    [Senate Hearing 116-603]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 116-603

                           THE CORONAVIRUS AND AMERICA'S SMALL
                                BUSINESS SUPPLY CHAIN

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

                                    HEARING

                                   BEFORE THE

                          COMMITTEE ON SMALL BUSINESS
                              AND ENTREPRENEURSHIP
                              UNITED STATES SENATE

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 MARCH 12, 2020

                                   __________

        Printed for the Committee on Small Business and Entrepreneurship

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

            Available via the World Wide Web: http://www.govinfo.gov

                                  __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    43-665 PDF                  WASHINGTON : 2023

    -----------------------------------------------------------------------------------

                COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                         ONE HUNDRED SIXTEENTH CONGRESS

                                  ----------
                         MARCO RUBIO, Florida, Chairman
                  BENJAMIN L. CARDIN, Maryland, Ranking Member
    JAMES E. RISCH, Idaho                MARIA CANTWELL, Washington
    RAND PAUL, Kentucky                  JEANNE SHAHEEN, New Hampshire
    TIM SCOTT, South Carolina            EDWARD J. MARKEY, Massachusetts
    JONI ERNST, Iowa                     CORY A. BOOKER, New Jersey
    JAMES M. INHOFE, Oklahoma            CHRISTOPHER A. COONS, Delaware
    TODD YOUNG, Indiana                  MAZIE K. HIRONO, Hawaii
    JOHN KENNEDY, Louisiana              TAMMY DUCKWORTH, Illinois
    MITT ROMNEY, Utah                    JACKY ROSEN, Nevada
    JOSH HAWLEY, Missouri
                    Meredith West, Republican Staff Director
                     Sean Moore, Democratic Staff Director

                                C O N T E N T S

                                  ----------

                               Opening Statements

                                                                       Page

    Rubio, Hon. Marco, Chairman, a U.S. Senator from Florida.........     1
    Young, Hon. Todd, a U.S. Senator from Indiana....................     1
    Cardin, Hon. Benjamin L., Ranking Member, a U.S. Senator from
      Maryland.......................................................     5

                                   Witnesses

    Gibson, Ms. Rosemary, Senior Advisor, The Hastings Center,
      Arlington, VA..................................................     7
    Anderson, Dr. Gerard, Professor, Johns Hopkins University,
      Baltimore, MD..................................................    15
    Morrison, Mr. Tim, Senior Fellow, The Hudson Institute,
      Washington, DC.................................................    22
    Briscoe, Ms. Wynne S., Acting Director, The Small Business
      Development Center--Southern Maryland Region, La Plata, MD.....    30

                              Alphabetical Listing

    Anderson, Dr. Gerard
        Testimony....................................................    15
        Prepared statement...........................................    17
        Responses to questions submitted by Senator Rosen............    52
    Briscoe, Ms. Wynne S.
        Testimony....................................................    30
        Prepared statement...........................................    32
        Responses to questions submitted by Senator Rosen............    54
    Cardin, Hon. Benjamin L.
        Opening statement............................................     5
    Gibson, Ms. Rosemary
        Testimony....................................................     7
        Prepared statement...........................................    10
    Morrison, Mr. Tim
        Testimony....................................................    22
        Prepared statement...........................................    24
    Rubio, Hon. Marco
        Opening statement............................................     1
    U.S. Chamber of Commerce Small Business Council
        Letter dated March 11, 2020..................................    56
    Young, Hon. Todd
        Testimony....................................................     1

           THE CORONAVIRUS AND AMERICA'S SMALL BUSINESS SUPPLY CHAIN

                                  ----------

                            THURSDAY, MARCH 12, 2020

                          United States Senate,
                            Committee on Small Business
                                          and Entrepreneurship,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 10:35 a.m., in
    Room 428A, Russell Senate Office Building, Hon. Marco Rubio,
    Chairman of the Committee, presiding
        Present: Senators Rubio, Ernst, Young, Romney, Hawley,
    Cardin, Shaheen, Booker, Hirono, and Rosen.

      OPENING STATEMENT OF HON. MARCO RUBIO, A U.S. SENATOR FROM
                                FLORIDA

        Chairman Rubio. Thank you all for coming today, and I
    appreciate the witnesses being here on this hearing. The
    hearing will come to order. I am going to go out of order
    quickly because Senator Young has another related topic event
    that he has to be at and I wanted to recognize him just
    quickly. He wanted to say a few words on this topic and I
    wanted to make sure he was able to get on the record before we
    begin.

       OPENING STATEMENT OF HON. TODD YOUNG, A U.S. SENATOR FROM
                                INDIANA

        Senator Young. Well thank you, Mr. Chairman, for holding
    this important hearing, and I first want to get on the record
    and thank all our subject matter experts. I think if there is
    anything we legislative leaders ought to be doing, and more
    broadly our government leaders, is listening to the public
    health experts. So thank you so much to the experts in some of
    these discrete areas that will be impacted by the coronavirus.
        I do regret that in minutes I have another meeting that
    also pertains to this important topic. I just want to publicly
    express my intention to submit to the record some important
    questions I have for you related to the increasingly integrated
    supply chains that we now have between various enterprises. And
    I guess this situation has exposed that that creates certain
    vulnerabilities during times of what is now a pandemic. I have
    some questions related to supply chain mapping that I am hoping
    someone will be prepared to answer.
        And lastly, our reliance on foreign-made medical supplies
    is something that I think we are going to have to rethink over
    the course of the coming weeks, months, and really years. But
    it has certainly caused us to heighten awareness of this
    important issue.
        So your attention to those issues would be much
    appreciated. Thank you again, Mr. Chairman, for this
    opportunity to say a few words and for holding this important
    hearing.
        Chairman Rubio. Thank you. So we are going to begin and I
    am going to give the Ranking Member the opportunity for opening
    comments and then I will go to mine.
        Senator Cardin. I do not mind if you go first.
        Chairman Rubio. Well, he wants me to go first. Very nice
    people here. We work on a lot of stuff together.

    OPENING STATEMENT OF HON. MARCO RUBIO, CHAIRMAN, A U.S. SENATOR
                              FROM FLORIDA

        Chairman Rubio. Anyway, as I said, today's hearing really
    is timely, unfortunately, because of the challenges that we are
    now seeing, and I want to sort of bifurcate it into two steps.
    The first is what we can do, obviously, to help small business
    weather the coming storm that is going to be created by the
    fact that people are not going to be able to be together with
    one another in places, and that is obviously going to impact
    cash flows and the impact that has on employees, and in some
    cases the threat it poses to a business' ability to continue to
    function. And I think that is of immediate concern. That is the
    one thing we have got to deal with if we are triaging this
    problem right away.
        But I think we are beginning to see the outlines of a
    second problem, and that is what it means when your supply
    chain is disrupted. And we all just left a meeting of the
    entire Senate with leaders in our country and health care, and
    what is becoming evident and apparent is that one of the
    impediments to the widespread availability of testing is a
    supply chain unpredictability. It is not just the tests. If you
    do not have cotton swabs, if you do not have protective gear
    for the lab technicians or the basic ingredients needed for the
    test you are going to have a problem in conducting those tests.
        And from our perspective is the role that small business
    can play, structurally, now and for years to come, in ensuring
    that these sources of supply chain disruptions do not become a
    national threat to the country. A lot of it will be focused on
    China, because that is where a lot of this activity has gone,
    but it is not just China. If you are India, if you are South
    Korea, if you are a country that also makes these things, and
    you are facing this threat, you are going to hoard it. You are
    going to act in the best interest of your nation, and that is
    understandable. We need to start acting in the best interest of
    our Nation in these regards, and so that is important.
        Later today, if we can bring it here--because I believe we
    can--we have been engaged before last night in conversations
    with the White House, with Ranking Member Cardin and his team,
    with individual members of this Committee, with our
    counterparts in the House Small Business Committee, on what
    relief to small businesses should look like and how we can help
    them. And so hopefully later today we are going to have an
    opportunity to present it, and the crux of it, as I have
    already outlined to some, is taking the commitments the
    President made last night and funneling it through our 7(a)
    program and our community banks, because they are in the
    community, they have, through Community Advantage and other
    related programs as well, have the ability to process the paper
    on this.
        We are going to have to give a little flexibility. We are
    going to have to allow small businesses to use the funds they
    have borrowed to make payroll, to provide paid sick leave for
    employees that are hurt or employees that are sick or employees
    that, frankly, cannot come to work. We are going to have to
    give them the flexibility to do that. We want to make sure that
    the money is being lent is real and going to be paid back, but
    by the same token--and that is where the community bank process
    can help--but we also have to make it quick. These guys cannot
    wait 90 days to get these funds, and workers cannot wait 90
    days for the paid sick leave that these will give the small
    businesses an opportunity.
        I am not claiming this solves all the problems. It does
    help. If we are going to make that kind of commitment to small
    business I believe that it should be in a way that is most
    effective and responsible with the taxpayer money, but also
    most helpful to those small businesses.
        On the supply chain issue, I think the backdrop to our
    general economy, even before--and this Committee issued a
    report a year ago that warned about it--even before all of this
    is that we are dangerously reliant, in particular, on China for
    the production of critical goods, and that includes goods, as I
    have already outlined, that are needed to fight the
    coronavirus.
        And I think we rely on far more goods than we know, and
    part of the economic pain that is going to be inflicted on the
    country as a result of these disruptions will be directly
    related to disruptions in the supply chain, because of an
    outbreak that shut down factories that end up impacting the
    availability of important consumer goods.
        Just a brief review that our staff put together for this
    hearing, last year--and this is according to the Census
    Bureau--China accounted for 88 percent of electric hand drill
    and saw imports, 87 percent of air conditioning machinery
    imports, 83 percent of hydraulic jacks and hoists, 72 percent
    for cell phones and its parts, 58 percent of forklifts, 51
    percent of lithium ion batteries. The list goes on and on.
    Disruptions in these supply chains tell you that even after the
    virus is contained and starts coming under control we could
    have shortages, and you know the industries that are reliant
    upon this. This is where the spread of this becomes much more
    serious.
        So the focus is on three things that we really want to talk
    about. First is the immediate consequence of not having the
    capacity to produce these essentials to your home. And small
    businesses are going to experience a great deal of economic
    pain as a result of supply chain disruptions.
        But there is also going to be increased demand, increased
    demand for medical supplies and surgical masks and
    pharmaceutical drugs, and our small businesses can be a part of
    the answer to that, to filling in those gaps in the supply
    chain for critical sectors that have been exposed, as weakened
    because of offshoring of our productive capacity to China and
    elsewhere.
        The absence of having these domestic businesses that can
    ramp up production to meet demand for these critical goods
    limits our ability to mitigate the worst effects of this virus
    beyond its broader economic impact, and the result is that the
    virus could end up being more damaging than it needed to be,
    and the economic impact, as a result, greater than it needed to
    be.
        As I pointed out earlier, we are already seeing this. One
    of the reasons why we have struggled to produce the testing
    kits is because we rely on foreign producers for the chemicals
    that are needed to make them. And there is a growing shortage
    because more people are testing, and as I said earlier, the
    countries that have it are going to be less willing to provide
    it.
        So I truly believe that one of the things we should look at
    after we provide the initial set is what can we do, through the
    SBA, through the work of this Committee, and it has to be
    bipartisan--there is no other way to do it--to help small
    business be a growth sector in our economy to meet some of this
    increased demand.
        Second, obviously, that we will discuss, and I am sure you
    will point to, is the long-term consequences of the
    vulnerability, particularly when it comes to China. This was
    not the accidental byproduct of globalization. It is an outcome
    of a deliberate strategy on their part which made biomedicine
    and high-end medical equipment a priority. In their Made in
    China 2025 plan they put it in writing. It has long been
    practiced. It encourages domestic companies and their predatory
    practices, and provides a short-term bargain for foreign
    companies, but big-time costs for our Nation and the world.
        For years, China has been able to entice American
    multinational corporations with access to its markets in
    exchange for offshoring and sharing intellectual property, and
    we have watched as Beijing captured critical portions of the
    global supply chain. Today, 80 percent of the active
    pharmaceutical ingredients in the United States, in the drugs
    that are here, are sourced somewhere else, and a lot of that is
    China. And now, in the face of the pandemic, as I said, the
    absence of this capacity in the medical sector is endangering
    our health care system, and that is something we have to figure
    out, in the short term and forever.
        So it is hopefully something that we are able to act on to
    find out what role can small business play in growth and in
    taking back the ability to make these critical goods in the
    United States right now and in the future.
        So I hope that we can come up with a second wave of
    proposals that will empower small businesses to bring the
    production of critical goods all in-house and getting American
    multinationals to buy domestically from them, not as a matter
    of economic protectionism but as a matter of national security
    and national economic stability. This is good for our public
    health, it is good for our economy, it is good for, as I said,
    our national security, and it is good for our people.
        So I look forward to hearing from our witnesses who are
    experts on these topics about what we can do to help small
    business be a part of solving this challenge, and now I turn it
    to the Ranking Member.

    OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, RANKING MEMBER, A
                       U.S. SENATOR FROM MARYLAND

        Senator Cardin. Well, Mr. Chairman, thank you very much for
    convening this hearing. As you pointed out, we came from an
    all-Senate members briefing on the COVID-19 virus and its
    consequences. We learned from that briefing, we heard last
    night that it has struck our family. Senator Cantwell's staff
    person has the virus, Senator Cantwell, former Chair and
    Ranking Member of this Committee, and a senior member of this
    Committee, and that there are members of her staff that are now
    in quarantine as a result, and, of course, one needing
    treatment. So we know this impacts all of us.
        I want to just underscore the last point that you made. Our
    first priority is to triage, to deal with the circumstances
    that we are confronting today, whether they are the medical
    circumstances or the economic circumstances. But I hope that we
    will follow your advice and recognize this will not be the last
    crisis that we are going to have, and in regards to the supply
    chain we need to take a look at making sure that we are better
    prepared for the next crisis that comes down than we were for
    this one. So I agree and I look forward to working with you in
    regards to those issues.
        Clearly our first priority is to deal with the medical
    challenges. That is our first priority. We still are not where
    we should have been or need to be in regards to testing. We are
    developing the vaccines and drugs that will hopefully be
    available. The drugs, the therapeutic drugs, may be available
    to help us in this crisis; it is possible. The vaccines will
    not. But I am proud of our leadership in regards to those
    developments at institutions located in the state of Maryland,
    including the National Institutes of Health and Johns Hopkins
    University and University of Maryland Medical Center.
        We need to deal with local responses, make sure they have
    the capacity, the hospital capacity, mitigate the spread. And
    the emergency supplemental dealt with many of those needs, and
    as the Chairman pointed out that is the first installment. It
    is not going to be the last installment.
        And we also have to deal with the economic impact,
    including the disruption of the supply chain to American small
    businesses. I was pleased to see that it was recognized in the
    supplemental. There was a recognition of the problems small
    businesses are confronting. We recognize that small businesses
    are very much impacted by the facts that Americans are self-
    quarantining and not using the business community as much as
    they would, the avoidance of gatherings, the cancellation of
    events, the school closures, the trip cancellations. All of
    that has an impact on American small businesses.
        I can give you specific examples in Maryland. Johns Hopkins
    has just announced that they are closing their campus from the
    point of view of students and faculty. I can tell you Charles
    Village in Baltimore City, a lot of small businesses are
    located in Charles Village. They depend upon the students and
    faculty. They are not going to be there, and it is going to
    impact those small businesses.
        We can give you many, many more examples. Chanell Wallace,
    who owns a hair salon in Bowie, Maryland, shared that order for
    her hair extensions placed in January has yet to be filled with
    her vendor in China because of the coronavirus. Jerry Chan, who
    owns a noodle restaurant in Gaithersburg, reported in the
    middle of February that his restaurant has already experienced
    a 30 percent decline in sales, and the spread of the
    coronavirus is only going to make that situation worse.
    Sterling Forever, a jewelry company based in Towson, reported
    that not only were some of the factories in their supply chain
    closed, their distributors were requesting advanced payment to
    help with the crisis. And the list goes on and on and on.
        So we know that we are just starting to see this. It is
    getting worse by the--I would say by the day, but it seems like
    it is getting worse by the hour. So we know we have an
    immediate crisis.
        Capital is the lifeblood of small businesses. We need to
    deal with that issue. The emergency supplemental allowed small
    businesses to qualify for economic injury disaster loans, EIDL,
    and provided some resources to the Small Business
    Administration in order to administer that. We need to build on
    that supplemental.
        Let me point out, Mr. Chairman, that I have already heard
    from some small businesses. They need to get the information on
    how they qualify, so we need to get that help out to small
    businesses so that they can take advantage of what was in the
    first supplemental dealing with the coronavirus.
        Our resource partners need to be better empowered. They are
    the ones in which small businesses will go to for help. Our
    Women Business Centers, our Minority Business Development
    Centers, and the other resource partners, we need to make sure
    that they have the resources.
        We all heard last night, as President Trump mentioned a
    number for small businesses that I thought was one that we
    could work with, $50 billion. Let us work with that in the most
    effective way. Chairman, I agree. We all need to come together
    with a bipartisan solution.
        I would hope that the disaster loans will provide help and
    will deal with resiliency the issues that you talked about--
    paid leave for the workers of small business, dealing with
    telecommuting. That is going to cost some resources. Do we have
    the resources to provide that? Let us take a look at the SBA
    loan packages. Let us make them easier, more generous, and less
    costly for small businesses to be able to take advantage of
    those, including looking at the costs of taking out a small
    business loan.
        And Mr. Chairman, I would hope we would also look at one
    additional factor. If you have seen a 30 percent decline in
    your revenues, will you qualify for a loan? The disaster loans
    are direct loans--that is good--from the SBA. But they have to
    be repaid. If you do not have the revenues, how are you
    expected to repay, and will the SBA structure allow those loans
    to take place? We need to take a look at a targeted grant
    program to keep small businesses afloat. Why? Because that is
    where job growth, innovation, and our economy depends upon it.
        This is an extraordinary crisis that requires us to respond
    in kind. Let us act in that regard to triage the current
    situation, be prepared for the future. I think we can work
    together and get this done. We need to do that for the sake of
    American businesses. As Congress begins to address this
    economic impact of the coronavirus, we must ensure that we
    focus on being prepared to withstand the economic disruption
    that is occurring in our economy.
        I look forward to hearing from our very distinguished
    witness panel, and look forward to all their testimony.
        Chairman Rubio. Thank you, and just along those lines,
    before I turn it over to our witnesses, items we have discussed
    with your staff, as you are aware, in the 7(a) loan part, is
    allowing the loans to be used for payroll support. That would
    include paid sick leave, so employers could use that. We waive
    the fees on both the borrower and the lender to lower the
    costs.
        On the particular of the SBA express loans, increasing the
    loan limit for those, those turn around in about 36 hours. And
    on the EIDL loans, which have already been approved for
    coronavirus impact, and 20 states have already applied, the SBA
    will be able to determine repayment solely on the applicant's
    credit score. They are not going to have to go and get tax
    returns or transcripts, and they do not have to prove that they
    could not get credit from somewhere else.
        So some of those ideas to address some of the issues you
    raised. It will not solve every problem, obviously, but
    certainly we are trying to move as quickly as we can on these
    topics. But it will have to be done, because of the nature of
    this place, not to mention the nature of this crisis, in a
    bipartisan way, and I think we can get to a point where we can
    put something forward that would achieve the President's
    purpose of getting $50 billion available to small business, but
    do it in a way that works, is responsible, and works for the
    borrower.
        So with that I appreciate everyone who has come here. We
    are going to try to move on this now, and we are going to begin
    with all of our witnesses. I will begin with Ms. Gibson, who is
    a Senior Advisor at The Hastings Center. She led the National
    Health Care Quality and Safety Initiatives at the Robert Wood
    Johnson Foundation. She is the author of China Rx: Exposing the
    Risks of America's Dependence on China for Medicine. So, Ms.
    Gibson, thank you for being here.

      STATEMENT OF ROSEMARY GIBSON, SENIOR ADVISOR, THE HASTINGS
                         CENTER, ARLINGTON, VA

        Ms. Gibson. Good morning. Thank you, Chairman Rubio and
    members of the Committee for the opportunity to be here today.
    I am here to talk about small businesses that are prepared to
    start production of critical medicines that are in short
    supply, that are needed to care for people who are hospitalized
    with coronavirus.
        The medicines I am talking about today are generic drugs,
    and generics are 90 percent of the medicines that we take.
    Members of Congress take them, occupants of the White House--
    the focus is generic drugs. And right now we are rationing, in
    the United States of America--the term is ``on allocation''--
    essential medicines, including critical antibiotics that are
    necessary to treat hospitalized patients with coronavirus.
        I visited a hospital last week and there is an antibiotic
    that they can no longer get. There are other antibiotics that
    are in short supply. There was a volunteer EMS worker who goes
    out on ambulances in her community and she said they do not
    have epinephrine on their ambulance, which is used to revive
    people. I said, ``So what do you do?'' and she said, ``We just
    drive faster to the hospital.''
        The $8.3 billion emergency package for coronavirus was an
    important step forward. There is support for research for
    vaccines for coronavirus, therapies to actually cure people
    with coronavirus, but there was nothing in that supplemental
    package to make, here in the United States, the essential
    generic drugs that are necessary to treat critically ill people
    with coronavirus, as well as critically ill people under normal
    circumstances in our Nation's hospitals.
        China is the dominant global producer of the core chemicals
    to make thousands of our generic drugs. It was mentioned of the
    active ingredients coming from China and other countries. We
    have to look beyond the active ingredients. That is the data
    the FDA has. But what is missing are the core chemicals to make
    those active ingredients. For essential medicines to treat
    coronavirus patients--sedative, pressers to raise their blood
    pressure, antibiotics--90 percent of those core chemicals are
    sourced in China.
        There is talk that we should let the free market fix this.
    The reality is that there is no free market. Generic
    manufacturing has collapsed in the United States. There are
    only two Western companies left that are making generic drugs,
    and they announced last year they are dropping half their
    products because they can no longer make them, so they are on
    the FDA shortage list.
        And how does this happen? It is because patterns of China
    forming cartels, which has driven out production of so many of
    our core medicines--we cannot make penicillin anymore because
    of what I wrote about in China Rx, the penicillin cartel. We
    cannot make vitamin C. We cannot even make aspirin, and
    thousands and thousands of other medicines.
        And India put out its export ban because its giant generic
    industry, which supplies us with 25 percent of our generics,
    depends on China for those core chemicals.
        So what can we do? In doing this work on China Rx, small
    companies have approached me, and these are brilliant people
    prepared tomorrow to start using advanced manufacturing
    technology to make medicines fully made here in the United
    States that are in short supply.
        There is a precedent for the U.S. government to fund
    medicinal manufacture, namely flu vaccines, through HHS and
    BARDA. BARDA knows how to do this. We could use that same model
    to make critical essential generic drugs through BARDA, through
    public-private partnerships. They do investment for capital and
    for equipment, but the production costs of using new technology
    would make our drugs much less expensive.
        I would like to close by saying there is another thing we
    have to address, and this has nothing to do with coronavirus.
    But there are thousands of children who have died in recent
    years because we can no longer make the old staple, generic
    drugs that are necessary to sustain them. These are children
    with rare diseases. There are small companies that approached
    me. They want to make them, and together we can make a
    difference, not only for coronavirus patients but for these
    children.
        I look forward to working with the Committee and the staff
    on how we together can do a lot of good to ensure that every
    patient has the medicines that they need when they need them.
        Thank you very much.
        [The prepared statement of Ms. Gibson follows:]
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        Senator Cardin [presiding]. Thank you, Ms. Gibson, for your
    testimony. I will now call on Dr. Gerald Anderson, who is a
    professor of Health Policy and Management and professor of
    International Health at the Johns Hopkins University Bloomberg
    School of Public Health and a professor of Medicine at the
    Johns Hopkins University School of Medicine. He is also the
    director of the Johns Hopkins Center for Hospital Finance and
    Management.
        Dr. Anderson.

    STATEMENT OF GERARD ANDERSON, Ph.D., JOHNS HOPKINS UNIVERSITY,
                             BALTIMORE, MD

        Dr. Anderson. Thank you, Senator Cardin, Senator Rubio, and
    members of the Committee.
        I have been a professor at Johns Hopkins School of Public
    Health for the last 37 years, and let me tell you about my
    greatest fear about coronavirus.
        Yesterday I went to the local grocery store. Tonight, I
    will go to the dry cleaners and maybe go out to dinner with my
    wife. My greatest concern is these people in these small
    businesses will go to work with coronavirus. The shop keeper
    will want to keep this business open because they do not have
    the funds to keep the office closed for 14 days. The worker
    will not want to report that she has coronavirus because she
    probably does not have sick leave.
        The uninsured worker will not have the $200 or so that is
    necessary for the coronavirus test. Remember, 10 percent of
    Americans are uninsured and they are most likely to be working
    in small businesses.
        So what Congress do to alleviate my fears? Pay the
    shopkeeper to close the business for 14 days if they do have an
    employee with coronavirus. A loan probably will not do the
    trick because most of them have huge bad debts anyway. As
    Senator Cardin said, grants may be necessary.
        At least for the next 90 days, make sure the person has at
    least 14 days of paid six leave. And for the next 90 days, pay
    the provider giving the test to the uninsured person at
    Medicare rates.
        While larger companies allow the people to work from home,
    and Johns Hopkins is doing that for me, many small businesses
    do not have the option because they have to work with their
    clients face-to-face. Helping the cruise line is under
    discussion. From a public health perspective, small businesses
    are so much more important than the cruise lines. We can get
    along without vacations. We cannot get along without the small
    businesses that feed us.
        Let me change the subject for a minute. The good news in my
    testimony is that small business is doing to develop the
    vaccine for coronavirus. A significant portion of the world's
    new drugs come from the uniquely American public-private
    partnership that involves the NIH, our universities and medical
    centers, small biotech companies and, finally, large
    pharmaceutical companies. Most of the initial drug development
    occurs in universities and small biotech companies, not the big
    pharmaceutical industries.
        For example, this is how the first drug that was effective
    in treating hepatitis C was developed. It began in a lab at
    Emory University with funding by the National Institutes for
    Health. With promising results, they started a small business
    and attracted venture capital. After the clinical trials showed
    positive results, a big company, Gilead in this case, purchased
    the small company Pharmasset. One year after that, we had
    hepatitis C drugs with FDA approval and it was brought to
    market.
        One of the companies with a promising coronavirus right now
    is a small business. Its name is Moderna. It began operations
    in 2011. The first clinical-grade batch of this drug was
    shipped to the NIH for a Phase 1 clinical trial in late 2019,
    and the clinical trials have already begun.
        In my written testimony, I list three other small companies
    that are developing coronavirus and there are 40 other ones
    developing vaccines.
        So how can the Congress help these small biotech companies
    develop a vaccine? The key is knowing that the small business
    will get paid for developing the vaccine. Congress can
    guarantee the purchase of a certain volume of vaccine at a
    price or giving them advance market commitments to purchase
    safe and effective products.
        In my written testimony, I also discuss some other ways
    that Congress could help the small businesses provide services
    to address the coronavirus epidemic. Small business can provide
    telehealth services to people in quarantine and in rural
    communities. People in quarantine need to discuss their health
    condition with medical professionals without subjecting the
    clinician or the public to the disease. Medicare now pays for
    telehealth but most private insurers do not.
        Congress could ensure that more generic drugs are made in
    America. In my written testimony, I explained how we helped
    create a small non-profit company that is going to manufacture
    drugs that are overpriced and in short supply. Working with
    Intermountain Healthcare, we created Civica Rx. It has gotten
    up and running and it is now manufacturing 20 drugs with 20
    more in the pipeline. BlueCross just gave them $55 million to
    expand into the outpatient market.
        Finally, small business can assist in worker training. Many
    hospitals are not prepared to train their employees, and small
    business can do that.
        I am happy to answer any questions.
        [The prepared statement of Mr. Anderson follows:]
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        Chairman Rubio [presiding]. Thank you, Dr. Anderson.
        Tim Morrison is a Senior Fellow at the Hudson Institute,
    where he specializes in Asia-Pacific security, missile defense,
    nuclear deterrent modernization, and arms control. He was
    previously Deputy Assistant to the president for national
    security and has written and spoken extensively about the
    national security aspects of supply chain issues.
        Thank you for being here.

    STATEMENT OF TIM MORRISON, SENIOR FELLOW, THE HUDSON INSTITUTE,
                             WASHINGTON, DC

        Mr. Morrison. Thank you, Chairman Rubio, Ranking Member
    Cardin, and members of the Senate Small Business Committee.
    Thank you for the invitation to be here today.
        I would like to start with the cold reality and the simple
    fact: according to the World Health Organization, the National
    Health Commission of the People's Republic of China initially
    knew of the Wuhan virus as early as December 8 of 2019. Yet,
    initial substantive disclosures to the WHO did not take place
    until approximately January 11, 2020.
        I do not think it is too much to ask how many people in the
    United States and elsewhere have been infected, gotten sick, or
    worse as a consequence of the Chinese Community Party's
    decision to sit on the fact of this epidemic?
        In fact, I think you as our elected officials must demand
    the answer to this question and determine how to respond.
        In 2004, as Ms. Gibson has explained, the United States
    stopped making penicillin domestically. This happened without a
    vote in this body. It happened without decision in the
    Executive Branch. It is a decision that was consulted about
    this decision. It was a decision prompted by China's Made in
    2025 plan to dominate what the Chinese Community Party
    determined were strategic sectors which Chinese industry should
    control globally.
        And so we are here today to ask, ``on a good day, what does
    it mean to rely on the People's Republic of China for our basic
    health care commodities?''
        Larry Wortzel, a member of the U.S.-China Commission, will
    tell you about his blood pressure medicine making him sick
    because it was contaminated with rocket fuel in a Chinese
    manufacturing facility. Rocket fuel.
        Surgeons around this country may tell you about the
    hundreds, if not thousands, of surgeries that were canceled
    because millions of surgical gowns had to be recalled because
    they may not have been sterile when they were packaged up in
    the People's Republic of China and sent to the United States.
    This was in January of this year.
        Now what if there was a malign intent? For example, what if
    this body passes a resolution demanding a high-level visit of
    an American official to Taiwan in furtherance of the Taiwan
    Travel Act of 2018? What if the United States chooses to
    sanction Huawai, or another Chinese state-proxy, for the Uyghur
    suppression? What if the Chinese Communist Party decides to
    retaliate to these sovereign decisions by cutting off the
    shipment of medicines to the United States?
        Do you think it cannot happen? Ask the Japanese who lost
    access to rare earth elements from the People's Republic of
    China in 2010 over a territorial dispute.
        The People's Republic of China's state-owned Xinhua, a
    communist party propaganda outlet, recently noted that the PRC
    could--and I quote--``plunge the U.S. into the mighty sea of
    coronavirus'' if it wanted to do so.
        I ask you to think about all of the tools of economic
    statecraft that you can use to support American producers,
    including small businesses and strategic industries. For
    example, I know that several of you were involved in the
    passage of the BUILD Act in 2018. This was an effort to
    leverage private sector investment in international development
    to counter China, Inc.
        What other tools are available to do the same at the Small
    Business Administration or the Export-Import Bank?
        I urge you, do not allow America's job creators and
    innovators to be unilaterally disarmed. Their government can
    and should defend them from foreign aggression.
        Chairman Rubio, your amendment to last year's National
    Defense Authorization Act concerning reliance on the PRC for
    pharmaceuticals was a key step. You sounded the alarm on this
    risk.
        Lastly, I know several of you serve on the Senate Foreign
    Relations Committee and related national security committees. I
    urge you to investigate the influence of the People's Republic
    of China in international organizations like the World Health
    Organization. Ask yourselves why, despite meeting all of its
    established criteria, the World Health Organization waited more
    than three months to label COVID-19 a pandemic? Why is the
    World Health Organization choosing now to adopt the Chinese
    Communist Party's playbook by removing Taiwan from its country
    list?
        I want to thank you for the opportunity to testify here
    today and I stand ready to answer your questions.
        [The prepared statement of Mr. Morrison follows:]
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        Chairman Rubio. Thank you.
        And our final witness is Ms. Wynne Briscoe, the Acting
    Director of the Small Business Development Center in the
    Southern Maryland Region. Thank you for being with us.

    STATEMENT OF WYNNE S. BRISCOE, ACTING DIRECTOR, MARYLAND SMALL
       BUSINESS DEVELOPMENT CENTER, SOUTHERN REGION, LA PLATA, MD

        Ms. Briscoe. Good morning. Thank you all for having me this
    morning. Again, Wynne Briscoe, the Acting Director for the
    Small Business Development Center. In that capacity, I consult
    with manufacturers throughout the State of Maryland. Based on
    those experiences, I wish to offer some recommendations to your
    Committee.
        I see the coronavirus pandemic and the supply chain
    disruptions that it has caused for some companies offering an
    opportunity to address the supply chain concern with a longer-
    term question: What opportunities do the current crisis offer
    U.S. businesses to fill newly emerging supply chain
    vulnerabilities within other companies? And how can these
    supply chain opportunities assist American small businesses
    long after the current health crisis has come and gone?
        In other words, I believe that we should act and think
    about the supply chain disruption and the current crisis in a
    way that will take us beyond the current crisis and set our
    economy on a level plane.
        When I consult with Maryland manufacturing companies, I
    insist that they have at least three alternative sources for
    the products that they produce. This is something that is going
    to be long beyond the current health crisis and something that
    the SBA can help make happen. And my idea I have created based
    on my experience with manufacturing companies is that I am
    recommending that you direct the Small Business Administration
    to produce a nationwide list of companies. Let them self-
    identify their supply chain concerns, those that have current
    supply chain concerns and those that forecast in the future of
    having supply chain concerns.
        From there, it would be a self-identified list of Made in
    America products and services the SBA would be monitoring, and
    these would be an opt-in list for those businesses that wish to
    participate. This would be businesses that the SBA has worked
    with throughout the country currently as well as over the last
    10 years. This list would be compiled and it would be monitored
    by the Small Business Administration.
        For example, if they find when they are doing their
    outreach efforts, hypothetically a company in Miami that might
    be producing paper and its largest manufacturer might be China,
    can we find an American company to replace that source?
        Again, another example might be a Maryland-based company
    that may be looking to replace its suppliers of key ingredients
    for its bakery supply products of a specialty product that it
    sells locally. The SBA does not have to do this process alone.
    They can work together with other Federal agencies such as the
    Department of Commerce or the Minority Business Development
    Administration to identify additional smaller companies that
    may be having concerns. With SBA compiling this Made in America
    master list, it could be sorted through NAICS Codes and have
    descriptions that would describe it, such as ``paper products''
    or ``sweeteners'' so that it would be easy to sort and address.
    These companies would receive this information on a regular
    basis, and it would be distributed throughout our network of
    Small Business Development Centers as well as the agencies that
    the SBA regularly communicates with.
        This process and something similar to it, using the SBA to
    identify companies looking to expand their American supply
    chain suppliers as well as the companies looking to bolster
    their supplies domestically is essential to our Nation's
    economy. May we learn from this time and learn from this crisis
    using this to strengthen our Nation's supply chains well into
    the future.
        Developing alternative suppliers of key products and
    services well in advance is how we like to prepare our
    businesses with the Maryland Small Business Development Center.
    And it is how I suggest that we move the Nation forward and
    proceed. We should look at this situation as a way to
    strengthen America's supply chain and ways to benefit America's
    smaller businesses.
        So I appreciate you listening to my suggestion of creating
    a voluntary, opt-in nationwide list of supply chain
    opportunities of Made in America products and services and for
    recognizing the insights of America's Small Business
    Development Center consultants and what we bring into solving
    this national problem by inviting me to this panel today.
        Thank you for your time.
        [The prepared statement of Ms. Briscoe follows:]
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        [GRAPHIC] [TIFF OMITTED] T3665.018

        Chairman Rubio. Thank you.
        The Ranking Member, are you ready for questions?
        Senator Cardin. Let me thank all four of our witnesses. Ms.
    Briscoe, let me just ask a question where you ended off. I
    think your suggestion is an excellent suggestion, but it does
    point out the fact that we need to be better prepared for the
    next crisis. I said that in my opening statement. We need to
    have better supply chains locally, and there is real
    opportunity for small businesses in helping us in that regard.
        The challenge will be to connect the opportunities with the
    businesses that are there, and there is where our resource
    partners can be of tremendous help. I appreciate what you do in
    the State of Maryland in our Minority Business Development
    Centers, our Women Business Centers. All those are places of
    contact where this type of a list could connect to the
    companies that are out there with investors to really provide
    new opportunities for small businesses.
        So I just really wanted to underscore and get from you your
    capacity today to reach out. We have already modified the
    disaster relief programs so that small businesses can qualify.
    I know that they are going to be knocking on your door saying,
    ``Can we get help under this program?'' The State of Maryland
    will help, but they are going to be your offices that are going
    to be called upon to do this.
        Do you have the capacity to expand your reach to take care
    of, for example, the suggestion you made on developing a list?
        Ms. Briscoe. Well, it would initially start with compiling
    the data from the businesses, so the SBA is what I am
    recommending start from the top down, utilizing the Small
    Business Development Centers, utilizing all of the agencies
    that work along with the SBA, and find the businesses that
    currently do produce products here in this country that can be
    of assistance to other businesses that they may not be aware
    of.
        So the first short term would be identifying what is made
    here in this country, and from there SBA would then follow up
    with sort of an opt-in matching, if there is a company that is
    looking for that product or service and they are now being
    matched with a product and service that is made here with that
    business in exchange.
        So that is how we see foresee this rolling out from the top
    down through SBA, through the resource partners such as the
    Small Business Development Center and SCORE and the Minority
    Business Centers and the Women Business Centers and our Veteran
    Business Centers, and connecting with the key stakeholders
    throughout the State, and then not just doing it alone,
    throughout the country working along with the Commerce
    Department and all of the other Federal agencies that work with
    businesses so that we can from a higher level identify what is
    being made here currently and how that can be a gap in the
    supply chain for the businesses that need them here nationally.
        Senator Cardin. I think it is an excellent suggestion, and
    I am just trying to figure out how we encourage that to be done
    and where the resources need to be placed in order to make that
    a reality. And I think you have given us a good blueprint, so I
    thank you for that.
        Ms. Briscoe. You are welcome.
        Senator Cardin. Dr. Anderson, you gave a pretty chilling
    account. You are small business owner. You are running a
    cleaning establishment that depends upon you and perhaps one or
    two other workers. You do not feel well. The advice is for you
    to go home and stay home, and perhaps someone in your
    operation, in fact, did get the virus. Now you have got to be
    treated and be isolated for a period of time. That is what we
    want you to do. We do not want you to spread that disease to
    people coming into your establishment because you need to keep
    your business open.
        So how do we provide the financial help to that type of a
    small business owner, which is in our interest to stop the
    spread of the virus, but also to keep that business open
    because of the impact it has on the local community? The
    Chairman talked about and we are working on a program that is
    going to make it easier for SBA loans, including how we
    determine whether they are creditworthy. Those are important
    steps. But if you are talking about closing a business, it is
    hard to understand how you can deal with another loan on top of
    that, and that is why I appreciate your response in regards to
    perhaps looking at a grant program. It is a little more
    complicated because we have not done that in the past. But I
    take it that your comment means that in our toolbox, if we
    really are interested in dealing with this crisis, we are going
    to have to look beyond the traditional loans.
        Dr. Anderson. Yeah, I mean, my local person that does my
    dry cleaning--there are two people that work in that place. I
    am sure there is somebody in the back office, but there are two
    people in the front office. And if one of them has coronavirus,
    that place has to close because they are essentially--you know,
    they just cannot work with just one person. And they are not
    going to be able necessarily to take out a loan. It is going to
    be a lot of work. They are going to need help to open again 14
    days later, and I think a grant is what they are going to
    actually need.
        Senator Cardin. I thank you. I think we just have to have--
    we have got to be flexible. This is a crisis that no one could
    anticipate how it is impacting. Every hour it is becoming more
    and more devastating to our economy. So we are going to need to
    develop in Congress a flexible toolkit in order to keep
    businesses going in our community, particularly small
    businesses.
        Again, I thank you all for your testimony.
        Chairman Rubio. Thank you.
        Senator Hawley.
        Senator Hawley. Thank you, Mr. Chairman, and thank you for
    holding this hearing today and for focusing our attention on
    what is obviously a very hugely significant topic. I think it
    has been clear for a while now that we are far too reliant on
    China for our domestic production, especially for essential
    products that we rely on, and, of course, our medical supply
    chain is at the very top of that list, as we are sadly finding
    out. This is one of the reasons that I introduced legislation 2
    weeks ago that would give the FDA more authority to require
    that our medical product manufacturers report all the details
    of their supply chain, report where they are facing potential
    shortages, and then give the FDA new authority to speed
    potential replacements, including, of course, replacements
    ideally that are made in this country.
        Ms. Gibson, can I just start with you? You stated in your
    testimony that we know China produces about 9 percent of our
    generic drugs, which is a lot, but do you have any sense of how
    many of our drugs involve Chinese production? In other words,
    maybe they are not made wholly there, but Chinese production is
    involved.
        Ms. Gibson. Thousands. Thousands of our generic drugs and
    even some of the brand-name products and perhaps even new
    therapies for coronavirus may depend on the chemicals that are
    sourced primarily in China. If you are hospitalized with
    coronavirus, if you have a severe case, which, thankfully, is
    small numbers of people, a small percentage, you will need--you
    might be on a ventilator, so you will need sedatives like
    fentanyl and propofol. Your blood pressure may get dangerously
    low, so you will need pressors like dopamine or epinephrine.
    You might get a secondary infection, bacterial in nature, and
    you will need antibiotics. You might become septic, which is
    life-threatening.
        I was sitting in a room where the people actually make
    medicines. These are the men and women in pharmaceutical
    engineering, pharmaceutical chemistry. I said, ``So tell me, if
    you have to make these tomorrow, where do the core chemicals
    come from to make it? How much are we dependent on China?''
    They said 90 percent of the chemicals to make those basic
    generic drugs depend on China.
        The good news is that there are advanced manufacturing
    technology and really brilliant chemists right here in the
    United States that want to make it, are capable of starting
    production tomorrow. And Civica Rx, they have committed to all
    their APIs being made outside of China. But they want to take
    the next step and make sure all the chemical components were
    not dependent on China. Advanced manufacturing technology--and
    we have brilliant people in this country, and they want to do
    it. So we can make a lot of these medicines here. They just
    need the investment to get started.
        Senator Hawley. It just strikes me, based on your
    testimony, which I think is really eye-opening, that we
    probably do not appreciate or have not appreciated until now
    the extent of our reliance, the true scale of the vulnerability
    in our medical supply chain.
        Dr. Anderson, let me ask you, in your view, what is the
    most helpful thing the Federal Government can do to support
    these small biotech companies that you have spoken about and
    that you write about? What are the right incentives that we
    ought to be proposing or adopting?
        Dr. Anderson. Essentially, that they have a guaranteed
    place to sell their products. So right now, they are coming up
    with these great new ideas, and they do not always have a place
    to sell their products. And it is true mostly in--not in cancer
    where there is a lot of profit in there, but in anti-
    infectives, in antibiotics, and things like that. You develop
    something new in that area, and the current system does not
    work. So that is why we had to create Civica Rx, which is this
    thing that is run out of Intermountain Health Care in Utah and
    other places. We just did not see that the marketplace was
    producing certain areas because the profitability was not high
    enough.
        Senator Hawley. Let me ask you about something else I found
    interesting. You wrote in your testimony that while small
    biotech companies often make the initial discoveries during a
    vaccine or drug development process, it is the large pharma
    companies that then often buy them up.
        Dr. Anderson. Correct.
        Senator Hawley. And gain ownership over the IP. I am
    wondering if that trend accelerates the offshoring of our
    capacity to China. Are those things related?
        Dr. Anderson. Well, I think what we are seeing now is, in
    fact, that is happening. So all of a sudden, you know, Pfizer
    has their major manufacturing plant in China. So the big
    companies are looking where they can produce it the least
    expensively and are going there, especially in the generic
    because it is all price-driven.
        Senator Hawley. Mr. Morrison, before I run out of time, I
    was reading your testimony and was astounded to learn--you
    reiterated this fact; Ms. Gibson, you mentioned it, too--that
    we stopped making penicillin domestically in this country in
    2004, right? Yet the CDC says 62 million penicillin
    prescriptions were filled in the United States in 2015. I have
    got two little boys at home. I think the Hawley household
    accounted for a number of those prescriptions.
        [Laughter.]
        Just to make it clear here, is it correct to characterize
    the decision to move the production of penicillin overseas as
    an economic decision, it was economically driven, it was a
    profit-driven decision? Is that your understanding?
        Mr. Morrison. Yes, sir. I think the point of Made in China
    2025 is essentially to destroy the free market and create
    incentives to offshore production in China. And originally this
    seemed like a good thing. We will save prices, we will move
    value where value could be moved. We will continue to do the
    innovation. But China is scooping that up as well. And so
    without any decision by any Government authority, this
    happened, and now we are going to deal with the consequences.
    And, of course, an antibiotic is not instrumental to treat a
    virus, but the respiratory infection, it is.
        Senator Hawley. Right. It just strikes me--and this is my
    last comment, Mr. Chairman--that our current drug policy seems
    to privilege economic considerations of maybe a few companies
    over public health considerations. Is that fair to say, Mr.
    Morrison?
        Mr. Morrison. I would largely agree, sir.
        Senator Hawley. Thank you, Mr. Chairman.
        Chairman Rubio. Senator Booker.
        Senator Booker. Mr. Chairman, thank you very much.
        I have got three areas that I want to try to get to in a
    very short 5 minutes, and, Dr. Anderson, maybe I can just get
    you, because I am uncomfortable right now. The Senate is about
    to go on a recess. We see this curve, the bell curve that we
    are in right now, of increasing levels of infections and it is
    going to continue to go up. Any modeling would say that our
    control actions to try to bend this curve are not doing that
    well. Having been an executive during a number of crises,
    including Superstorm Sandy, it is the first order of keeping
    people safe, but it is the second-order consequences when
    something like that happens.
        We are about to face nationwide second-order consequences
    of what it means to have schools closed, what it means to be
    told to go home and stay home. And so could you just take 30
    seconds for me to sound the alarm a little more dramatically
    than you did, just like saying going out tonight to your--what
    does it mean if we have large-scale orders for social isolation
    as well as basically people sheltering in place in terms of the
    local economies that depend upon small businesses? Can you just
    paint this picture for me? Because I think that we need to be
    taking a lot more dramatic action to try to stabilize a lot of
    the small businesses and help people who are going through this
    crisis.
        Dr. Anderson. So I just walk through my neighborhood, and I
    see basically restaurants basically empty. I see dry cleaners,
    no one going. I see in the last week or so a fundamental change
    in how the economy is working, and I think the stock market is
    telling you that is what is happening. And I think what we are
    seeing in the real world in our neighborhoods every day is just
    so----
        Senator Booker. So something as basic as schools closing,
    child care crises--I live in a community at the poverty line
    where people if they miss one paycheck, they cannot make a rent
    payment, they cannot make their car payment. Their lives spiral
    out of control. So telling a food service worker, for example,
    to stay home for 2 weeks is just not going to happen, right?
        Dr. Anderson. Unless they get paid.
        Senator Booker. Right.
        Dr. Anderson. And you have got to make sure that they are
    willing to stay home because they are going to get paid.
        Senator Booker. Eighty percent of our food service workers
    do not have paid family leave. Every year we see the spread of
    flu and like that because they are handling our food. Right now
    in this crisis we cannot bend the curve unless we find a way to
    make it so people can stay home without putting themselves in
    pending doom.
        I want to stop there and pivot real quick. The testimony of
    Morrison and Gibson, I wish every Senator could read that
    because clearly this is a national security issue. It is not
    just pharmaceuticals. It is rare earth metals. I can go through
    the things, should something more major in terms of a conflict
    between us and China breaks out, that would cripple our economy
    and our health and well-being and safety. And so this idea that
    it is a free market, when I know this from New Jersey that
    people are luring companies to manufacture over in China, and
    so, again, knowing--here we are in a time of crisis, it is too
    late. Shouldn't we as a Federal Government be doing more on
    these issues to make sure we are building manufacturing
    capacity here?
        Ms. Gibson.
        Ms. Gibson. Yes, what we can do and what small businesses
    want to do to prevent a future situation with drug shortages,
    they want to make the active ingredients, which is what makes
    the medicine medicine. They can make it fully here in the
    United States using advanced manufacturing technology.
    Stockpile that, because it lasts longer than the finished
    drugs. And if we have another coronavirus outbreak, have a
    stand-up facility ready to go, which we have with--you know,
    companies have these as backup, redundant capability. Take that
    API out and make those medicines that are in critical
    shortages. This is what small business, the innovative thinking
    and the technology and the brilliance----
        Senator Booker. But this takes conscious, long-term
    planning. You cannot just flip a switch and have the
    manufacturing capacity here. I have a bill that tries just
    talking about seeding critical startup capacity here so that we
    build it, correct?
        Ms. Gibson. There are small businesses that can start
    production of active ingredients made here in the United
    States. They could start within weeks. It would take maybe 9
    months to start making small quantities of these key
    ingredients fully made in the United States, not dependent on
    China for chemicals. They could do that in about 9 months.
        Senator Booker. Mr. Morrison.
        Ms. Gibson. And they could start for the stockpile DOD and
    VA, use our Government purchasing power to stimulate that
    market.
        Mr. Morrison. That is, in fact, where I was going, sir. You
    have tremendous purchasing power through Medicare, Medicaid,
    TRICARE, the Department of Veterans Affairs. These are some of
    the largest health care consumers in the world. You can control
    their procurement regulations.
        And if I could just make one more pitch, right now the
    Federal Government may be about to allow the TSP I Fund to
    invest in the MSCI Index. We are going to be investing in
    Chinese enterprises. I have worked 19 years for the Federal
    Government. Please do not put my pension in nontransparent
    Chinese companies.
        Senator Booker. And so I just want to make just a massive
    appeal to my Chairman right now that this should be a Committee
    urgency. We can address this. It is actually not that hard. We
    just do not have the collective will. This is a national
    security crisis that one of our serious adversaries is doing
    things strategically to undermine our health and economic well-
    being, which at any point they could cripple our economy. And,
    actually, this has a win-win. It corrects for a national
    security crisis, and it actually helps our overall economy, and
    the fact that they are doing it and we are not.
        So I would just appeal to the Chairman and the Ranking, let
    us work on this as a project. This is an obvious area where we
    should have bipartisan commitment to fill these vulnerabilities
    and actually build more American economic manufacturing.
        Chairman Rubio. Absolutely. And that is the goal of the
    second tranche of work we are going to have to do on this. We
    are trying to figure out what can we do to help assist small
    business quickly right now. But we are going to have to come
    back and do more on a host of issues. This hearing has actually
    been scheduled for over a month and a half before this, so we
    already identified this in our report last year. And I agree
    with you. There are still a couple people that debate whether
    we have a supply chain issue. I am not sure they will be able
    to make that argument here any longer in any event.
        Senator Cardin. Let me just underscore what the Chairman is
    saying. We are going to try to see whether we can get something
    done as early as today, if at all possible. We recognize that
    within the next couple weeks we really need to put together a
    package that is going to make a broader appeal to some of the
    issues that are here. We are not talking about months. We are
    talking about we need to respond while there is an interest.
        So we are going to try to work with everyone and try to see
    what we can get done.
        Chairman Rubio. Yes, and one last point before I turn to
    Senator Hirono. We want to do it in a way that obviously
    respects the jurisdiction of this Committee, which is small
    businesses that have supply chain disruption vulnerability, but
    also small businesses as the answer to the supply chain
    vulnerability. And that will require access to capital and the
    ability to invest to ramp up. So we have got some work to do,
    but I am glad we have a head start on some of this.
        Senator Hirono.
        Senator Hirono. Thank you, Mr. Chairman.
        Did I hear you say that we can reduce or totally eliminate
    the overdependence we have on China, that we in our country
    have the capacity to create or manufacture these chemicals that
    are so necessary?
        Ms. Gibson. For a lot of medicines, brilliant chemists and
    pharmaceutical engineers can make these chemicals here.
        Senator Hirono. So why is that not happening?
        Ms. Gibson. Well, on the generic side, the margins are so
    slim that companies would not invest in the new plant and
    equipment to do it, and also our last large generic company,
    Mylan, in Morgantown, West Virginia, merged with Pfizer, and
    Pfizer last year announced the opening of its global generic
    headquarters in Shanghai. So we do not have these companies. In
    5 years--there are two more Western companies--they will be
    gone.
        Senator Hirono. So we have a so-called free marketplace
    where companies can make those kinds of relocation decisions.
    So are you suggesting that there be some kind of legislation
    that will prevent or effect a cost on these companies that will
    take their manufacturing to places like China?
        Ms. Gibson. Well, I think sort of the horse is out of the
    barn on that. How can we grow and incent small businesses that
    are eager to fill this very large vacuum that we have. They
    want to do it. Civica, I am sure, would want to purchase
    essential medicines and all their ingredients made here in the
    United States. The DOD could purchase it, the VA. We could
    start a whole new market with manufacturing here in the United
    States.
        Senator Hirono. I think we are going to need to figure out,
    though, because if a small business creates these chemicals, et
    cetera, and they get bought up by a larger company that is
    interested in the bottom line, they go off to China, that is
    not resolving the situation. So we are obviously going to need
    to come up with some really, in my view, tightly drafted
    legislation that will get us to where we need to go.
        Ms. Gibson. There are some provisions that can be done,
    that you cannot sell your plant for national security reasons.
    If we make any investment, it----
        Senator Hirono. I think those are the kind of ideas we need
    to put in place, I would say.
        Dr. Anderson, here we are in the midst of a pandemic. It is
    here and now. And, you know, any State that is so dependent on
    tourism as a major part of their economy, I would say most
    States tourism is their number one or number two driving
    factor. So we are already seeing thousands of people losing
    their jobs. Most of them probably do not have paid leave, sick
    leave, or anything else. So here and now, I agree with you that
    we really need to figure out how to ease the impact on workers
    and their families in the here and now, because if we expect
    people, 20 percent who are not even insured, to go to the
    doctor, that is not likely to happen.
        I think this crisis has really illuminated and illustrated
    the huge gaps in health care coverage in our country and how it
    is creating a risk for all of us. So we can have that
    conversation later. But for the here and now, I am wondering
    whether you think, Dr. Anderson, that we obviously need to have
    a lot more testing in our country so that we can get a sense of
    how far this--how much of this virus is already in our country.
    We do not know that, so testing.
        And then, obviously, we are going to see this continue if
    we do not develop a vaccine. Would you agree that testing and
    developing a vaccine are critical to our ability to get a
    handle on the spread of coronavirus in our country?
        Dr. Anderson. First of all, the vaccine is absolutely
    critical, but it is going to take a year or whatever.
        Senator Hirono. And in the fall this virus can come back.
        Dr. Anderson. Hopefully, it will not happen again, but it
    may resurge in the fall. Let me go back to the question,
    though, about what we can do besides for generic drugs, because
    we are now working with the State of California, and they have
    said that they want to essentially manufacture or produce drugs
    for the 13 million people that they insure. And they are trying
    now to do that based upon plants in California. And so they
    have the power of 13 million people that could manufacture
    drugs, and they are trying to do it with Civica and other
    places based in the United States.
        So the Government has this huge purchasing power and can
    use it to do things that are manufactured or produced in the
    United States.
        Senator Hirono. I am all for Government using its
    purchasing power, but I would note that we cannot even under
    Medicare have a discussion about, you know, drug purchasing
    where we cannot even negotiate those things. So I am all for
    our Government using its power to create the kind of situation
    where drugs that we need are being produced for our people, and
    we apparently are not there yet. But whatever you can do to
    raise your voices to head us in the right direction along these
    lines, I am grateful.
        Dr. Anderson. Medicare cannot, but Medicaid can. DOD can,
    VA can. So there are a number of very important buyers in the
    public system that can.
        Senator Hirono. Yes. Medicare, though, is a huge gap.
        Dr. Anderson. I understand.
        Senator Hirono. Thank you.
        Chairman Rubio. Senator Shaheen.
        Senator Shaheen. Thank you all very much for being here and
    for your testimony.
        The President last night talked about one of the actions
    that he was taking would be to invoke a travel ban on
    passengers coming from the EU, and initially it sounded like he
    was also saying cargo, although that got corrected later. But
    given what Senator Hirono said and what I know to be true in
    New Hampshire about the importance of the tourism industry and
    the impact on so many small businesses of our European
    travelers, can you speak to what the impact of that might be on
    the small businesses that you are working with? I had some
    questions, as did other Senators earlier, out of a briefing on
    the coronavirus about why the U.K. was exempt from that travel
    ban, and what we were told is because they are no longer,
    because of Brexit, part of the Schengen zone, which is where
    people can travel across borders without screening. But they
    are a part of that zone until December of 2020, so they are
    still very much in the Schengen zone, so I am just saying that
    I guess as a point. I am not necessarily asking you to comment
    on that, but if you could comment on what the impact you think
    will be on small business of the travel ban from European
    customers.
        Dr. Anderson. So, I think it is going to be huge for the
    people. I mean, if you are just in the Washington, D.C., area,
    we get so many visitors. You get them for skiing and other
    things. So you know, these are huge industries that are going
    to lose 20, 30 percent of their business literally overnight.
    They do not have contingency plans for a 20 or 30 percent
    reduction in their business.
        And it is not just oh, take out a loan. You are going to
    need some real cash immediately that you know you do not have
    to pay back because you are going to be in the hole for a
    while.
        Senator Shaheen. Ms. Briscoe, have you heard from any folks
    through the SBDCs in Maryland about the potential impact? Or is
    too soon to know?
        Ms. Briscoe. We have not had, at this current time, any
    businesses that have reached out to us specifically about the
    supply chain impact at this moment. But we will be sending out
    a correspondence to our caseload to ask them have they had an
    impact or how do they feel about a future impact. They may have
    supplies that can sustain them currently but is it something
    that, for the long run, that they can maintain. So we will be
    in communication with them.
        Senator Shaheen. Great, thank you.
        On February 27th, the FDA pointed out that it had received
    its first notification from a drug manufacturer about a drug
    shortage. I am sorry, I did not hear all of the testimony
    earlier from Ms. Gibson and Dr. Anderson, so you may have
    referenced this. But the question that I have is how do we
    balance the public's need to know on an issue like that without
    it creating a run on those drugs and a real panic about how to
    respond to that kind of situation?
        Ms. Gibson. I think the FDA did the right thing in not
    naming the medicine because that would have contributed to
    hoarding and precluded the opportunity to allocate it to those
    people who need it the most.
        But I also think, we have had drug shortages in this
    country for more than 20 years and we have not been honest
    about the impact that it has had on patients. So at some point,
    maybe when coronavirus--we get through this, we have to have an
    honest conversation about the shortages of medicines in this
    country, the terrible impact it has, what the real root causes
    are, and address those.
        Dr. Anderson. So the FDA says there are about 100 drugs. At
    places like Johns Hopkins, we know that there are 250, 300
    drugs that are, in fact, on shortage. And we sort of borrow it
    from the University of Pennsylvania and then pay it back to the
    Mayo Clinic and do all sorts of bartering on this when there,
    in fact, a shortage.
        But this is not a new thing. It is just going to get worse
    with the travel bans because so many of the drugs are
    manufactured overseas.
        Senator Shaheen. And of course, that does not address the
    cost of so many drugs which, while they may be available, if
    you cannot afford to use them because you do not have insurance
    and cannot cover the cost, you are in the same position.
        Dr. Anderson. Well, that is particularly true in this case
    for the uninsured because if you go to the doctor, it is going
    to cost you $200 just to get a simple test. And if you need to
    get some kind of x-ray or something, it is going to be now
    $1,000. And if I am uninsured, I probably do not have $200 or
    $1,000.
        Senator Shaheen. Well, as you all point out, this is an
    opportunity for us to look at some of those issues and
    hopefully respond in a more positive way going forward.
        Mr. Morrison, I would just like to share your concern about
    investment of the Thrift Savings Plan and the MSCI index, using
    that as the index for how to make those investments. Senator
    Rubio and I have been beating that drum for a while without
    much support from the administration.
        Mr. Morrison. Time is running out.
        Senator Shaheen. Thank you.
        Chairman Rubio. Just on that point, we have reason to
    believe that they have actually expedited moving in that
    direction. It is just crazy. It is crazy. And I mean, it is not
    a term that you normally use to describe public policy, but
    this is nuts, taking the retirement funds of Federal employees
    and the military to be invested in companies in China that are
    actively working to undermine our national security, our health
    care security, and our economic security. It just cannot
    happen. I mean, if it was not so serious, you would laugh at it
    and say that cannot be true, that is something from the
    Enquirer, or whatever.
        But it is real, and hopefully we can see action taken on
    this promptly, among other things.
        Senator Rosen, are you ready?
        Senator Rosen. Yes, thank you.
        Thank you, Mr. Chairman. Thank you to the Ranking Member.
    Thank you all for being here today.
        Needless to say, it has been quite the roller coaster since
    the coronavirus has reared its ugly head, and it is going to
    probably get worse before it gets better.
        And so, practically speaking, I can tell you that people
    think of Nevada and Las Vegas as these giant casinos. And we
    are those. But in fact, 99 percent of businesses in Nevada are
    small businesses in support of a lot of--especially in the
    Southern Nevada area--in support of those large businesses.
    They provide over 40 percent of the private jobs in our state.
    They really are the backbone of our economy. You think about
    all of the weddings we have. They are the vendors who bring the
    flowers and the candles. All of those people that make that
    happen, make the magic happen in Las Vegas, of course, in Reno
    and all across our state. And we have nearly 50 million of
    those visitors a year.
        So as far as small businesses go, what suggestions do you
    have for those businesses to be able to adapt in some way to
    the current environment. Maybe specifically, if you could speak
    to the people in the travel and tourism industry, do you
    suggest working through the Small Business Development Center?
    Are they a good cooperative partner, the SBA? Can you just talk
    about how some of these supportive businesses from our tourism
    industry, if you can? Anyone at all? Or just in general?
        Dr. Anderson. Let me try.
        I mean, I think the key thing is to make sure that they are
    going to be around in three months or two months. And I think
    what the challenge is, if you just give them a loan, they are
    going to be in trouble because they are now going to have to
    pay for it and not get any money for the last two months or so
    for the flowers and all those things because nobody is going to
    be having weddings and using all those flowers because they
    cannot bring all their friends and relatives to the wedding.
        Senator Rosen. Right.
        Dr. Anderson. And so, you are going to have to essentially,
    if you want them to survive after two months, is to give them a
    grant to survive. You are going to have to give the worker who
    might have coronavirus 14 days of paid sick leave so that they
    can quarantine at home. And you are going to have to give the
    uninsured person who needs to go to the doctor but does not
    have the $200 to go to the doctor some money and pay them on
    the basis of Medicare rates. You will not make them a medicare
    beneficiary but pay them on the basis of Medicare rates so they
    actually do get tested. And so when they are working in one of
    these small businesses, we know that you are safe to go to a
    small business.
        Because as soon as we feel like it is not safe to go to
    small business, we are going to stay at home.
        Senator Rosen. So we have to just remove the obstacles for
    specifically getting testing and being quarantined. I think
    that is the best thing. And then financial support that may not
    need to be repaid back is really the way to do it because it is
    going to take a while for everything to recover when we do,
    hopefully, all go into recovery.
        I know this is going to sound--this is happening, I know,
    across the country and not specific to tourism. But we have a
    lot of wonderful things about our entire Nation. A lot of it is
    diversity. I have heard stories about people and businesses,
    that they are not buying frozen Chinese food in a grocery
    store. They are not going--because they think that the virus is
    going to be at the Chinese restaurant. Or they think that oh,
    now that it has been in Italy, so I should not do this or that.
        So how do you think the mechanism for some of our small
    businesses--I guess they can put up signs. But how do we just
    try to dispel these myths that you shopping or going to a
    Italian restaurant in Henderson, Nevada, is not going to give
    you--it is not getting the coronavirus from Italy if we are
    living there.
        Ms. Gibson. Well, I will take a stab at that. To the extent
    that food service companies import food from China, we do have
    a lot of food imports from China, we should be mindful that the
    FDA withdrew its inspectors from there to protect them from
    what was going on.
        So the big question is who is going to be inspecting the
    places that are making our food in China or elsewhere to ensure
    that it is safe? The same is true for our medicines.
        Senator Rosen. Again, that is an imports issue.
        Ms. Gibson. That is a different issue from what you are
    talking about but there is some concern there. And I think it
    is going to be a long time before the FDA meaningful can get
    back into certainly China and some of these other countries to
    really do the work they need to do to protect the American
    people.
        Senator Rosen. Thank you.
        Chairman Rubio. Go ahead and follow up, because I have a
    number of questions.
        Senator Cardin. I just was going to thank your panelists.
        But I do want to respond to Ms. Gibson's point about drug
    shortages because there is no question the coronavirus is
    causing a concern in our supply chain on drugs. That is a fact.
    And we need to be able to have domestic productions. That is a
    need.
        But make no mistake about it, the couple hundred drugs that
    were short before the coronavirus had nothing to do with the
    supply chain issue because they were produced domestically. It
    had all to do about the economics of productions of those
    medicines because they were basically inexpensive medicines in
    which the pharmaceutical companies were not making big profits
    off of. And that is a fact.
        So when we are dealing with the shortages of drugs, let us
    make it clear that we have responsibilities to make sure drugs
    are available in this country, and it is not just supply chain.
    It is the economics of how the pharmaceutical industry is
    organized here in the United States.
        Dr. Anderson. And that is why, when we created Civica, we
    had to have a guaranteed market. And so 1,200 hospitals jumped
    up and said we know there are shortages. We will buy these
    drugs from Civica. We will guarantee the purchase of those.
        So having a guaranteed purchase is the key thing for these
    small businesses.
        Ms. Gibson. If I may add, American companies are competing
    not with companies in China, they are competing with the
    Chinese government because their domestic companies are
    subsidized. So it really is an unlevel playing field.
        Senator Cardin. Again, I want to thank the witnesses for
    their testimony.
        Chairman Rubio. Thank you.
        Before we conclude, I had a number of observations and I
    wanted to elicit points from you. Let us start with the first,
    and that is--let me begin by saying I am a big believer in
    capitalism. I am a big believer in free markets. And one of the
    reasons I am is because I believe it provides for the most
    efficient allocation of capital to the most productive place.
        However, there are times in which the most efficient
    allocation of capital does not align with our national
    interests. And in those times in which it does not align with
    our national interest, it is incumbent upon public policymakers
    to make adjustments. So we are now facing that.
        And for many months and years we have been making this
    conversation, we have been talking about this in conversation
    with people. The answer always was that either a denial that a
    problem existed or accusing this of being some sort of
    rejection of the market. It was theoretical.
        Now, it is no longer theoretical. We have before us, just
    in the health care and medical field, a market decision that it
    was more efficient, that you can do it at lower costs despite
    transportation and everything else, if you made these things
    somewhere else. And that is what the market did, destroying
    jobs and companies here and providing that there.
        And this is now couched now in some anti-China narrative
    and so forth, but it really is not. There is a national
    security component to the fact that China is a geopolitical,
    near-peer competitor. But beyond it is the reality that even if
    they did not do it on purpose, the shutdown of factories
    because of an outbreak of this virus has impacts that end up
    hurting us here.
        So the question now becomes how do we address it? And what
    can we do to incentivize investment in critical industries? And
    the topic of critical industries today is broader than it has
    ever been in the history of the world.
        So we have to identify what those critical industries are
    and then decide, from a small business perspective, what do we
    need to do to incentivize investment in those industries? And
    that will require potentially government investment but also
    incentivizing private investment in those fields.
        Is that an accurate way to assess the challenge before us
    now? That what we have seen these things leading is the
    combination of our adherence to let the market decide where it
    goes, which is generally the right decision, combined with a
    deliberate policy aim on behalf of the Chinese government to
    attract that capacity away from us. And the result is we have
    reached an efficient market outcome despite market interference
    in their part that now places our national security and
    economic security interests in danger.
        Dr. Anderson. So I agree with you totally. I would just
    make one slight modification. That is saying not government
    investment but government purchase. I think it is important for
    these small businesses----
        Chairman Rubio. Meaning on the demand side?
        Dr. Anderson. On the demand side. That they essentially
    have to have a guaranteed market. So when we are working in
    California, they are going to buy for 13 million Californians--
    the state is going to buy those. And that allows a company to
    get started in California because they have a guaranteed
    market.
        Civica has a guaranteed market for 1,200 hospitals. They
    are willing to get started. Otherwise, they would not get
    started. So guaranteed purchase is the critical thing.
        Chairman Rubio. And in that realm, let me say that there is
    a court decision that undermined the ability to do that. There
    is a DOD and VA requirement to Buy American on key components
    and drugs. And the Court ruled against it. And so this requires
    a legislative fix.
        Dr. Anderson. Correct.
        Chairman Rubio. And there is hopefully, any moment now or
    any day now, an Executive Order issued by the White House that
    will strengthen these Buy American requirements. Because now
    the Federal Government, in addition to driving the investment,
    one of the things that will drive investment is that there is a
    customer that is going to buy it. And we can be a big customer
    in some sectors.
        Again, that is not government ownership of the means of
    production, that is what socialism is. But it is government
    saying it is in our national interest to do these things.
        This is not just about--this is not even protectionism.
    This is security. So I hope we can fix that.
        Ms. Gibson. If I may add, Senator Rubio, and thank you for
    your leadership on this. We would not have our aircraft
    carriers or military equipment fully made in China. If we
    wanted to do a free market, we could do that and just outsource
    all of that. But we realize there is a point which we do not
    want to cross.
        I will say that if we want to have manufacturing here in
    the United States for our essential drugs as a national
    security issue, if we look at how we have been making medicines
    it is the same way we have been doing it 100 years ago. We have
    the opportunity to bring manufacturing home to make it more
    efficient, less costly. And that will take some initial
    investment so the DOD and the VA can have all of their
    components made here in the U.S.
        Otherwise, if we just buy--and Civica has found this.
    Civica is still finding it. It still has to get the core
    ingredients from China. New types of manufacturing, we can
    bring all of it back to the United States.
        Chairman Rubio. And this is something that I hope that we
    will be able to do together. Part of these hearings and the
    report we did is to create awareness about these challenges.
        I wanted to ask you about that in a second, Mr. Morrison.
        But I wanted to ask you, Ms. Briscoe, from the small
    businesses perspective--so we view the small business sector as
    a place that we can see some of the stuff happen. It is easy to
    focus on the guys on the cover of the magazines and on the
    stock market on a daily basis. But there is a lot of potential
    capacity out there now. And you have done a good job of
    addressing small businesses through your idea.
        Small business is vulnerable to supply chain disruption.
    But also, small businesses who could fill supply chain
    disruptions.
        Ms. Briscoe. Correct.
        Chairman Rubio. But finding the way small businesses could
    fill that is a key thing.
        So right now we are focused on just keeping people in
    business; right? There are a substantial number of small
    businesses that cannot afford to go seven to 10 days without
    operating. They do not have that kind of cash reserve, and
    things of this nature.
        Ms. Briscoe. They basically would be the problem and the
    solution at the same time. And that is what we are looking to
    do.
        Chairman Rubio. So what can we do, as we move forward on
    this first tranche of work, which is just making available in
    the most appropriate way, through 7(a) and Community
    Advantage--and using and leveraging the community banking
    industry which is there and on the ground, providing an
    increase in the percentage of guarantees to make the loans
    easier to issue.
        What would be the best thing we can do for small businesses
    to be able to access it quickly and stay afloat? Obviously, we
    have to make them aware of it, and from a paperwork standpoint
    and so forth. Do you have any practical advice as to how to
    make that--because one thing is to pass a bill that allows it
    and another thing is utilization, knowing it is there. And for
    some businesses, frankly, it may not be the solution.
        But what can we do on the ground level to actually make the
    program accessible?
        Ms. Briscoe. It should be a step-by-step process that is
    going to be easily and readily accessible for business owners
    to understand what they make and how it can benefit. As they
    have stated, a guaranteed buyer. If they have a matchmaking
    process, if I know I am making something and I know you are
    interested in purchasing, it should be just as simple as that.
        They will need an infusion of capital if they are going to
    scale up their production. So that is something that we are
    going to have to address as far as cash flow. And also work
    force. Those are two major things.
        Chairman Rubio. And that second point, about the infusion
    of capital, ties right in to one of the things that we have
    been talking about as far as the second step, and that is not
    only do you want to make more capital available for companies
    to stay afloat. But to the extent possible, we want to try to
    focus as much of that as possible not just to small business
    writ large, but in specific critical industries that could help
    fill these gaps and that are tied to all of this.
        Which leads me to the question for you, Mr. Morrison, and
    that is is not one of the challenges we face now that the
    definition of a critical industry for the country has to be
    broader than it has historically been? Everyone will agree
    aircraft carriers and airplanes are things we need to make. It
    takes a little while to convince people that making forklifts
    or pharmaceutical ingredients that, at an individual level may
    not mean anything to most people around this country but in the
    cumulative have enormous impact. Part of the challenge we have
    is identifying a much broader scope of what qualifies for a
    critical industry or critical supply need for the country in
    the 21st century which either we took for granted in the past
    or never had to address.
        Mr. Morrison. Mr. Chairman, I think that is exactly right.
    There is a reason that we have effectively lost the race for
    5G. It is because we have relied on the market and now there
    are no American companies left that do this work.
        The Chinese had a plan. They are on the cusp of their 14th
    five-year plan. They have Made in China 2025 and Made in China
    2035 is about to come out.
        They have determined the strategic sectors that they want
    to dominate in the future economy. And what they do in the
    domestic market is they boost up the price, they restrict the
    ability for outside companies, American companies and other
    companies to compete, and then they provide all manner of trade
    promotion tools, zero interest loans, to dominate export
    markets.
        And so our small businesses, our medium-sized businesses
    and other American ventures are playing by one set of rules and
    the Chinese companies are playing by another set of rules. In
    another realm of national security, we would call that
    unilateral disarmament.
        And so that is the question to investigate. That is why I
    talked about the BUILD Act. That is why I talked about your
    amendment to the Defense Authorization Act last year.
        Using our market power, determine what industries are
    critical, and then taking steps to level the playing field. Do
    not put our businesses on a different playing field and tie
    them to different rules than the Chinese hold its businesses.
        Chairman Rubio. I appreciate all of you being here today
    and your patience on the hearing. The Senate is voting now, so
    we will have to head to that.
        But I want to thank you because your expertise and your
    ideas are aligned with a lot of the work we are already doing.
    We have come up with some good new ideas, as well.
        The hearing record will stay open for two weeks and any
    statements or questions for the record should be submitted by
    Thursday, March 26 at 5:00 p.m.
        With that, the hearing is adjourned.
        [Whereupon, at 12:03 p.m., the Committee was adjourned.]

                          APPENDIX MATERIAL SUBMITTED

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