    [House Hearing, 119 Congress]
    [From the U.S. Government Publishing Office]

                   NATIONAL ECONOMIC SECURITY, ADVANCING U.S.
                               INTERESTS ABROAD

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

                                    HEARING

                                     OF THE

                     SUBCOMMITTEE ON EAST ASIA AND PACIFIC

                                   BEFORE THE

                          COMMITTEE ON FOREIGN AFFAIRS
                         U.S. HOUSE OF REPRESENTATIVES

                        ONE HUNDRED NINETEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                  May 14, 2025

                                   __________

                               Serial No. 119-18

                                   __________

            Printed for the use of the Committee on Foreign Affairs

                     [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    Available: http://www.foreignaffairs.house.gov/, http://docs.house.gov
                           or http://www.govinfo.gov

                                   ______

                     U.S. GOVERNMENT PUBLISHING OFFICE

    60-912PDF                 WASHINGTON : 2025

                          COMMITTEE ON FOREIGN AFFAIRS

                        BRIAN J. MAST, Florida, Chairman

    MICHAEL T. McCAUL, Texas             GREGORY W. MEEKS, New York,
    CHRISTOPHER H. SMITH, New Jersey         Ranking Member
    JOE WILSON,, South Carolina          BRAD SHERMAN, California
    SCOTT PERRY, Pennsylvania            GERALD E. CONNOLLY, Virginia
    DARRELL ISSA, California             WILLIAM R. KEATING, Massachusetts
    TIM BURCHETT, Tennessee              AMI BERA, California
    MARK E. GREEN, Tennessee             JOAQUIN CASTRO, Texas
    ANDY BARR, Kentucky                  DINA TITUS, Nevada
    RONNY JACKSON, Texas                 TED LIEU, California
    YOUNG KIM, California                SARA JACOBS, California
    MARIA ELVIRA SALAZAR, Florida        SHEILA CHERFILUS-McCORMICK,
    BILL HUIZENGA, Michigan                  Florida
    AUMUA AMATA COLEMAN RADEWAGEN,       GREG STANTON, Arizona
        American Samoa                   JARED MOSKOWITZ, Florida
    WARREN DAVIDSON, Ohio                JONATHAN L. JACKSON, Illinois
    JAMES R. BAIRD, Indiana              SYDNEY KAMLAGER-DOVE, California
    THOMAS H. KEAN, JR, New Jersey       JIM COSTA, California
    MICHAEL LAWLER, New York             GABE AMO, Rhode Island
    CORY MILLS, Florida                  KWEISI MFUME, Maryland
    KEITH SELF, Texas                    PRAMILA JAYAPAL, Washington
    RYAN K. ZINKE, Montana               GEORGE LATIMER, New York
    JAMES C. MOYLAN, Guam                JOHNNY OLSZEWSKI Jr, Maryland
    ANNA PAULINA LUNA, Florida           JULIE JOHNSON, Texas
    JEFFERSON SHREVE, Indiana            SARAH McBRIDE, Delaware
    SHERI BIGGS, South Carolina          BRADLEY SCOTT SCHNEIDER, Illinois
    MICHAEL BAUMGARTNER, Washington      MADELEINE DEAN, Pennsylvania
    RYAN MACKENZIE, Pennsylvania

                  James Langenderfer, Majority Staff Director
                     Sajit Gandhi, Minority Staff Director

                                     ------

                     SUBCOMMITTEE ON EAST ASIA AND PACIFIC

                       YOUNG KIM, California, Chairwoman

    MICHAEL T. McCAUL, Texas             AMI BERA, California, Ranking
    ANDY BARR, Kentucky                      Member
    AUMUA AMATA COLEMAN RADEWAGEN,       BRAD SHERMAN, California
        American Samoa                   JOAQUIN CASTRO, Texas
    RYAN ZINKE, Montana                  JARED MOSKOWITZ, Florida
    JAMES MOYLAN, Guam                   GABE AMO, Rhode Island
    SHERI BIGGS, South Carolina          JOHNNY OLSZEWSKI, Maryland
    RYAN MACKENZIE, Pennsylvania

                     Tom Hill, Subcommittee Staff Director

                             C  O  N  T  E  N  T  S

                                  ----------

                                REPRESENTATIVES

                                                                       Page
    Opening Statement of Chairwoman Young Kim........................     1
    Opening Statement of Ranking Member Ami Bera.....................     2

                                   WITNESSES

    Statement of Elaine Dezenski, Senior Director and Head of the
      Center on Economic and Financial Power, The Foundation for
      Defense of Democracies.........................................     4
      Prepared Statement.............................................     7
    Statement of William Norris, Associate Professor, Texas A&M
      University.....................................................    16
      Prepared Statement.............................................    19
    Statement of Wendy Cutler, Vice President, Asia Society Policy
      Institute......................................................    39
      Prepared Statement.............................................    41
    Statement of Matthew P. Goodman, Director of the Greenberg Center
      for Geoeconomic Studies, Council on Foreign Relations..........    47
      Prepared Statement.............................................    49

                                    APPENDIX

    Hearing Notice...................................................    74
    Hearing Minutes..................................................    76
    Hearing Attendance...............................................    77

                            Material for the Record

    Slides submitted by William Norris...............................    78

                   NATIONAL ECONOMIC SECURITY, ADVANCING U.S.
                               INTERESTS ABROAD

                                  ----------

                            Wednesday, May 14, 2025

                      House of Representatives,
                 Subcommittee on East Asia and Pacific,
                                  Committee on Foreign Affairs,
                                                       Washington, D.C.

        The subcommittee met, pursuant to notice, at 10 a.m., in
    room 2172, Rayburn House Office Building, Hon. Young Kim (chair
    of the subcommittee) presiding.
        Ms. Kim. Good morning, everyone. The Subcommittee on East
    Asia and the Pacific will come to order. The purpose of this
    hearing is to discuss how the United States could prioritize
    economic statecraft more effectively and efficiently, taking
    special notice of the role of the Department of State. So let
    me now recognize myself for an opening statement.

               OPENING STATEMENT OF CHAIRWOMAN YOUNG KIM

        Ms. Kim. Good morning and welcome to the East Asia and the
    Pacific Subcommittee's National Economic Security, Advancing
    U.S. Interests Abroad. In 2019, Ambassador William Burns, one
    of our most decorated diplomats and former CIA director,
    described the Department of State as adrift. Over the years,
    the department has had trouble finding its purpose, as
    functions and authorities have been stripped away or absorbed
    by the National Security Council, Department of Defense, and
    even agencies traditionally focused on domestic issues.
        For more than 170 years, economic statecraft was led by the
    Department of State. This changed in 1961, when President
    Kennedy sought to expand the administrative State, pulling
    functions and authorities out of the department to create new
    agencies and organizations, including the United States Trade
    Representative, which would be responsible for conducting all
    U.S. trade and investment diplomacy.
        The justification for pulling these trade and investment
    functions out of the department was to improve the government's
    capacity to prioritize and support U.S. businesses, strengthen
    the export performance of U.S. industry, and assure fair
    international trade practices. However, it has, effectively,
    split our economic interests from our diplomatic priorities,
    which has resulted in several challenges.
        The first challenge is that it has not helped increase the
    ability of U.S. businesses to access foreign markets. In
    practice, the Foreign Commercial Service and Foreign
    Agriculture Service officers are few in number and often
    positioned at U.S. embassies without alignment to
    ourpriorities. When I travel abroad, I routinely meet with FCS
    personnel who explain that they spend most of their time
    engaged in trade shows and organizing events with minimal
    direct work on increasing and securing market access for
    American businesses. Because they are siloed off from our
    diplomatic efforts of the Department of State, they are
    restricted in leveraging the other tools in our diplomatic
    toolkit to assist American companies.
        The second challenge is that the American market has been
    left susceptible to predatory foreign competition. Our ability
    to protect American businesses and workers has been severely
    hampered, leading to calls from across the country for the
    executive to act and repatriate entire industries and sectors.
    President Trump, like his predecessors, has repeatedly said
    that economic security, economic policy is. Unfortunately, we
    have not implemented the structural reforms needed to mobilize
    that sentiment.
        Even President Obama asked Congress for the authority to
    consolidate six agencies with trade and investment functions in
    2012. This request was not supported by Congress. Bipartisan
    administrations have independently come to the same conclusion:
    the current alignment of functions and agencies charged with
    leading our economic statecraft effort is in need of structural
    reform.
        I agree that economic security is national security, and
    the key question we will be asking today is what structural
    reforms are necessary to reflect this prioritization? So we
    intend to answer that question in our committee's first
    comprehensive State authorization legislation that we will be
    doing in more than 20 years.
        Let me now recognize Ranking Member Ami Bera for your
    opening remarks.

              OPENING STATEMENT OF RANKING MEMBER AMI BERA

        Mr. Bera. Thank you, Madam Chairwoman. And I also just want
    to recognize and appreciate that, in our conversations setting
    up this hearing, that we set up a bipartisan panel, so I do
    appreciate that because, again, market access, you know,
    helping our companies be successful around the world is not a
    Democratic or a Republican agenda item. It is something that I
    think we all care about.
        I appreciate the witnesses. You know, I obviously have
    gotten to know Wendy Cutler and Matt Goodman over the years and
    have had the pleasure of working with them and certainly
    looking forward to hearing from the Republican witnesses. I
    have said this a lot, you know: had I had a magic wand, we
    would go back to 2014 and we would have had TPP in place and,
    you know, we would have had a framework for the movement of
    goods and services. We are not there yet, so we are where we
    are.
        I do think it is incredibly important for us, as we go
    through a State Department authorization process, this is not
    exactly how I would have gone about reorganizing the State
    Department. I would have done it in a slightly different way
    than President Trump has chosen to do it, but we find ourselves
    with an opportunity to think about what a 21st century State
    Department would look like, what 21st century tools of economic
    engagement, economic development, of trade, of tariffs would
    look like and where that's best housed.
        I know, in our analysis, as we have talked to others, I do
    think it is incredibly important to have economics as part of
    the State Department, to have representatives around the world
    within our embassies out there promoting U.S. goods, products,
    working with our companies to help them navigate, you know,
    foreign markets and so forth. I also think it is very
    important, you know, as we watch these tariff conversations
    unfold, that we take it as an opportunity perhaps to remove
    tariff barriers. You know, again, this isn't exactly how I
    would have gone about doing it. I certainly would not have
    targeted, you know, countries like Australia where we actually
    have a trade surplus, you know, close allies, like Japan and
    Korea. But I am happy that the president is prioritizing some
    of the Indo-Pacific nations as first places to enter into
    negotiations and, you know, having just returned from Korea,
    having some real interesting conversations. The U.S. Trade
    Representative is in Korea right now engaging in some of those,
    have had conversations with the Japanese and others.
        Also, I think there is a unique opportunity with the ASEAN
    nations. We had dinner a few weeks ago with the ASEAN
    Ambassadors, and they are looking for guidance here in terms of
    how to approach this. But there is a very real recognition from
    the Southeast Asia nations that they don't want the United
    States to leave these markets, so I do think there is an
    opportunity there.
        I think some of the important things that were accomplished
    under the Biden administration were programs like the Mineral
    Security Partnership. These are important programs in the sense
    that, you know, as we look for redundant supply chains, so
    we're not solely dependent on a single source, in this case on
    Beijing and the PRC. It is an opportunity for us to work with
    like-valued allies, like Japan, Korea, Australia, to build
    redundant supply chains for these rare earth elements and
    critical minerals. I think you need State Department diplomacy
    to help negotiate a lot of these deals and so forth. So I think
    we should be very careful in dismantling some of this
    expertise.
        Last, I would say, you know, while IPEF was not exactly how
    I would approach trade, I think digital trade is incredibly
    important to what we do economically. I think getting a digital
    trade, digital services deal done that doesn't disadvantage
    U.S. companies, U.S. technology companies where we're dominant
    is incredibly important. I think, again, in these trade tariff
    negotiations and conversations, I think there is strong
    bipartisan support for us to get a context and some digital
    services trade framework done.
        So, again, I look forward to hearing from the witnesses and
    from your expertise. Thank you, and I will yield back.
        Ms. Kim. Thank you, ranking member. The other members of
    the committee are reminded that opening statements may be
    submitted for the record.
        We are pleased to have a distinguished panel of witnesses
    before us today on this very important topic. First, Ms. Elaine
    Dezenski. She is a Senior Director and head of the Center on
    Economic and Financial Power at the Foundation for Defense of
    Democracies. The center produces actionable research and policy
    proposals to address global economic threats, illicit finance
    and supply chain vulnerabilities, while promoting the forceful
    use of economic power to advance American interests. She has
    more than two decades of experience in government, industry,
    academia, and international organizations, building an
    expertise in economic statecraft, supply chain resilience,
    illicit finance, anti-corruption, and national security. Thank
    you for joining us.
        Dr. William Norris is an Associate Professor of Chinese
    Foreign and Security Policy at the George Bush School of
    Government and Public Service at Texas A&M University. He is
    also the director of the Economic Statecraft Program where he
    focuses on the strategic relationship between economics and
    national security. He is a recipient of the World Politics and
    Statecraft Fellowship by the Smith Richardson Foundation. Thank
    you for joining us.
        Ms. Wendy Cutler, Vice President at the Asia Society Policy
    Institute and the managing director of the Washington D.C.
    office. In these roles, she focuses on leading initiatives that
    address challenges related to trade, investment, and
    innovation. Previously, she spent nearly three decades as a
    diplomat and negotiator in the office of the USTR working on a
    range of bilateral, regional, and multilateral trade
    negotiations and initiatives. Thank you for joining us.
        Last, Mr. Matthew Goodman is a distinguished fellow and
    director of the Greenberg Center for Geoeconomic Studies at the
    Council of Foreign Relations. He leads the RealEcon:
    Reimagining American Economic Leadership initiative, exploring
    the U.S. role in the international economy. Prior to joining
    the council, he served as the senior vice president for
    economics and Simon chair in political economy at the Center
    for Strategic and International Studies. He was also the
    Director for International Economics on the National Security
    Council staff during the second administration under President
    Obama. Thank you so much for joining us.
        Now, the committee recognizes the importance of the issues
    before us and we are so grateful to have you here to speak with
    us today. Your full statements will be made part of the record,
    and I will ask each of you to keep your spoken remarks to 5
    minutes in order to allow time for member questions.
        Let me now recognize Ms. Dezenski for your opening remark.

                      STATEMENT OF ELAINE DEZENSKI

        Ms. Dezenski. Chairwoman Kim, Ranking Member Bera, members
    of the subcommittee, thank you so much for the opportunity to
    testify. It is an honor to be here today.
        The United States has too often responded to serious
    geopolitical challenges in an unserious way, failing to prepare
    for either crises or opportunities and poorly employing one of
    America's most potent weapons: our economic power. In 2008,
    Russia invaded Georgia. America was unprepared. In 2014, Russia
    invaded Ukraine and illegally annexed Crimea. Again, America
    was unprepared. In 2022, Russia, again, invaded Ukraine and
    started a war that killed hundreds of thousands of soldiers and
    civilians. Somehow, once again, we were unprepared.
        In each case, our economic power was either underutilized
    or disregarded. Sanctions, when they came, were ad hoc,
    incremental, and did more to push the war into a stalemate than
    to bring peace. Poorly enforced export controls led to blatant
    evasion, and leaky oil caps gave rise to a shadow fleet
    flotilla.
        Russia is not the exception. The Arab Spring blossomed and
    died without meaningful U.S. economic support. Venezuelan
    elections were stolen, and a handful of officials are
    sanctioned. A coup overthrows democracy in Myanmar, and
    America's enormous economic power sits idle. Over and over, the
    U.S. responds to global crises with a fragmented toolkit: a
    sanction here, an export control there. Disconnected, delayed,
    and diluted.
        Still, we have unmatched strengths: the world's reserve
    currency, deep capital markets, innovative companies. And, yet,
    we spread our economic power across dozens of siloed agencies
    without a central strategy or command structure. Technology
    isn't maximized, enforcement isn't prioritized, intelligence
    isn't operationalized.
        Now is the ideal time to change this. We are in an economic
    moment of opportunity that we haven't seen in 80 years. We need
    to seize this period of trade awakening to elevate economic
    statecraft as a key tenet of U.S. foreign policy and driver of
    national security. We can no longer treat adversaries and chaos
    agents the same as allies and rule followers. To push back, we
    must use the power of our markets to defend our markets by
    creating a Near-Global Economy. American capital and consumers
    should not be open to every rogue nation or evil empire. Access
    to our markets must be reserved for those who accept market
    principles, and access to our currency must be granted to those
    who don't manipulate their own.
        The status quo must change and quickly. As my written
    testimony lays out, the State Department is well placed to meet
    the new global moment of economic engagement by reinforcing
    foreign policy strengths and developing new economic policy
    capabilities.
        We must begin, however, with a recognition that we may have
    launched an economic war without an economic pentagon. To
    address our organizational deficiencies will require dedicated
    new leadership, such as establishing a Deputy Secretary of
    State for Economic Security, that could lead a new Interagency
    Economic Command Center. It will require new specialists on
    economic security within the diplomatic corps to translate
    strategies into country-level action and feed local
    intelligence back into policy.
        It will require new planning capacities to proactively war
    game risk scenarios and develop pre-planned economic strike
    packages and reserve staff to call up in times of crisis. It
    will require innovative new tools, like an Economic Strike
    Force, to provide a conditional support package when a regime
    is toppled or a reformer comes to power to support banking,
    trade, and sustain jobs for potential new allies during periods
    of upheaval. And it will require modernizing our economic
    statecraft efforts with new technology, real-time data, and
    innovative intelligence tools.
        New capacities, better training, and leading-edge
    technology are all essential. But there must also be an
    institutional shift of culture and mindset. Economic security
    must go beyond isolated sanctions and export controls to a
    coordinated strategy that deploys tariffs, investment
    screening, supply chain initiatives, transparency mechanisms,
    and foreign development in a more integrated way.
        As I show in a graphic on the final page of my written
    testimony, the wide variety of statecraft tools are integrated
    gears that drive the engine of America's economic power
    projection. With the right leadership, the right tools, and the
    right strategy, we can unleash the full potential of that
    engine. We can bring American economic power to bear faster,
    smarter, and with purpose. We can deter aggression, support
    allies, and help anchor a Near-Global Economy that is stable,
    free, open, and fair.
        Thank you. I look forward to your questions.
        [The prepared statement of Ms. Dezenski follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Ms. Kim. Thank you. I now recognize Dr. Norris for your
    opening statement.

                      STATEMENT OF WILLIAM NORRIS

        Mr. Norris. Thank you, Chairwoman Kim, Ranking Member Bera,
    members of the subcommittee. I thank you for the opportunity to
    speak today. My comments are my own. I am not representing my
    employer, Texas A&M University, nor the Bush School of
    Government and Public Service. This testimony represents my own
    views and does not reflect the endorsement or perspective of
    any other organization with which I am or have been affiliated.
        I would like to cover three topics in my oral testimony
    today. First, I am going to provide an innovative definition of
    economic statecraft itself, which I hope will be constructive.
    Then I will briefly suggest a simple way to improve how we
    approach economic statecraft strategy. I will be suggesting
    that we shift our way of thinking away from a tools-based
    approach oriented exclusively around the authorities that exist
    in the U.S. Government and toward more of an end-State approach
    of desired effects and what we are trying to accomplish with
    that. I will end with some general principles that I hope will
    help guide our path forward as we endeavor to do economic
    statecraft better.
        Economic statecraft itself can be something of a Rorschach
    test. What you see when you look at it depends heavily on where
    you sit. For example, if you're at OFAC and you are an analyst
    at Treasury, you think of economic statecraft primarily as
    sanctions. If you are in the Commerce Department, economic
    statecraft is about promoting U.S. businesses abroad or perhaps
    it is about economic export controls if you are at the Bureau
    of Industry and Security. The point is many people now care
    about economic statecraft, but we don't really have a common
    definition or lexicon on this important topic yet.
        My work at the Economic Statecraft Program at Texas A&M
    University has thought long and hard about this, and we have
    come up with what I think might be a useful way for thinking
    about the phenomenon of economic statecraft. It starts with
    commercial actors themselves. Most of economics is not done by
    countries, although we report macroeconomic data at the
    national level. Most of the actual work being done in economic
    domains is done by firms. I call them commercial actors because
    they also want to include things like state-owned enterprises
    or sovereign wealth funds. These entities will make decisions
    primarily based on their own self-interests, and, from time to
    time, those decisions about where to locate a factory, how to
    design a supply chain, are going to have implications for
    national security that matter for countries.
        When countries decide that they care about these
    externalities or these kinds of strategic effects and they
    decide they want to shape the incentives facing those
    commercial actors, that is economic statecraft. And that
    definition, I think, allows us to have a much wider aperture
    about what is inbounds, and I think a lot of the comments
    already have kind of listed through a number of different tools
    that we have used in the recent past, but what is lacking is a
    sense of coherence of strategy, of integration, and of
    coordination across those tools.
        So the typology that I included in the slides in the
    written testimony provides a little bit of a framework for
    thinking about the different ways that economic activity can
    read down to an impact on national security.
        We are a rules-based society; and, currently, we are
    organized on the basis of legal authorities that the U.S.
    Government has to do economic statecraft. But these authorities
    are scattered across more than 1,400 different offices that are
    spread across 13 departments and 10 agencies with very little
    coordinating capacity across those silos. Most parts of the
    U.S. Government lack the ability to do any kind of economic
    statecraft campaign planning, contingency modeling, strategic
    forecasting, any kind of meaningful economic analysis from a
    statecraft perspective or an evaluation of impact. So there is
    very little capability to kind of do that coherently and in a
    strategic fashion today.
        Instead of this tools-based approach, I suggest organizing
    ourselves around the desired strategic effects is a better way
    to do economic statecraft. Those are those six externalities I
    kind of walk through in the written testimony.
        In conclusion, I would like to suggest a few key principles
    that I think might be constructed to help guide us as we
    endeavor to more effectively design mechanisms by which to do
    economic statecraft. In many ways, we are embarking on
    unchartered territory for the United States. As we proceed, I
    think you will be well served to keep efforts grounded in
    longstanding values and principles that have been a key part of
    the U.S. success story. Here is a couple of them as I see them:
        The first one is we have to work with the American private
    sector, not against it. A lot of the sanctions paradigm
    inherently pits interests that the commercial sector are going
    to have against the wishes of government, and that is just
    fundamentally a conflictual kind of relationship.
        The second, our national power ultimately derives from U.S.
    economic growth and innovation. Increasing long-run
    productivity gains is really the key to succeeding in any
    international competition of duration.
        Third, we need to be very careful about industrial policy,
    protectionism, or other sorts of market-distorting measures, as
    these can easily become politically ingrained and they can lead
    to inefficiencies and a failure to innovate in the long run.
        Fourth, government initiatives are most effective when they
    are focused simply and directly on addressing market failures.
        And, last, I think it is important for us to be humble. We
    are going to try out a lot of things. The stakes are just too
    high for us to simply do nothing in the face of the challenges
    that you have already heard about this morning. As you proceed,
    I would suggest building in the capacity to reevaluate and
    explicitly take stock of whether things are working or not.
        In my written testimony, I have also included a number of
    specific ideas and recommendations for how we might think about
    enhancing the USG abilities in this domain of economic
    statecraft. These involve organizational ideas, ways to improve
    our human capital, and processes to enhance effectiveness.
        I would now like to respond to any questions that the
    committee may have.
        [The prepared statement of Mr. Norris follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Ms. Kim. Thank you, Dr. Norris. I now recognize Ms. Cutler
    for your opening statement.

                       STATEMENT OF WENDY CUTLER

        Ms. Cutler. Thank you, Chairwoman Kim, Ranking Member Bera,
    and distinguished members of the subcommittee. Thank you so
    much for inviting me to testify before you today. Having worked
    on trade policy in the U.S. Government for over 30 years,
    mainly at USTR, but also Commerce, I have seen firsthand what
    has worked and what could stand improvement. And I
    wholeheartedly agree with the committee's premise for this
    hearing: namely, that in today's environment, economic policy
    is, indeed, foreign policy and economic security is national
    security.
        Over the past few months, I have traveled to Asia
    extensively and have conversed with many delegations in
    Washington negotiating trade agreements. My Asian colleagues
    have shared with me their deep concerns about the direction of
    U.S. trade and economic policy and the atmosphere of
    uncertainty it has created. They do not understand the U.S. end
    game, particularly if we seek their cooperation to counter
    China. Some have gone so far as to say they no longer know the
    United States, which looks increasingly unreliable and inward-
    looking. And though encouraged by the recent de-escalation of
    U.S.--China trade tensions, Asian partners are concerned that
    their window for navigating between American and Chinese
    pressure is closing.
        As a result, diversification efforts are underway away from
    the United States. These efforts have taken on a new urgency.
    Asian partners are launching new trade and economic
    initiatives, updating existing trade pacts, and seeking new
    members to join these arrangements. And as we continue to
    retreat from leadership, Chinese officials are stepping up
    their so-called charm offensive, trying to woo countries by
    offering to build new railways and bridges, lift sanctions, and
    portraying Beijing as the defender of the multilateral rules-
    based system.
        While Beijing is extending carrots, the U.S. is favoring a
    stick approach in the form of high tariffs as we dismantle many
    U.S. foreign aid and assistance programs. The contrast could
    not be starker. Successful economic statecraft cannot be
    achieved solely by thinking how we should reorganize or
    restructure at home. It must be anchored in a coherent, fair,
    and sustainable economic and trade policy framework.
        The global economic landscape has changed dramatically in
    recent years but our economic policy frameworks have not kept
    pace. And based on my decades of working with State Department
    officials, I offer a few personal observations:
        First, I believe that the personnel rotational system at
    State works against State officials playing a more central role
    on economic matters. Trade negotiations often require technical
    expertise and take multiple years to negotiate, while State
    Department assignments typically last two or 3 years.
        Second, economic jobs are generally viewed more as
    backwater assignments at State with ambitious Foreign Service
    officers preferring to stay in the foreign policy and security
    lanes. Regarding how the U.S. Government should organize itself
    to address economic statecraft, economic security, and trade
    more effectively, it's safe to say that, if we could start from
    scratch, our current model whereby key functions are scattered
    among many agencies would not be the first choice.
        If we look to centralize all of these functions under one
    roof, in my view, none of the existing agencies are fit for
    purpose. At a time when the United States is trying to rebuild
    a bipartisan consensus supportive of trade, I believe moving
    the trade policy functions to State would send the absolutely
    wrong signal, namely that broader geopolitical objectives would
    be given more weight than the views of U.S. workers,
    businesses, and communities.
        Moreover, creating a new agency that brings all of these
    functions under one roof, I believe, would be fraught with
    bureaucratic and cost challenges. Thus, I contend that the best
    way to proceed is to implement a set of specific reforms and,
    in my testimony, offer four proposals for your consideration,
    including elevating the importance of economic matters at the
    State Department; having State clearly in the lead on specified
    international economic matters; establishing a new U.S.
    governmentwide fast-track program to recruit and promote and
    retain international economic officers; and, finally, as
    Chairman Kim suggested, folding the Foreign Commercial Service
    back into the State Department.
        But, in conclusion, let's keep in mind that government
    reorganization, while a worthy exercise, will not succeed if we
    don't get our policies right. Thank you.
        [The prepared statement of Ms. Cutler follows:]

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        Ms. Kim. Thank you, Ms. Cutler. I now recognize Mr. Goodman
    for your opening statement.

                    STATEMENT OF MATTHEW P. GOODMAN

        Mr. Goodman. Thank you, Madam Chairwoman, ranking member,
    members of the committee, for this opportunity to testify
    today. I would like to make three points, and I might sneak in
    a fourth one based on what Wendy just said if I have time.
        First, at a tumultuous time, we need to keep our eye on
    enduring U.S. interests. In my written submission, I said we
    are going through a kind of historical hurricane in which the
    global economic order that the United States, effectively,
    created and championed for decades was being upended. The Trump
    administration's tariffs and disruption of the institutions and
    norms of that order are clearly the latest phase of that storm,
    but you could argue the order has been teetering since the
    first decade of this century, buffeted by the so-called China
    shock, the inflows of cheap manufactured goods before and after
    China joined the WTO in 2001, that devastated certain sectors
    and geographies in the United States and the global financial
    crisis later that decade. And, of course, we have had the
    emergence of other risks, from global pandemics to climate
    change to technological developments that have given rise to a
    new area of policy in Washington: economic security or managing
    economic-related risks to the threat in national security or
    the foundations of the economy.
        When you are in a hurricane, naturally, your focus is on
    protecting your family and property, on battening down the
    hatches, on ducking and covering; and it is hard to see past
    the storm to the landscape beyond. But for the United States,
    we have other enduring interests that go beyond just protecting
    ourselves. To advance our economic and strategic interests, we
    need to engage affirmatively in the global economy.
    Economically, we need trade and investment, fair and resilient
    trade and investment, to tap into the three-quarters of the
    global economy and 95 percent of consumers located outside the
    United States.
        Strategically, we need to complement our military presence
    around the world with economic engagement. Our allies and
    partners want us to do both. And we have what I call strategic
    economic interests, namely the need to continue championing our
    preferred rules, norms, and standards around the world, while
    others are seeking to champion theirs.
        As this committee knows well, all of these interests,
    economic, strategic, and strategic economic are especially
    important in the Asia-Pacific region where most of our big
    challenges and opportunities lie. I am very concerned that we
    have no Asian economic strategy to speak of at the moment and,
    arguably, haven't for a number of years, leaving others to move
    ahead with their own arrangements to advance their economic and
    strategic interests and spread their own preferred rules.
        Against this backdrop, my second point is that the United
    States needs a smart economic statecraft to advance our
    interests. Economic statecraft is a two-sided coin: using U.S.
    economic power and leverage to advance our strategic and
    foreign policy interests and using our diplomacy to advance our
    economic interests. Smart economic statecraft needs to be
    balanced, especially between defensive and offensive efforts.
    We need to both promote and protect--sorry--protect and promote
    our economic interests through policies ranging from export
    controls to affirmative trade negotiations. We also need to
    balance costs and benefits and balance international and
    domestic policies to make sure that we are maximizing our
    economic position and our strategic benefits and to win the
    support of Americans, which is very important.
        Strategic economic statecraft also needs to be leveraged in
    the sense that the U.S. Government alone doesn't have the
    resources and capabilities to do everything we need to do. We
    need to crowd in both the private sector and our allies and
    partners to reinforce our statecraft on both the offensive and
    defensive sides.
        My third and final point is that all of this requires a
    capable State Department that puts a priority on economic
    diplomacy. State's comparative advantage among U.S. Government
    agencies is its reach, its presence in 175 countries around the
    world and ability to operate across government and society in
    those countries. The so-called E-line at State where the
    economic bureaus are housed is one of the few parts of the U.S.
    Government that works on both promote and protect sides of
    economic statecraft, everything from commercial advocacy to
    economic security, such as the Minerals Security Partnership
    that Congressman Bera mentioned and pushing back on economic
    coercion, for example. They have done a lot of great work
    there.
        What the State Department needs is a culture that values
    economic work more highly, and this, in turns, requires
    leadership and signaling from the top and resources to do the
    job. And I fear that the cuts to State's budget that have been
    proposed will come disproportionately at the expense of the
    department's economic functions.
        Thank you for your attention. I have more to say about
    government reorganization and happy to talk about that if you
    would like to ask questions----
        Ms. Kim. We can do that during Q&A, I'm sure. So thank you,
    Mr. Goodman.
        [The prepared statement of Mr. Goodman follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Ms. Kim. I now recognize myself for the 5-minutes of
    questioning.
        I want to start by saying there has been a lot of
    suggestions about ways to elevate our economic statecraft
    regime. You may know Dr. Henry Farrell and Dr. Abraham Newman,
    they wrote in their article for Foreign Affairs in October 2023
    that the U.S. needs a comprehensive economic security strategy
    to outline how the U.S. could implement its de-risking
    strategy.
        Dr. Norris, I know the working group that you led has done
    a lot of outside-the-box thinking on how to align economic and
    national security resources. So can you share your thoughts on
    the idea advocated by some to create an economic security
    intelligence apparatus aligned with other intelligence arms of
    the U.S. government?
        Mr. Norris. Sure. I think that the suggestion is probably
    coming into a space that has, for a long time, been relatively
    under-resourced and under-provisioned. A lot of intelligence
    focuses around military or strategic intelligence. Economic
    intelligence is done widely in the private sector but not
    nearly to the same scale or breadth in government, and so I
    think that there is potentially a positive contribution to be
    made around building out our capacity of being able to do
    economic security intelligence.
        The comment about Farrell and Newman's work, I think it is
    pretty emblematic in political science because it tends to
    conceive of economic tools of national power through a
    relatively coercive lens. And I agree that is an important part
    of how these things work, but it is not the only part. And it
    may not necessarily be the thing that the United States is best
    at, so I would encourage the committee to think more broadly
    and holistically about economic tools of national power. Thank
    you.
        Ms. Kim. Thank you. You know, should Congress consider
    reviving the Office of Technology Assessment, that provided
    legislative branch with scientific advice? What is your
    thinking on that?
        Mr. Norris. I am not a technical specialist, so I always
    find technical advice to be very constructive in a policy
    domain. I think that it is useful in terms of informing good
    policy. It provides that kind of information flow back and
    forth.
        Ms. Kim. Let me go to Ms. Dezenski. In April 2024, you
    wrote an article published in the FDD website. I think the
    title was Economic Security is National Security in which you
    seem to support the idea of creating a new Economic Security
    Council to be used as a referee to mitigate the disputes
    between the NSC and NEC. Is that still your view, and how do
    you feel about the Economic Security Council idea today?
        Ms. Dezenski. I do think it is still a good idea to have
    that strong interagency engagement and the ability to close the
    gap across the siloed organizations and regulatory authorities
    and policies that are being used right now. So I think we need
    that more than ever.
        Ms. Kim. Thank you. The department has struggled to find
    its purpose as its most important authorities and functions
    have been absorbed by other agencies, as I mentioned in my
    opening remarks. This is especially true when it comes to our
    economic statecraft. Presidents Obama, Trump, both made efforts
    to move USTR. And President Obama proposed to consolidate it
    with five other agencies, and President Trump said it should be
    absorbed by Commerce. So there is bipartisan belief that USAR's
    current independent status is undesirable.
        Dr. Norris, where should USTR reside? And I would like to
    ask Ms. Dezenski to also answer the question. Should
    international economic statecraft be led by single agency? And
    if so, which agency should lead it? Can you both tackle that?
        Mr. Norris. Sure. So USTR plays a very important role in
    spearheading trade efforts on the part of the U.S. Government.
    I think what is missing has been the ability to integrate that
    into a larger strategy and security strategy. At various times,
    we have integrated it. And so I think that, when we think about
    where it ought to live and what functions it performs, I think
    it needs to be considered under the larger umbrella of strategy
    and how that role feeds into U.S. strategy. Whether it is to
    expand free trade agreements or to constrict them, all those
    things kind of matter from a strategy perspective.
        Ms. Kim. Thank you. Yes, I am going to give some time.
        Ms. Dezenski. Thank you. With respect to who should lead on
    economic statecraft, I think there's a leadership role across a
    variety of organizations and tools and authorities, as I
    mentioned in the testimony; but I do think there is an
    opportunity for State Department to take a lead coordination
    role. It just feels like the time is right for this. It has to
    reside somewhere. The interagency process is valuable and
    meaningful, but there needs to be leadership that connects
    strategy to operational implementation and coordination. And
    because we are now in what I think is a full-scale pivot to an
    economic security power projection era, that [economic
    security] is foreign policy now. So I believe it makes sense to
    create a leadership function within State Department.
        Ms. Kim. Thank you. Let me now recognize the ranking member
    for your 5 minutes of questioning.
        Mr. Bera. Thank you, Madam Chairwoman. Just kind of
    listening to the opening statements of the four witnesses, I
    actually think you guys agree on a lot more than you disagree
    upon, and I think that is going to be incredibly important
    because we are at a pivotal moment where we are rethinking what
    national security, global security, economic security looks
    like in the 21st century.
        It's a simplistic view, but the 75 years post World War II,
    I do think the United States put together an economic framework
    that benefited the entire world, you know, created relative
    peace and prosperity and, at times, disadvantaged us. But,
    again, being the dominant economy in the world, I think we
    could do that in those 75 years, rebuilding Japan, creating a
    natural competitor but also a stable democracy, you know,
    watching South Korea go from one of the poorest countries in
    the world to the tenth largest economy in the world and a
    natural ally, a stable democracy, rebuilding Europe, you know,
    through the Marshall Plan but also creating relative stability
    on the peninsula.
        I'd argue, you know, two decades ago, three decades ago
    with China, the approach was the same, thinking that, Okay, if
    we normalize trading relations, you know, China would create a
    middle class, an entrepreneur class. And you could argue in
    2010 that they were on that path, but, today, it is very
    different. I mean, Xi Jinping has, you know, taken China into a
    very different direction.
        I think some of that is rethinking where we are, but I also
    think the internal politics of the United States have changed
    where the basis of the Democrat Party was the working class
    union workers in the middle of the country. That formed the
    base of a lot of Donald Trump's victory right now, and, you
    know, it is interesting to hear me, as a Democrat, sometimes,
    be more of a free trade person than some of my Republican
    colleagues. Again, there's just a recasting.
        So a couple of things. You know, I do think it will be
    incredibly important in these next, you know, 2 years, 4 years,
    10 years, as we try to think what is a 21st century global
    economic order, it is going to be different than the past. And
    I think this is a worthwhile exercise, but it can't be a
    partisan exercise because, if all it is is Republican policy
    for 2 years or 4 years, then Democratic policy for 2 years or 4
    years, that will really disadvantage us as a Nation. And what
    served us well in the 20th century was we had an American
    policy, an American strategy, whether you agreed with that or
    didn't.
        I have a couple of things that do cause me some worry,
    though. One is where the private sector and shareholder
    activism sits here, and what I mean by that is, you know, when
    I was in Shanghai a decade ago visiting a GM plant, the Chinese
    owned 51 percent of that plant and GM owned 49 percent of that
    plant, and they very much knew the Chinese were learning how to
    build cars. And as soon as they figured out how to build those
    cars and sold that technology, they would kick them out. Yet,
    they continued to do that because they were so concerned about
    quarter-over-quarter profits because of what their shareholders
    and the pressure that CEOs were under.
        I think that is a bad way to drive economic strategy
    because I think, you know, there is short-term profits but
    long-term disadvantages. I don't know exactly how to solve
    that, but I have raised that with many of the American leading
    CEOs. And they would love for us to solve that issue because
    they don't want to deal with those shareholders and that
    activism. They would rather build companies for long-term and
    long-term profits. I think that is incredibly important.
        I do think, you know, Ms. Cutler and Mr. Goodman, both of
    you, I think, Wendy, you said the economic policy jobs were
    backwater jobs at State. We have heard that repeatedly. And, in
    this framework, I think we have to elevate and make those jobs
    more significant. What that looks like across an interagency
    process, I don't exactly know. I think it is components of
    diplomacy. It is components of market access, promotion, et
    cetera, and how that looks, if it's a single agency, if it is
    an interagency task force. Again, you guys are smarter than I
    am on this.
        Mr. Goodman, you talked a little bit about, you weren't
    able to get to government re-framework, so let me give you the
    last 30 seconds to touch on that.
        Mr. Goodman. Thank you, Congressman. And I agree with
    everything you've just said. And the point I wanted to make is
    to foot stomp what Wendy said, which is that it is really less
    about organization than it is about strategy and policy. I
    mean, we have to get that right.
        I actually, having worked twice in the National Security
    Council staff under very powerful deputy national security
    advisors for international economics, respectively in the Bush
    and Obama White Houses, they ran a pretty good process of
    pulling agencies together and getting them to coordinate. I
    actually think you could do it that way. You still need a very
    empowered State Department, but I would keep the agencies with
    their individual comparative advantages doing what they do best
    and then have a really tight White House process to coordinate
    it.
        Mr. Barr. The gentleman's time is expired. I recognize
    myself now for 5 minutes. And as I reflect on the insightful
    testimony of all of our witnesses, I want to make an initial
    observation. I wholeheartedly agree with Mr. Goodman's
    observation that sound smart foreign policy involves economic
    statecraft, involves economic engagement. And there is a
    narrative, I think, communicated by some that the America First
    strategy of the current administration is disengagement and
    that allows China to fill a vacuum. I actually see it the
    opposite way. As Secretary Bessent rightly pointed out, America
    First is not America alone. And while the tariff strategy has
    created some uncertainties and turbulence, what it has done is
    actually deepened engagement, not disengagement but deepened
    negotiations with partners, allies, and adversaries, like
    China, to actually get us to a point where there is more
    American leadership and engagement in the world on the economic
    front.
        I think this has the enormous potential to achieve greater,
    more bilateral, more reciprocal trade deals that give American
    exporters more market access and, therefore, more leverage and
    economic influence in the world. And look just to yesterday to
    see the $600 billion commitment from Saudi Arabia of more
    foreign direct investment in the United States to see that
    there is massive economic engagement like we have never seen
    with this America First strategy.
        Let me ask Dr. Norris a question about what Mr. Goodman
    says is smart economic statecraft. In February, President Trump
    issued a national security memorandum entitled America First
    Investment Policy directing Federal agencies to address
    outbound investments into China. I think this is smart economic
    statecraft. I think it is very smart to stop financing Chinese
    military industrial complex companies.
        I also would say, though, I very much appreciate, Dr.
    Norris, your pointing out that we should not try to fight the
    American private sector, that our national power ultimately
    derives from U.S. economic growth and innovation, and so we
    need to be careful about mimicking Chinese industrial policy.
    We should counter China not by becoming more like China but by
    being the best version of ourselves. Our advantage, I always
    say, is that we are capitalists and they are communists, and so
    they misallocate capital and their industrial mercantilist
    policy is not what we want to emulate.
        So can you speak about what is the right way to screen and
    stop investments and capital flows into China that threaten our
    national security while, at the same time, adhering to our free
    market cross-border capital flow ethos?
        Mr. Norris. So I think this idea of outbound investments is
    an important topic. I think that you are exactly right when you
    say we need to do us better and not try to copy what they are
    doing or try to mimic exactly what they are doing. The way I
    think about this is these kind of investment flows are going to
    generate things that matter for national security, so what can
    we do better on this? We have to be specific and precise in
    saying here is why this is bad for national security. It
    doesn't have to be public, but somebody needs to know, they
    need to be able to do that analysis. And then they need to be
    able to have mechanisms that allows us to put a stop to that
    kind of behavior because it is going to be detrimental to U.S.
    national security.
        I think this dovetails with something that Ranking Member
    Bera also talked about in terms of the key to U.S. success for
    most of the 20th century was that we found a system that was
    able to have other countries' pursuit of their self-interests
    read down to America's best interests. That is the secret
    sauce. That is what we are after today, I think.
        As we start thinking about strategies and ways to design
    systems, we want to capture and harness these naturally
    incurring incentive structures. So companies want to make
    money. They want to manage their quarterly profits. That is a
    feature, not a bug, in my opinion; but you also have the
    importance of long-term capital. Warren Buffett has achieved a
    lot of success with a very long-term vision. There is a space
    for that, but we have to be smart about harnessing these
    incentives. That is where the policymakers come into play. That
    is our jobs. We have to think creatively, and we have to think
    about what are those incentives. If everybody looks out for
    their best interests, what is going to be the macro result of
    that?
        That is kind of the framework that I am trying to suggest
    to you all is, as you think about these security externalities,
    that is the thing that is not going to be endogenized into the
    transaction.
        Mr. Barr. I wanted to talk about DFC as an important tool
    for economic statecraft. I don't have time. Let me just ask
    this final simple question. Dr. Norris, can you speak to the
    importance of fiscal responsibility and lowering our deficits
    to protect strong demand for U.S. Treasury securities and the
    dollar's dominance? Why is that important to national security?
        Mr. Norris. Yes. As all of you will appreciate, the U.S.
    serving as the world's reserve currency gives us a lot of
    privileges. We are unique in this regard. The United States is
    a $30 trillion economy, and we, as government stewards of
    public capital, always have to think about being prudent with
    how we allocate and use those resources.
        In my opinion, our real strength resides in the private
    sector. What we have to do is find a way to harness those
    proclivities and naturally occurring tendencies to read down to
    the national security interests.
        Mr. Barr. My time is expired. Growth, growth, growth. Thank
    you very much. And, at this point, I recognize the gentleman
    from Texas, Mr. Castro, for 5 minutes.
        Mr. Castro. Thank you, Chair. Thank you all, each of you,
    for your expertise and testimony today. We started the year as
    the most powerful, most prosperous nation on Earth, and the way
    I approach it is, when you're going to make changes to that,
    those changes better be such that they make us even stronger.
    That is not to say that there aren't deep challenges that we
    face, particularly domestically, issues that we need to address
    for workers and so forth and even in trade policy. But I think
    it is fair to say that the last few months, in terms of
    economics around the world and trade policy, it has been
    chaotic.
        I remember, when President Obama was in office, one of the
    critiques of the American business community of his presidency
    was the uncertainty. Everybody was using that word, the
    uncertainty. Well, if that was uncertainty, this is chaos with
    tariffs changing from day to day, a million different
    negotiations supposedly going on with different countries. And
    one of the effects, as I have had meetings with embassies and
    with foreign leaders, is that the world is starting to move
    around us.
        Ms. Cutler, you mentioned diversification, and I imagine
    you meant diversification, countries are diversifying their own
    economics and their trading partners. And I wanted to see if
    you would speak to that a little bit with respect to Asia and
    the fact that, as to them, from their perspective, not our
    perspective, but, to them, as we become a less reliable trading
    partner and economic partner, what do they do?
        Ms. Cutler. Well, it is not only that they are viewing us
    as unreliable, but they are also viewing us as no longer as
    interested in the rules-based trading system. And so I think
    both of those factors are motivating other countries to become
    less reliant on us and work with countries where they have
    common interests and, frankly, for many small and medium-sized
    countries, a strong WTO, for example, is in their interest.
        What we are seeing now, though, is countries forging new
    agreements and expediting negotiations that seemed impossible
    just years ago. So, for example, the U.K. and India, just 2
    weeks, concluded an agreement that was under negotiation for
    many years. We have seen now the European Union express
    interest in somehow aligning itself with the CPTPP, something
    that, for years, they said they would never do. And we are also
    seeing other countries express interest in either joining the
    Regional Comprehensive Economic Partnership or CPTPP or
    different digital agreements. And, ultimately, as all of these
    agreements are being forced without us, we are disadvantaged.
    We do not get those benefits.
        I think this trend is very concerning, and I hope that we
    can work together to find a way to convince our partners that
    we want to engage with them, we want to seek win/win
    agreements, and that we still see merit in a rules-based
    international order.
        Mr. Castro. No, absolutely. And I think it is fair to say
    that this has been a kind of shakeup, but the world is not a
    snow globe. Things don't just go back to exactly where they
    were once everything settles down, right?
        I'm the ranking member on the Western Hemispheres
    Subcommittee and was meeting with folks from Mexico who said
    they are pursuing a free trade agreement with Brazil, for
    example. And so you see different regions of the world trying
    to come together in their own ways. Mr. Goodman.
        Mr. Goodman. Yes. I totally agree that this is really the
    problem, that we used to write rules, get others to agree with
    our approach to rules, standards, norms, of international
    economic behavior, and that was very much in our interest.
    Frankly, it was in their interest, too; but it was, ultimately,
    in our interest. And we are giving up that by not having some
    kind of more affirmative offering of our preferred rules,
    including, by the way, I meant to say earlier, to Congressman
    Bera's point in the digital space, I think that is really
    critical where we pulled out of an effort to try to get people
    to agree to our preferred digital rules. So we need to do more
    of that, or others are going to make other arrangements.
        Mr. Castro. In my 20 seconds, other witness, quick
    comments?
        Ms. Dezenski. I will just say that, from my perspective,
    the rules-based system is broken. The global trade order is no
    longer something that we have been able to manage, and the
    problem behind this is China. And this requires a reset of
    significant magnitude. Why? Not only because we need to
    rebalance trade but because we need to free our defense
    industrial base from dependency on Chinese supply chains, and
    we need to move toward real wage growth and productivity in
    this country. And we won't get there if we continue to be in
    this deficit orientation without a rebalancing of trade.
        Mr. Castro. My time is up. I apologize.
        Ms. Kim. Thank you, Mr. Castro. You know, during my travels
    and visit with our embassies abroad, we always, in a bipartisan
    way, express our appreciation for the work that they do to
    represent our U.S. interests. But I have also been unimpressed
    with the efforts made to assist American businesses in gaining
    market access and competing on an international level.
        So I want to ask all panel what inhibits our current export
    promotion regime from producing the results that our companies
    and constituents desire? Let's start with you, Ms. Dezenski.
        Ms. Dezenski. Sure. Thank you. Well, first and foremost is
    the ability to be competitive. So I think we need to do a
    better job at providing some incentives through EXIM, for
    example, and export financing. We need to be better
    cheerleaders for U.S. companies abroad. We need better terms of
    engagement, which is what at least some of this tariff
    negotiation is about: opening up foreign markets in ways that
    were not open previously.
        So we need to do a much better job in terms of setting the
    conditions for American companies to be successful abroad and
    to be able to compete in what is a fair and open market. That
    is not what we have now.
        Ms. Kim. Thank you. Mr. Norris. Dr. Norris.
        Mr. Norris. Yes, I agree. I think there is a lot of
    variation by country teams. In my experience, I think that some
    countries do this really well and others don't; and so studying
    that variation, why is it working somewhere, why is it not
    working somewhere else, would be a useful way to proceed.
        The thing that I would suggest is you might find in those
    places where the country teams are really killing it is going
    to be a very close working relationship with the major
    industries and sectors and private sector players that have
    opportunities in their host nations. That is probably not
    coincidental. In formal mechanisms, a lot of what we are doing
    today, I think a number of other panels have talked about this,
    we are using these workarounds to get past some of the
    institutional design failures that we are currently enmeshed
    in, so that would be something else to kind of pay attention
    to.
        Ms. Kim. Thank you. Ms. Cutler.
        Ms. Cutler. With respect to export promotion, I think this
    is an area where State Department could play a more effective
    role, particularly in our embassies abroad. And I think this
    gets back to the whole notion of looking at the Foreign
    Commercial Service and the State Department's economic offices.
    I think, if they were merged, then there would be a lot of
    synergies to help promote exports.
        But, also, look, we need an infrastructure to help us
    promote exports. It is one thing just to advise companies; but,
    you know, our companies are competing against financing that
    other governments are giving their private companies. And,
    again, that puts our companies who are incredibly innovative
    and competitive at a disadvantage. So I would urge the
    committee to look at those structures, as well.
        Ms. Kim. Thank you.
        Mr. Goodman. And just very quickly to agree with all of
    that and just say that I think, you know, the problem has
    really been we haven't had a commitment at the highest levels,
    that this is really important for our interests. Frankly, in
    the last couple of administrations. So I think that is the
    first thing: you need a real commitment from the top, I mean
    from the president, to why this is important.
        And then you need finance and you need other removal of
    legal constraints, like other countries can just go and
    advocate for a particular company. We can't do that, and, you
    know, there is an argument about that because we don't want to
    pick winners. But I think there is a way between our approach
    and the French or Chinese approach that would be more helpful
    to getting our products and services forward.
        Ms. Kim. Ms. Cutler mentioned and then you also, Mr.
    Goodman, financing is another way, and our committee is also
    charged with authorizing or reauthorizing DFC, so we will
    addressing that issue. But, in addition to that, what
    suggestions do you have to improve our export promotion regime?
    I want to ask the two, Mr. Norris and Dezenski, to also address
    that, as well.
        Mr. Norris. Yes. I think that capital provision is an
    important dynamic here, not least because we're dealing with an
    unfair playing field often. There is either a different risk
    appetite or a different cost of capital.
        One of the things, again, I don't want to sound like a
    broken record, but I think it is really important to think
    about how we can be good stewards of public resources and crown
    in private capital. So things like EXIM, when they think about
    being able to take some of the riskiest tranches off the table
    and then the rest of it looks commercially viable, that is the
    way to kind of get good leverage and good maximization when we
    think about those resources.
        Ms. Dezenski. I would just add that I think we need to
    focus on the U.S. ground game abroad, and that is about
    bringing together all of the capacities that we have in key
    markets of interest to us, where we see the big opportunities
    to expand our manufacturing and export opportunity. There are a
    lot of them, but we don't really have a game plan.
        Ms. Kim. Thank you. Let me now give the podium to Mr.
    Olszewski for your 5 minutes of questioning.
        Mr. Olszewski. Thank you, Chair Kim, to our Ranking Member
    Bera for holding this hearing. It is actually a good followup
    to an outstanding roundtable discussion we had just last week
    with some of our Pacific Island Ambassadors discussing
    partnerships and strengthening those in the region.
        My takeaway was the overwhelming consensus was that that
    region wants the U.S. to show up. They want us to be there,
    even as they see what I think is a global retreat. And, again,
    they were concerned about the on again, off again tariffs from
    the administration. In some ways, it reinforced the point made
    by my colleague, Representative Castro, about the world is
    still moving. So, appreciate all of your testimony today on
    that front.
        That roundtable specifically touched on two issues I hope
    to focus on with my time. One is the mounting debt crisis being
    driven partly by Chinese lending practices, as well as
    strengthening economic growth through a pact modeled on
    something like AGOA, the African Growth and Opportunity Act.
        We know that China's extensive lending policies on Pacific
    Islands has resulted in unsustainable debt burdens. Tonga, for
    example, relies heavily on international loans and is currently
    saddled with more than $100 million in debt to China. That is
    about 20 percent of its GDP. Not a one-off story. Over the past
    20 years, China has become one of the largest lenders in the
    region, and, often, governments then face an impossible choice:
    do we cut spending on critical services or do we default on our
    loans and risk access to future financing.
        So we know that this is possible. We need to show up and
    support our businesses, to the chair's point. Actually, there
    is a great company in my home State of Maryland doing great
    work. It is a company called InventWood. It is a supplier of
    climate-resilient building materials in Frederick, Maryland. It
    signed a landmark partnership with Tonga to advance climate-
    resilient construction across the Pacific. So we want to be
    incentivizing more partnerships like that for a model for
    sustainable development.
        We will start on the debt crisis, and we will start with
    you, Mr. Goodman, and if others want to jump in. From your
    perspective, how has Chinese lending contributed to the current
    debt crisis in the Pacific Island countries and what are the
    key risks for U.S. interests resulting from that?
        Mr. Goodman. Yes. It is a huge problem globally, and the
    Pacific Islands are very vulnerable to this model of Chinese
    lending that is nontransparent and has hidden conditions
    attached to it. This is something that there has been great
    work done on this by a group in Williamsburg, AidData, and also
    the Center for Global Development here in Washington have done
    some great work on trying to expose the contracts and the terms
    on which China is making this lending. I think that is one
    thing that more transparency would be helpful.
        I think we also need to find a way through diplomacy to try
    to pull China into some of the international arrangements, like
    the Paris Club, even if we have to rename it because China
    doesn't want a club that was set up without them in it
    originally. But we need to get them at the table to help with
    some of the resolution of these debts, and it is an absolutely
    critical issue.
        But the final thing is the U.S. also has to offer some
    alternative, and I haven't said the word DFC myself but just,
    since others have mentioned, I should have said it is really
    important that we reauthorize the DFC, give it more muscle,
    power, let it fix the equity scoring problem, and make it a
    more capable organization because, at the end of the day, that
    is what the Pacific Islanders want: they want us to have a
    better offer.
        Mr. Olszewski. Yes. And I think we all agree on the
    reauthorization. Any other points on that one? I have a second
    question, a trade question, on the AGOA-like trade pact that
    could signal, I think, a new commitment to the region and its
    growth. What would--and we can start with Ms. Cutler and,
    again, we will open it up if there is time. What will the
    economic benefits be for the Pacific Islands and U.S.
    businesses from a trade agreement modeled on AGOA? And what
    sectors hold the most promise for expanding trade, and how can
    we better incentivize more public-private partnerships like we
    mentioned with InventWood back in Maryland?
        Ms. Cutler. Well, I think you raised an excellent
    suggestion, some kind of AGOA program for the Pacific Islands
    because countries like this, as Matt said, then you said, they
    very much want us to show up, they want to work with us, but
    they need some benefits, right? And so even though these
    programs provide unilateral benefits, they also very much
    provide an opportunity for continued connectivity and
    cooperation between the United States and these countries. So I
    think that's a model that's worth looking at.
        Mr. Olszewski. I have 20 seconds if any of the witnesses
    wanted to chime in.
        Mr. Norris. I was going to say I think that your comments
    raise some awareness around making sure you understand what the
    partners need, what are they looking for. So listening to what
    is going to be resonant for them. And, also, this idea of
    building capacity, being able to have that transparency around
    these dead agreements, these are all things that are going to
    reinforce good governance and I think are going to play to our
    strengths. The key really is the commercial viability,
    particularly with the Pacific Island nations. And some of them
    struggle with that.
        Mr. Olszewski. Thank you all. Madam Chair, I yield back.
    Thank you.
        Ms. Kim. Thank you. Let me recognize Rep. Moylan for his 5
    minutes of questioning.
        Mr. Moylan. Thank you, Miss Chairwoman. While national
    security is often dominated by military sectors, the economic
    domain has historically been the strongest tool in shaping
    international affairs. So sitting on this committee and Armed
    Services, I fully understand the importance of national
    economic security's role alongside traditional military power,
    but economic tools don't often get the bureaucratic limelight.
    By advancing our cutting-edge technologies and building more
    resilient supply chains, the United States continues to build
    peace through trade deals and deter bad actors through
    sanctions and tariffs.
        As the U.S.--China trade negotiations become increasingly
    high profile, we can't talk about national economic security
    without addressing the relationship with the People's Republic
    of China. While we have already implemented export controls on
    PRC, the U.S. must do more to maintain our leadership in key
    industries, like cyber, quantum technology, and AI.
        Ultimately, the PRC's unilateral decisionmaking structure
    makes many of its economic policies expedited and reliable,
    making it hard for democracies like the U.S. to compete. So the
    United States is faced with unique problems: how can the U.S.
    economy diplomacy outcompete the PRC while maintaining our
    values?
        And as Guam sits closer to Asia than North America, I can
    certainly tell you my appreciation for working with our foreign
    partner nations. Large partnerships with organizations like
    ASEAN or smaller free trade agreements have continued to
    demonstrate the willingness and success that comes with less
    constraint economic policies. In the State Department's
    reauthorization, I think it is clear that we must combine
    greater domestic investments while collaborating with our
    allies in areas where the United States has comparative
    disadvantages.
        So, Ms. Dezenski, the Department of Commerce has published
    The Dire Nature of U.S. Critical Mineral Supply Chains. With
    regard to our supply chain reliance on foreign sources, what
    diplomatic tools and instructional changes do you think could
    properly address our dependency issues?
        Ms. Dezenski. Thank you. I will just highlight that we have
    a report coming out on this very issue in the next few weeks,
    which is very specific to looking at dependencies in the
    advanced battery supply chain and the role of critical
    minerals. But let me just highlight a couple of the key
    elements from that report because it applies across the board
    for the challenge we face.
        No. 1, we have to get control on processing of critical
    minerals. We need to break that choke hold. China is not
    necessarily controlling all critical minerals, but they are
    definitely controlling the processing, and that has to stop. We
    need to look at controlling for price volatility around core
    commodities. It is making it really difficult for Western
    manufacturers and processors to get into the critical mineral
    space because of that. We also need to look at much deeper
    partnerships with allies and partners who have the very same
    problems about access to markets.
        More broadly, I would say that we have a host of problems
    with nonmarket practices coming out of China, and now is the
    time to put that on the table, whether we are talking about
    currency controls; capital controls; dumping, which is a
    massive enforcement issue now for us; rules of origin
    questions; you name it, these all contribute to why it becomes
    so, so difficult for U.S. manufacturers and others to compete
    in this global trade order.
        Mr. Moylan. Thank you. Ms. Cutler, based on your experience
    at the Office of U.S. Trade Representative, how should the U.S.
    approach known adversaries in the competitive economic realm?
    Additionally, is there a point where the U.S. should consider
    revoking items, like the permanent normal trade relations?
        Ms. Cutler. I think the key to addressing the China
    challenge is working closely with our allies and partners. I
    don't think we can effectively do this on our own, and so I am
    concerned that, with our current trade policy, when we are
    hitting our allies and partners with tariffs, they are busy
    negotiating with us and I think time would be better spent,
    frankly, working with them to address many of the practices
    that my colleagues have expressed concern with with respect to
    China.
        Mr. Moylan. Thank you very much. I am out of time. I thank
    the panel for your testimoneys. Thank you, Madam Chairwoman.
        Ms. Kim. Let me now recognize Representative Sherman for
    your 5 minutes of questioning.
        Mr. Sherman. Comment on Mr. Barr's statement that we need
    to deal with the deficit: that is why we need to avoid the tax
    cuts that are being proposed in the Ways and Means Committee at
    the present time. We did balance our budget in the 90's because
    we locked in Clinton's tax policies, and then, in 1995, we
    started spending like Republicans.
        Mr. Barr also talks about how important it is that we have
    the U.S. dollar be reserve currency. The crypto advocates have
    made it very plain they want to take that away from us. When
    somebody says what they are going to do to you, you should
    listen.
        Our chair asks us where should USTR be. I think it should
    be in the State Department, but my fear is that then State will
    make trade concessions in order to achieve other foreign policy
    objectives because the people we have hired at the State
    Department are people who dream of a Nobel Prize and study how
    Metternich dealt with the Congress of Vienna.
        We have got a distinguished panel here. You all have spent
    a lot of time with State Department people. Putting aside the
    political appointees, just on Civil Service and Foreign
    Service, do any of you know any CPAs who are employed by the
    State Department? No hands go up. Do any of you know any MBAs
    personally who work--I see one. You are nodding, sir. Do you
    actually know somebody well enough to name, an MBA? No. So we
    have no MBAs. And do any of you, please raise your hands if
    this applies, do you know anyone with 15 years international
    business experience who is a civil servant with the Civil
    Service or the Foreign Service of the State Department? I
    assure you that, if this was the House of Commons, lots of
    hands would have gone up. In every other country, business is
    important.
        But there is no way in which the State Department has the
    greater flaw than their process of issuing visas. Nobody
    becomes a Foreign Service officer to issue visas. We don't hire
    people who want to issue visas. And so I have got to send an
    apology letter to my cable company because I was, well, the
    cable company, I was on the phone with them for an hour and
    flipping it around and around, and I thought that was the worst
    experience possible until last night when I tried to deal with
    the consulate in Karachi. The process that we put people
    through to get a tourist visa or a visa to come here and buy
    our products shows that we don't care about tourism, we don't
    care about products.
        Ms. Dezenski points out that we have perhaps started an
    economic war without a Pentagon. There is only one thing worse,
    and that is if you have your general being bought off the way
    Benedict Arnold was bought off. We have got this $400 million
    plane. Not since the Greeks left a gift outside the walls of
    Troy have we seen such a bad gift acceptance. We are going to
    have to disassemble the plane looking for bugs. Then we are
    going to have to outfit the plane with the most advanced
    communications device, and then we, as a government, don't own
    the plane. It is owned by Qatar, and they are going to transfer
    it over to the Trump Foundation.
        But more important perhaps is the $2 billion Abu Dhabi has
    announced they are going to put in the Trump stablecoin. That
    is, at minimum, a $2 billion interest-free loan to the Trump
    Organization.
        And then, finally, we have Trump coin. We can put up the
    chart. Some 96 percent of this coin is owned by 40 wallets. The
    press report says they are all owned by the Trump family, so
    anybody who buys the Trump coin is putting 96 percent of their
    money into those wallets. Everyone on this subcommittee, I
    believe, voted to limit TikTok. We know how important that is.
    We gave him 75 days. And now I would like to put in the record
    an article from yesterday's New York Times, a tiny company with
    China ties announce big purchase of Trump cryptocurrency and an
    announcement that $300 million is going to be put into those 40
    wallets by an entity with ties to TikTok that has, the entity
    itself has eight employees and no revenue, but they have been
    able to raise $300 billion from mysterious sources in a tax
    haven country. And I want to quote Charlie Dent who served here
    with distinction, a Republican member, a former chair of the
    House Ethics Committee, when he said: Make no mistake, these
    foreign entities and government obviously want to curry favor
    with the president.
        So the only thing worse than not having a Pentagon is
    having a leading general who has been bought off. And with
    that, I think my time is expired.
        Ms. Kim. Thank you, Rep. Sherman. I think we are going for
    another round of questioning, so let me first ask the next 2
    minutes, I mean the next few minutes if Ms. Dezenski and Dr.
    Norris could answer the question of if you can assess the
    economic vulnerabilities of the United States to China, and
    what should the United States do to take more active steps to
    limit those vulnerabilities? And if so, what policies can you
    recommend?
        Ms. Dezenski. Thank you. I would point out a couple of
    major vulnerabilities, one which I mentioned which is the
    dependency of the U.S. defense industrial base on Chinese parts
    and Chinese technology. I think that is something that is
    untenable for us and needs to get rectified. How do we do that?
    We have to look deep within those supply chains to understand
    where to pull out that vulnerability and either bring
    production home or transfer that to allies and partners through
    some sort of ally-shoring.
        There are critical dependencies on Chinese magnets,
    certainly on critical minerals coming from China. These are
    harder to solve, but we need a game plan and that also needs to
    include some very targeted innovation.
        The defense industrial base and we'll call it the U.S.
    industrial base writ large is beginning to merge. A lot of the
    advanced technologies are the same, whether we are talking
    about manufacturing drones or manufacturing computers, et
    cetera. A lot of the inputs are the same. So we also need to
    think differently about these dependencies and how to get to
    that.
        In terms of, you know, what else we can be doing to
    highlight those vulnerabilities, this is where we need a lot
    more of that trade analysis and economic analysis that I
    highlight in the testimony. We need to have an all-of-
    government understanding of where these vulnerabilities are and
    then start applying the tools to call out where, for example,
    Chinese economic coercion may be stealing innovation from the
    U.S. and forcing us to fall further behind.
        Mr. Norris. Yes. I think I would classify the U.S.
    vulnerabilities to China in this domain of economic statecraft
    as being there are some that are acute that are sort of in the
    near term, the next 6 to 12 to 18 months. And there is another
    set that are longer term, this idea of creating alternative
    orders that exclude the United States or have an alternative
    center of gravity.
        So I think those acute ones have gotten quite a bit of
    attention, items like when China is the unique source of key
    inputs, things like for some pharmaceutical precursors. The
    list, I think, is well known to this committee. And what to do
    about that, I think the thing I like to do about this is
    stockpile if your competitor is subsidizing. I like buying it
    below market prices, and I would like to buy a lot of it if it
    is something I feel like I need for a rainy day. Diversifying
    to partners and allies. When you have complementarity that
    exists among trusted partners and allies, China has a scale
    that is going to be, in certain areas, difficult for the United
    States to match unilaterally, and that is where I think
    partners and allies can really benefit the United States. And
    then, of course, bringing it in-house, and some of this is
    going to be able to be brought in-house, particularly if you
    are concerned about security externalities and if there is very
    clear reasons to be worried about stuff.
        But I do want to couch my remarks in a broader concept that
    the U.S. and the Chinese economies are the world's largest,
    single largest two economics. With $30 trillion and $18
    trillion, there is a big gap before you get to No. 3. These two
    are deeply integrated today, and there is a small portion of
    that integration that has direct national security
    ramifications and that is what we should really be focusing on,
    particularly in the acute timeframe.
        In the bigger timeframe, if there is a real desire to
    decouple, that is another sort of conversation and another
    strategy. Is that, ultimately, in America's best interests, I
    think, is a conversation we ought to be having as a Nation. I
    don't necessarily have the right answer for you this morning on
    that.
        Ms. Kim. Thank you. Very helpful. Let me now ask the
    ranking member to ask questions.
        Mr. Bera. Great. Thank you. We do find ourselves in a
    pretty interesting time. You know, I would agree with each of
    the witnesses that the rest of the world, whether it is Europe,
    countries in Asia or elsewhere, are trying to figure out where
    the United States is and what our strategy is and so forth, and
    that is creating some uncertainty.
        But in my interaction with, again, in my travels abroad but
    also with Ambassadors here in the United States, there is also
    a deepening recognition that they don't want the United States
    to leave, and I would say, you know, particularly in Southeast
    Asia, they recognize that, they understand the terms by which
    China does business and they want a robust U.S. presence there
    as an alternative partner.
        Our trade policy, economic policy, isn't just based on
    benevolence. You know, much of it, again, in that 75 years
    post-World War II was benevolent, didn't disadvantage our
    companies, didn't disadvantage our economy, certainly opened up
    markets for our companies and we did very well in that
    construct, but so did many of the other nations that share
    similar values to us. And I think that creates an interesting
    opportunity for us, as well, because, you know, while they
    don't like the uncertainty, and I do think most countries
    around the world appreciated the rules-based order that we had
    put in place, I think there is a growing recognition that
    American economic policy is changing a bit. Again, I go back to
    my 13 years in Congress. We all would have guessed TPP would
    have--you know, trade deals were never easy. It didn't get
    across the finish line; and we saw in the 2016 Presidential
    candidate both candidates turned against TPP. I would have
    thought, you know, the renegotiation or the negotiation of
    USMCA, which was the largest bipartisan trade bill, you know,
    close to 400 members of the House of Representatives, more
    Democrats than Republicans, voted to support that process. I
    would have thought we would then say maybe we build off of
    that. Again, we are in a much different place with either
    President Trump to say, Okay, if you have issues with Mexico
    and Canada, you have got a renegotiation coming up, let's use
    that as a vehicle by which to address some of this.
        Then the orthodoxy around tariffs and what that looks like
    again, the president might take this as a compliment, has been
    incredibly disruptive. I think he is using a very blunt
    instrument, a blunt tool, but it is getting everyone's
    attention. I would hope that we, on this committee, we, in
    Congress, along with the administration, as we start to
    approach this, I can't undo the past, but what does that
    context look like moving forward.
        I also think the pandemic was a real wake-up call for not
    just the United States but most of the world because of the
    real dependence on whether it's the pharmaceutical sector and
    APIs, you know, protective equipment, rare earths, et cetera,
    just exposed tremendous vulnerabilities that we have. And if we
    were to get into a direct confrontation with China, those
    vulnerabilities we are seeing a little bit around the tariff
    conversation and the trade conversation with China, but it does
    expose real economic and national security vulnerabilities that
    not just us but others have.
        So the reason why I talk about things like the Mineral
    Security Partnership, which, again, I think is a really good
    idea, but I also think how we approach trade and economic
    development in the 21st century is probably going to be more
    alliance values-driven with partners, and what I mean by that
    is I think we should work with the Koreas of the world, the
    Japans of the world, the Australias of the world.
        Rare earth elements aren't super rare, it is just, as you
    pointed out, Ms. Dezenski, the processing of these, it is a
    dirty business and I don't know if we are going to do that in
    the United States. But we ought to go into Malaysia or Vietnam
    or places that would be willing to do it and build those
    markets. And we don't have to do that by ourselves. I would say
    we should do that with like-valued allies that want these
    redundant supply chains. Australia certainly has expressed an
    interest. Now, it may cost us a little bit more, and I think
    that is something that we will have to try to address. Dr.
    Norris, I certainly think it is a great idea for us to have a
    national stockpile of these critical earths. That is something
    that we, as Congress, should explore with the administration of
    creating that stockpile, so we don't have those
    vulnerabilities.
        It is going to be different, and, again, I will just go
    back to my supposition, which is this can't be a Democratic or
    Republican strategy. This has to be an American strategy, and I
    think an American strategy in concert with countries that share
    similar values of relative open markets, relative democracy,
    freedom, because it is not a given what the next 75 years looks
    like, who dominates those 75 years. But I do think, again, in
    my travels, my conversations, the actions of the first 100 days
    of the Trump administration have shaken a lot of countries
    around the world, but it also has brought them to the table and
    say, hey, wait a minute, we may not like what America is doing,
    but the last thing we want is America to leave our markets.
        I would be curious, just quickly, if you feel like that is
    characterizing it in the right way. And maybe we will start
    with Ms. Dezenski and just go----
        Ms. Dezenski. I do think that is the right
    characterization. There is a long-term strategy here, but there
    is also a lot of tactical back and forth right now that is
    probably causing some confusion. But I think what we are seeing
    now is the display of economic power in a way that we haven't
    seen it before. And whether we agree or don't agree with how
    the tools are being used, we do have an administration that is
    using them in some pretty interesting ways.
        I will go back to an earlier comment. I do think it is time
    for a pretty broad trade reset, and we need to think about it
    holistically and, ultimately, getting back to this Near-Global
    Economy idea. So we box out the countries that don't want to
    participate in a free and open market, and, to your point, we
    ally shore. We ally shore where we can. We bring home
    production. Where that is required and necessary, we do that.
    And where we can't do that, we work with allies and partners.
        Mr. Bera. Dr. Norris.
        Mr. Norris. Yes. I'm going to agree with a lot of what you
    said and also what my fellow panelists are saying. I think the
    United States does enjoy a significant incumbency advantage for
    having written a lot of the international rules of the order. I
    don't always think that we are taking full advantage of that
    opportunity, and I think that, when we think about this
    competition, it is important to maintain flexibility, the
    ability to adapt.
        We have to be able to do us better. We are an incredible
    nation that has incredible capabilities. And when we think
    about how we are going to compete, we are not going to compete
    because we are going to mimic and do something that they are
    doing and try to make it fit for us. We have to think about
    what are we good at, and that's why I come back to innovation.
    I mean, we can completely change a paradigm with our radical
    capacity to innovate in this country. We have to preserve that
    capability; that's really important in a long-run competition.
        I also think your point about making this bipartisan,
    making it something that is not going to lurch from one
    administration to the next or one Congress to the next is
    really important. And this is a long-run competition that is
    going to have to be run in a series of sprints, and they are
    going to be 4-year sprints or 2-year sprints, and we need to
    find strategies that are sustainable politically, economically,
    and socially for our fairly partisan and fairly divided country
    right now. I think that is really important.
        I just would also agree that the idea of having trade and
    economic development be somewhat contingent on similar shared
    values, I think, makes a lot of sense. There is nothing that
    quite clarifies who your friends are than a pretty significant
    new challenge that you collectively face, and you have to sort
    of say, Okay, who do I want to have on my side. And that is
    kind of the moment we are in right now, and I think we can--to
    your point, this is kind of a unique moment. We should try to
    capitalize on it as best as we can to position ourselves for
    success for decades to come.
        Mr. Bera. Ms. Cutler.
        Ms. Cutler. I also agree with almost everything you said.
    And, particularly, I do think there is an opportunity here.
    Okay. But what my concern is, we may squander that opportunity,
    and this is such a critical time where, you know, based on all
    our discussions this morning, our allies and partners are
    extremely important to work with in order to achieve our
    objectives.
        So my view is carrots and sticks. Let's keep those carrots
    in mind. I think, to date, we have been doing a pretty good job
    competing with China for the hearts and minds of third
    countries, but I worry, through heavy-handed tariff requests,
    win/lose trade negotiations, and then the dismantling of a lot
    of our soft power, we may squander this opportunity if we don't
    all work together, Congress, the administration, the private
    sector, to really double-down on our strengths and work with
    our allies and partners.
        Mr. Goodman. Yes. A colleague and I are doing a project in
    which we have been talking to a bunch of trading partners,
    mainly through their embassies, a few capitals. And we actually
    started this before the election, and we were trying to look at
    what the U.S. really needs from its trading partners and what
    it is willing to offer, what it needs to offer to get them to
    give those things.
        The conversation has diverted to, you know, a lot of this
    uncertainty and confusion around tariffs. But I take away the
    same point you do, which is, while people are disturbed and
    troubled by that, there's a demand signal they want to work
    with the United States, maybe in a slightly different way than
    in the past. They recognize it is going to be different, but
    they want our engagement, they want our markets still, they
    want our products, they want our leadership. They want, you
    know, maybe access to our innovation ecosystem which is sort of
    a new thing that we may be able to--it is not new, but we could
    package it as a new offer.
        So I do think there is a big opportunity, and I think the
    key is--two things I want to say about trade policy going
    forward. One, we need a trade policy that combines sort of
    three things: one, it has to advance American interests,
    economically, strategically, other ways; second, it has to
    incentivize our partners to want to work with us and give them
    something, some reason to give us the things we need; and,
    third, it has to win the support of the American people, and
    that's really your job.
        I do think the second point I want to make is it's really
    important for you guys to figure this out because, in the end,
    if we don't have a trade policy that is embedded in law through
    you, it is not going to stick. It is going to be a house made
    of cards. You need the pylons dug deep into the soil, and that
    means you need legislated trade agreements, in my view.
        Ms. Kim. Thank you. I think we all agree that economic
    policy is foreign policy. With that, our goal of this hearing
    was to evaluate how we can position the United States as the
    center of the economic statecraft.
        So thank you, everyone, for engaging the Members of
    Congress in a very, very productive conversation today. It
    really was helpful in assessing that our current economic
    statecraft is an incoherent network of more than a dozen
    agencies and organizations with many of the overlapping
    responsibilities. As the saying goes, when everyone is in
    charge, no one is in charge, and I think that is true of
    economic statecraft architecture now.
        So let me once again thank all of our witnesses for your
    valuable insights, the suggestions, the recommendations that
    you have provided to us. We will definitely keep our
    conversation today in mind and take those suggestions in mind
    as our committee works to authorize the State Department.
        With that, the members of the subcommittee may have some
    additional questions to the witnesses, and we will ask you to
    respond to those in writing. Pursuant to committee rules, all
    members may have 5 days to submit statements, questions, and
    extraneous materials for the record subject to the length
    limitations.
        So, without objection, the committee now stands adjourned.
    Thank you.
        [Whereupon, the committee was adjourned at 11:37 a.m.]

                                   APPENDIX

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                   Material Submitted for the Hearing Record

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