Mr. 
Secretary, for your service and for being here today.
    I want to turn again to the issue of China and after 
President Obama and President Xi met in Washington on the 31st 
of March, the two leaders affirmed cyber commitments that were 
announced in September 2015 and agreed to ensure their full 
implementation. Five days after that, Admiral Rogers, the 
commander of the U.S. Cyber Command, testified to Congress 
that, and I quote, ``Cyber operations from China are still 
targeting and exploiting the U.S. Government, defense industry, 
academic and private computer networks.''
    So my first question is, are you aware of cases in which 
the Chinese Government may have supported cyber-enabled theft 
of intellectual property from U.S. targets since the 
announcement in September 2015 and how is the State Department, 
in conjunction with the rest of the U.S. Government, addressing 
these challenges?
    Mr. Blinken. Thank you very much.
    I think there are two things going on here. It's not a 
surprise that countries try to get information about other 
countries and that goes on every day and it continues to go on, 
of course, from China in the direction of the United States.
    Where we've drawn a very bright line is on the question of 
using cyber technology to steal trade secrets for commercial 
advantage and a critical component of the agreement reached 
between President Obama and President Xi actually last fall and 
then reaffirmed is that China will no longer do that.
    Now, it said that. It made a commitment. It's reasserted 
that, reaffirmed that in the G-20 as well as directly with us. 
We now have to make sure that that in fact is the case and it 
is being implemented.
    So we are watching very vigilantly to see. I am not----
    Mr. Cicilline. But that is not my question. Has there--are 
you----
    Mr. Blinken. I am not personally aware of cases--of current 
cases of that but I am happy to go back and confer with Admiral 
Rogers.
    Mr. Cicilline. Great. Thank you.
    Next I'd like to turn to the issue of North Korea. In the 
wake of North Korea's recent nuclear weapons test and satellite 
launch, South Korean society has begun to reengage in the 
debate about developing its own nuclear weapons capability, 
even though, of course, Seoul relies on the U.S. nuclear 
umbrella. And I'd like to know whether you think there's 
support within the Korean Government for developing a nuclear 
capability and over the long term what should the United 
States' response be to this development?
    Mr. Blinken. You're right that that debate has reemerged in 
South Korea as a result of North Korea's provocations. 
President Park was very clear in statements that she's made 
that that is not the path that South Korea should or will take, 
at least under her administration.
    And we've tried to make clear to our allies and partners 
that it is not necessary because, to put it colloquially, we 
have their back with the nuclear umbrella and with every other 
means that we have to their defense.
    So we have not only reaffirmed that very solemn commitment 
to the defense of Korea, we have strengthened our own 
relationship and one of the things that we've done is now 
engaged in formal consultations with them on deploying the 
THAAD missile defense system to South Korea and they're 
developing their own missile defense system in cooperation with 
us. So we've been building up the defenses including for our 
partners and allies and, of course, we've also been going very 
hard at the North Koreans on the nuclear missile program.
    Mr. Cicilline. Thank you.
    And finally, Mr. Blinken, I'd like to turn to Malaysia. As 
you know well, there was significant concern about the upgrade 
of Malaysia to the Tier II watch list and I wondered if you 
could just speak a little bit to what progress Malaysia has 
made, particularly in the area of combating human trafficking, 
but in human rights as well as human trafficking since that 
time and whether or not we should--I mean, what progress has 
been made? I think you're aware of the controversy that is 
surrounding that change in their classification.
    Mr. Blinken. As you know, Congressman, we are actually 
working very actively right now on the new report for this--for 
the past year and so I can't speak to its conclusions because 
they haven't been reached.
    I can say generally with regard to Malaysia just over the 
past year some of the things we've seen. We have seen very 
significant and in fact unprecedented consultations between the 
government and civil society and international experts to draft 
regulations to implement the legal amendments that were passed 
by their Parliament at the very end of the last reporting 
period.
    And that would really empower the agencies to enforce the 
amendments that were reached. So that is positive. That doesn't 
mean its dispositive of anything we'll conclude but it is 
something we've seen over the last year.
    This would allow victims of trafficking to live and work 
outside shelters, which is a strong consideration. I know that 
we have remaining concerns about the conviction rate in 
Malaysia. That's something that we are looking at and that will 
factor in to the assessment and we need to continue to work 
with them to build their own capacity to investigate, to 
prosecute, to convict and we are doing that, for example, 
through IOM.
    We are funding some of those activities. So I would say I 
can't speak to you, obviously, about the conclusions of the 
report. We haven't reached them yet. I would say based on this 
we've seen some progress but that is not dispositive to the 
conclusion.
    Mr. Cicilline. Well, can I just ask with respect to the 
implementation of one of the biggest issues then, virtually no 
prosecutions.
    Mr. Blinken. Yes.
    Mr. Cicilline. So have you seen any progress on that? 
Enacting--it is one thing to enact and begin to implement but 
if it is not enforced it is sort of meaningless. Have you seen 
any progress on actual prosecutions?
    Mr. Blinken. I agree with you. I agree with you on that. I 
mean, enforcement is a critical piece of this. I am not aware 
of significant progress on the prosecutions but I can come back 
to you on that.
    Mr. Cicilline. Great. I appreciate it so much.
    Thank you, and I yield back, Mr. Chairman.
    Chairman Royce. Mr. Matt Salmon of Arizona.
    Mr. Salmon. Thank you.
    Mr. Blinken, first, let me just go on record as saying how 
I commend the administration for pursuing deployment of THAAD 
in South Korea. I think it is incredibly important.
    One of my frustrations is that many of these sanctions that 
we've done haven't really moved the needle with North Korea and 
I am not sure any other sanctions really will. I think that the 
one thing that will move North Korea is some flexing of the 
economic muscles by China and we've got to figure out a way to 
get them motivated because they haven't been--they helped us a 
little bit at the U.N., and I appreciate that with the 
multilateral sanctions. But they hold a disproportionate 
influence with North Korea than any of the rest of us or any of 
the other in the Six Party talks and we've got to influence 
them to do the right thing and get North Korea under control.
    Last weekend, China announced that it formed a consensus 
with Brunei, Cambodia, and Laos that the territorial disputes 
over some islands, rocks, and shoals in the South China Sea are 
not an issue between China and the Association of Southeast 
Asian Nations--ASEAN--as a whole.
    At the same time, China consistently relies on ASEAN's 
declaration on the conduct of parties in the South China Sea, 
citing its endorsement of consultations and negotiations to 
argue that it is not subject to the binding arbitration brought 
under the Law of the Sea Treaty by the Philippines.
    Can China have it both ways? Is China trying to sideline 
ASEAN in relation to the South China Sea maritime disputes and 
what's the administration's response to the quadrilateral 
consensus between China, Brunei, Cambodia, and Laos and what's 
the administration's position on ASEAN's role in resolving the 
maritime disputes?
    Mr. Blinken. Thank you very much.
    And first of all, I very much appreciate your comments on 
North Korea and agree very much with you that China has a 
unique role to play because of its unique relationship with 
North Korea.
    We are seeing some positive steps forward in terms of 
implementation of the Security Council resolution but it is not 
yet dispositive. So we are looking very carefully at that.
    I could not agree more with you as well that China can't 
have it both ways. It can't have it both ways in a number of 
areas. It can't be a party to the Law of the Sea Convention and 
then ignore or reject the provisions of that treaty including 
arbitration as an appropriate mechanism and the binding nature 
of any arbitration decision on the parties to that decision.
    So we would expect that China, as a party to the Law of the 
Sea Convention, once the decision is issued by the tribunal, 
will respect it. So it can't have it both ways there. It can't 
assert the Law of the Sea and not respect its decisions.
    Second, with regard to ASEAN, I think you're exactly right. 
We worked very, very hard to build up ASEAN as an organization 
to make sure that it created a space in which countries that 
individually might not have the confidence to take on difficult 
issues like the South China Sea might feel some greater 
strength in numbers and collectively.
    The President, as you know, had this historic summit with 
the ASEAN countries at Sunnylands just a few months ago. We are 
looking to ASEAN, as it did most recently at that summit, to 
express its support for these basic principles and we'd like to 
see that happen when the arbitration decision is issued as 
well.
    And by the way, on the agreement that you referenced with 
Brunei and Laos, I think there is a lot less there than meets 
the eye.
    Mr. Salmon. I hope so, and I hope that ASEAN really does 
step up to the plate when it comes to dealing with these 
maritime disputes and resolving them. I think the more they 
speak with one solid voice the better chance we have of 
resolving this without the conflicts that we hope we don't 
have.
    My last point is that I am very optimistic about our 
economic opportunities in the region and I am a strong 
supporter of TPP. But I would also like to see us further 
enhance our trade ties with India and as such I have introduced 
legislation in concert with Senator Cornyn pushing for India's 
entrance into APEC.
    What do you see as the obstacles to that getting done?
    Mr. Blinken. First, we welcome India's interest in joining 
APEC and we also welcome, and I've said this directly to my 
Indian counterparts, talking to them about how they see 
membership in APEC fitting into their own thinking about their 
economy, about trade, and the evolution that they would make.
    So I suspect we will have those conversations going 
forward. I also very much agree with the larger proposition 
that you cite about the importance of India and in particular 
the importance of trying to deepen and expand our own trade 
relationship with India and its own relations in the area.
    I think a few things just in terms of obstacles. First of 
all, the other members, of course, would have to agree. It's a 
consensus-based organization. The other thing I'll tell you and 
I think, you know, this is a consideration as well. We want to 
make sure that as countries join organizations like APEC that 
they are going to work to productively and cooperatively to 
uphold its rules and standards and to be productive partners in 
that enterprise. So that is one of the things we'll be talking 
to the Indians about. But the bottom line is we welcome their 
interest and will be talking to them about it.
    Mr. Salmon. Thank you.
    Chairman Royce. Mr. Daniel Donovan from New York.
    Mr. Donovan. Thank you, Mr. Chairman, and Secretary, thank 
you for your attendance and your testimony today.
    In February of this year, the U.N. came out with a report 
about Vietnam making prohibited purchases of weapons from North 
Korea. As the President and this administration is about to 
enter into a trade agreement should their avoiding and actually 
unlawfully purchasing weapons from North Korea be a 
consideration as we enter into an agreement with Vietnam?
    Mr. Blinken. We would be concerned with any country 
violating its obligations under the U.N. Security Council 
resolutions in terms of purchasing or making available to North 
Korea weapons, and if that is the case with Vietnam that is 
going to be a concern.
    We are being very vigilant about making sure the countries 
are not doing that.
    Mr. Donovan. And you also indicated about supplying North 
Korea with weapons. That same U.N. Council has indicated to us 
that Cuba is providing North Korea with illegal weapons. As the 
administration tries to renew relations with Cuba, should that 
be a consideration as we go forward?
    Mr. Blinken. Yes. As you know, there was an incident in 
which a ship that was transporting weapons that apparently 
originated in Cuba and seemed to be heading for North Korea was 
actually stopped by the Panamanians and weapons were found on 
board. The weapons were confiscated. The ship was finally 
returned to the North Korean ownership. There was, I think, a 
$700,000 fine that was paid. I think the captain was detained.
    We've come down very hard at the United Nations on this 
shipment, including putting a spotlight on it--putting a 
spotlight on Cuba's apparent role in helping to facilitate this 
trade in weapons. This is a real concern and we've been very 
vigilant about making clear that that is unacceptable.
    Mr. Donovan. And finally, Mr. Secretary, yesterday I met 
with steelworkers from my district. They're very concerned 
about China manipulating the steel market in the world.
    We've had, I think, zero growth in steel production in our 
country over the last 25 years. I think Europe's steel 
production is down about 12 percent and there's a fear that 
China is manipulating by selling steel below market price in 
order to box everyone else out.
    Is the State Department looking into that and what is the 
position of the administration?
    Mr. Blinken. Congressman, I can say generally two things. 
First, my colleagues in the Treasury, Commerce, and USTR are 
across the board very vigilant about trade enforcement 
generally and with regard to China specifically.
    We have, I think as you know, overall filed, I think, 20 
WTO enforcement complaints since 2009--the most of any country. 
And by the way, we've won all of the cases that have been 
decided.
    With regard to China specifically, and this is not in steel 
but this is more generally, just this past month they signed an 
agreement ending export subsidies as a result of a challenge we 
made to those subsidies at the WTO.
    A year ago, we won a challenge to compliance on high-tech 
steel duties that we had challenged them on and that 
contributed to a $250 million annual loss to our exporters. 
That ended as a result of the enforcement actions that we took.
    In 2014, there was a finding against China on duties and 
quotas on rare earths and tungsten. And finally, we issued--
this again was the result of an action that we took. And also 
in 2014 there was a finding of breach regarding unjustified 
duties on cars and SUVs--$5.1 billion worth of cars and SUVs 
sold. There, too, we got a decision.
    So I can't speak to the specific case that you referenced 
but I can promise you that I am sure my colleagues are looking 
at this very carefully and based on the record to date if there 
is something that is actionable we'll take action.
    Mr. Donovan. Appreciate that, Mr. Secretary, because I know 
the American steelworkers would appreciate it as well if you 
and the administration could look into that.
    Mr. Chairman, I yield back the rest of my time.
    Chairman Royce. Thank you very much, Mr. Donovan.
    We are at adjournment here. I do want to express our 
appreciation with the Deputy Secretary's time this morning and 
thanks for meeting with us after your recent trip back from 
Asia.
    As we've discussed, the United States as a Pacific power 
has tremendous interests in Asia. We have allies in Asia. So we 
look forward to working with you on issues like the North 
Korean sanctions that I suggested. We need full implementation 
on that and on the transition in Burma, on the new government 
in Taiwan--in Taipei. So many issues for us to continue to 
collaborate on and, Deputy Secretary, thank you again.
    Mr. Blinken. Mr. Chairman, thank you very much.
    Chairman Royce. We stand adjourned.
    [Whereupon, at 11:57 a.m., the hearing was adjourned.]

                                     
                                    

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