Transcripts For CSPAN Hearing On Coronavirus Pandemic Critical Supply Chains 20240712

Recommendations for the next pandemic. Several members also pay tribute to representative john lewis who sat on the house ways and Means Committee. Appreciate everybody joining us today. This is a terrific turnout, considering all of the activity and turmoil going on around us. Many of us are back in washington today. We are holding this committee virtually in compliance with the regulations for Remote Committee proceedings pursuant to House Resolution 965. This authority allowed us to continue to do our work on behalf of the American People, while keeping our staff, families, and the Broader Community safe. We have all started to become familiar with navigating this technology, i do want to remind members of a few procedures. First, consistent with the regulations, the committee will keep microphones muted to limit background noise. Members are responsible for unmuting themselves when they seek recognition or when recognized for their five minutes. Members and witnesses must have their cameras on at all times. Weve got to keep track of you even if you step away from the proceedings. Please leave your camera on rather than logging out. Finally as you know, we may have votes during todays hearing. It looks like theyre going to be later. If we do have votes, it would be my intention not to recess. Members should vote when their group is up and come back immediately. If your turn for questioning comes up while youve stepped away, i will get back to you. Today were holding a hearing on trade manufacturing and critical supply chains, lessons from covid19. Its a little poignant for us to start our proceedings, First Committee activity that ive been involved with since we lost mr. Lewis who really set the standard on so many Different Levels with the conscious of the conscience of the committee, was someone who touched us all, and showed not just courage and stamina, but humility that is rare in our environment. He was truly a unique human being and will be sorely missed. He will continue on in our memories with all the great times and experiences that weve shared with him. As john lewis would have wanted, we must continue the peoples work. And i hope all of our work will be guided by his principles and his valiant example. Today marks the First Virtual hearing of the trade subcommittee. The hearing topic is one of the upmost importance for our ability to emerge from this ongoing covid19 pandemic with a stronger, more resilient economy. Reexamining the trade and manufacturing policies that have led to a fragile, brittle and opaque Global Supply chains and amplifying the painful lessons were learning from covid19 to make sure were better prepared for the inevitable future crisis and challenges. The pandemic highlights the impact of globalized supply chains, designed to pursue the lowest price whatever the true cost without appropriately accounting for possible risks such as an anticipated disruptions to sourcing, relying on complicated supply networks easily disrupted and losing key manufacturing flexibility in the United States. I think we fail to fully appreciate these vulnerabilities. The pandemic has revealed the almost total extreme lack of transparency into supply chains while exposing the dark underbelly of what were once considered innovative, costsaving business models. The dependence on limited inventory and just in time delivery enhances our vulnerability. And covid19 has served as a very painful example of the longexisting problems. In the spring i was horrified to see medical facilities across the country, including hospitals and Nursing Homes in my community, struggle to secure personal protective equipment and lifesaving medical devices like ventilators. We witnessed state governments forced to turn to unreliable suppliers to obtain needed medical products. While i hope this dark period was behind us, in the past few weeks, were seeing shortages again emerge as cases spike in various parts of the country. Despite the tool at its disposal, the administration has been unwilling to use the full power of the federal government to develop american productive capacity to meet the ballooning demand for these critical products. For the richest country in the world, this seems absurd and a sad reality. Covid19 underscores the decline in American Manufacturing which presents major economic, National Security, and Public Health challenges that can no longer be ignored. We must think strategically about our domestic manufacturing capacity both in the context of the covid19 crisis and what comes next. These considerations must be understood in the ongoing and emerging Economic Security and technological competition with china. China has not been shy about its intent to use industrial policies that deploy the full light of the chinese economy in furtherance in the furtherance of its goals. The United States cannot sit by as china invest heavily in those ambitions. As members of congress, its incumbent upon us to seek out experts like our Witnesses Today to identify issues and learn from past mistakes. Policymakers must think about how the United States can mitigate the risk while cultivating manufacturing capacities and Economic Opportunity for our workers and for our families. As part of the effort to first understand and address the deficiency in our existing policy, im pleased that we were able to convene this panel of experts who can provide a diverse range of views and perspectives as we consider policies that ensure greater resilience in critical supply chains. We must keep an open mind about the policy levels that are appropriate moving forward. I encourage my colleagues on the subcommittee to use todays hearing as an opportunity to actively examine available policy tools for addressing one of the most consequential challenges of our time. In the conversations that have been developing around the topic of reexamining supply chains and the relationship between trade and manufacturing at home, theres been a lot of excitement regarding tax incentives or applying additional tariffs. Our examination, i would argue, should not fixate on one particular tool to the exclusion of others. Lets keep an open mind, keep our eyes focused on our objectives. Meaningful solutions will require us to Work Together to be thoughtful and creative. Theyll require our best tools and ideas to work in concert, likely across policy areas without prejudging what specific tools may be, im confident that trade policy is an important part of the answer. Todays hearing is to assist our committee in a robust and bipartisan effort to harness trade and manufacturing policies to create resilient and versatile supply chains. The future of the american economy, the health of our workforce and our leadership in innovation is at stake. With that, let me please turn to Ranking Member, mr. Buchanan, for his opening comments. Thank you, mr. Chairman. I also want to take a moment to offer my condolences to the family of congressman john lewis. John and i worked closely together on many issues as members of the ways and Means Committee including as chairman and Ranking Member of the oversight subcommittee. Particularly, we closely worked on taxpayers first act, the first reform to the irs in two decades. He was a remarkable man to who dedicated his life to making it better. His wisdom he will be dearly missed. This committee and this congress will never forget. Thank you, mr. Chairman, for holding this timely hearing. This important issue has been at the forefront of our minds as weve been fighting the covid19 pandemic. I hope we can Work Together to find Commonsense Solutions to make our medical independence, strengthen our supply chains. More manufacturing jobs here in america. I want to thank our witnesses for taking the time to testify and sharing your views with the subcommittee. This panel has shown us how important it is for us to be medically independent and to have a supply chain that are reliable and flexible, no matter how theyre structured. If we want stronger, more resilient supply chains here, we must be the best place in the world to do business. I enthusiastically support the tax cuts and jobs act because it will improve our tax incentives for manufacturers and conduct research and development in the United States, creating more jobs here at home. President trump has enacted many commonsense Regulatory Reforms over the last several years that have greatly improved our competitiveness around the world. As we Work Together through the health and economic effect of the pandemic, republicans understand that action is needed to make us more medically independent and prepare for the future crisis. The pandemic has showcased the urgency for having a vital medical products like ppe and pharmaceutical availability quickly and reliably. We cannot rely on our add adversaries like china. We seek to create and expand tax incentives to make the United States more medically independent. Im proud to introduce the American Innovation act which allows startup businesses to expense more of their startup costs and preserve the important tax benefits like r d credits in the hands of american innovators to develop new cures and treatments. This package is just the beginning. Committee republicans continue to put forth winning progrowth proposals that will strengthen our Manufacturing Base and create more investment and production in jobs here at home. Its vital for america to maintain its status as the premier location of the world for any innovation and manufacturing. Thats the goal of the republican progrowth agenda. I also introduced the secure american medicine cabinet act to create a new office to stockpile Encouraging Companies to ramp up manufacturing and create the National Center for excellence for advanced pharmaceutical manufacturing to develop and manufacture more active pharmaceutical agreements within the United States. Another key consideration when assessing supply Chain Resilience is diversity of supply. Our allies play a vital role with us to make us medically independent like china poses serious threats. Working with trusted allies maximizes our strength and safeguards our role as a Global Leader in manufacture and Health Care Innovation and it effectively discourages our partners from adopting localization measures that cut off our vital export markets. Mr. Chairman, this is a nonpartisan issue. Lets Work Together to address the challenges we face in a seamless, proactive, stable way that ensures our health, security and economic prosperity. Thank you, again, mr. Chairman, for calling this important hearing and i want to also thank all of your witnesses. I yield back. Thank you very much. We appreciate your comments and leadership and partner. We have a distinguished panel of witnesses to discuss the policies. I would first like to welcome professor of engineering in public policy. And then we will hear from senior fellow at the center for Global Development. Following him will be Roxanne Brown, International Vice president at large of the united Steel Workers and kim glass, president and ceo of the National Council of textile organizations and following ms. Glass is senior fellow at the hudson institute. Each of your statements will be made part of the record in its entirety. I would ask that you summarize your testimony in five minutes or less, if you could. Professor, you may begin. Thank you, chairman blumenauer and members of the subcommittee. During the pandemic i spoke with a mediumsized u. S. Medical supplier which has imported equipment from china capable of manufacturing 9 Million Masks per month. Surprisingly, their most challenging bottleneck was the ear loops for the masks. Work in their automated machines, the elastic needed to be no latex, a precise width and to come in a bag. They found a domestic supplier for a small fraction of the necessary elastic. But on a spool and for a while, a worker hand unspooled the elastic with the expected productivity slow down. When discussing Critical Technologies, we wouldnt think elastic. And yet, that lack of elastic cost our country millions of masks a week. The lesson from this story, however, is not that we need to produce elastic, per se. Whats missing is the capability to pivot. Diversity the suppliers internationally, adapt the equipment, change the elastic, change the regulations. That inability to pivot is the tip of the iceberg for how dilapidated the u. S. Manufacturing ecosystem is. First, for the u. S. To compete, we must make Innovative Products here that are demanded by the world. If we do it right, it can be a win win for National Security, the economy and jobs. Making advanced products domestically can create good jobs for hardworking High School Graduates. Im not talking about automating everything. While automation, i. T. And digitalization are clearly important, theyre just one set of a range of innovations. Our Research Shows that many of the advanced manufactured products on todays Critical Technology lists are likely to create more demand for skilled crafts people and empower those skilled High School Graduates to have more involvement in the innovation process itself. How do we get that technology manufactured in the United States . Unfortunately, my Research Shows that the globalization of production makes it harder for u. S. Innovators to bring their ideas to market. When firms move manufacturing to developing countries, it reduces the cost of old products, making Innovative New products have to be that much better to compete. We need to help u. S. Innovators leap over this valley of death through mechanisms such as increased and extended fbir funding. Second, the u. S. Needs to rebuild its manufacturing ecosystem through strategic investment in infrastructure. Infrastructure for transit, energy, communications and data address needs of society and manufacturing. Done right, it can also build National Capabilities in the companies and skilled workers who become the manufacturing workforce of the future. To lead in manufacturing the products of the future, we need to build the infrastructure of the future. The Computer Science skills relevant to transportation and Infrastructure Systems have corollaries in grid infrastructure, privacy and intelligent manufacturing. Our investments and training should be strategic to leverage these overlaps and the Career Transitions between them. Third, as youve heard, manufacturing the right advanced products domestically can increase National Security and demand for skilled High School Graduates. The right investments in infrastructure can serve triple duty in creating the groundwork for manufacturing success. But we must make the right investments which brings me to my final point. We cannot just produce more reports with lists of Critical Technologies. The u. S. Needs a nimble entity that combines Program Managers and analysts to make Strategic Investments that ensure National Technology competitiveness. That entity needs enough money for its investments to be influential, but a sufficient lack of money such that it is required to engage and influence other agencies to have a larger effect. Getting these decisions right is going to require an organization with Technical Depth run by Interdisciplinary Teams of our best and brightest. Otherwise, as we are currently with covid19, we will be flying blind. Thank you, doctor. Members of the committee, im a senior fellow at the center for Global Development and affiliate professor and lecture at harvard medical school. Over the last two decades, my research has focused on Global Medical supply chains. Thank you for the opportunity to share my viewpoints to this committee and for convening this very important hearing. Ppe testing supplies and other products have highlighted the grave challenges we face in our medical supply chain. Much of the discussion has focused on ppe. The supply chain for different types of medical products varies a lot in its economic geography. The supply chain for test kit is less dependent on manufacturing in china than in europe. Ireland, germany, switzerland and mexico make up half of the u. S. Imports. The u. S. Is a significant exporter of medical products with a 12 global share of the market. A different picture emerges, china is the top exporter of face masks. India is a significant exporter of medicines. Its due to the clustering of technical know how, tax incentives offered by certain governments and proximity. For api, for example, environmental legislation was one of the factors that led to moving forward to china and india. Next ill present some ideas to make our medical supply chain for resilient. First, we should diversity our production basis but not limited only to domestic manufacturing. It is tempting to think of producing all critical supplies within our national borders. However, this is implemented hastily, it may further reduce the decisions of our medical supply chain. Covid19 has shown us the huge risks that geographical concentration of manufacturing brings. Were experienced this at home when Hurricane Maria hit puerto rico. It led to shortages in hospitals across the u. S. Reshoring production of medical products also doesnt happen with the flip of a switch, building new production plants for medical products that requires several years sometimes to ensure the steps for manufacturing and process efficiency are steadfastly in place. We need to create sufficient reactive capacity, capacity which can be scaled up and down quickly within the u. S. To be able to rapidly respond to surges in demand or disruptions in Global Supply. To the u. S. International Development Finance corporation, we can provide capital for u. S. Based medical companies so they can expand and ders fi their basis, especially for ppe. It will allow us to contribute Technological Development and create good will in countries which are not able to get into glow supply chains. Setting up alternative manufacturing sites and keeping capacity costs money. If left to their own devices, its unclear if all companies in the medical supply chain will invest so we need a mandatory stress test for the supply chain. Keeping adequate supplies for critical products in the Strategic National stockpile is the most robust way that were going to meet our emergency needs, purchasing for the stockpile can prioritize those manufacturers who have reactive manufacturing capacity in the u. S. In order to keep their supply lines running. We need a National Academy of expert to reevaluate the design of the sns. In summary, i would say as you prepare for the massive supply chain that will be necessary to manufacture and distribute potential vaccines, we are reminded of the Global Supply chain. In which it comes from a supply chain with a vast global footprint. We need not frame this issue of supply Chain Security as a zerosum game. Our National Interests are best served by looking at diversity, preserving our partners and contributing to helping around the world. Thank you and i look forward to your questions. Thank you, professor. Ms. Brown . Are you unmuted, ms. Brown . Thank you, chairman, very much. Members of the subcommittee, my name is Roxanne Brown and im honored to serve as International Vice president at large for the united Steel Workers union. I appreciate the opportunity to join you and our president sends his regards. The Steel Workers is the largest Industrial Union in north america and we represent workers in a vast array of industries and are uniquely positioned to discuss the themes of trade, manufacturing and critical supply chains. At the heart of my testimony is the need for a pragmatic, strategic and thoughtful manufacturing plan for the u. S. That puts americas workers at its core. Covid19 may be the catalyst for todays conversation. But our union long known that without a strong globally competitive Manufacturing Base, our members, our communities, and our country are all less secure, less resilient and incapable of truly responding to crisis when necessary. Union members throughout this country continue to stand on the front lines in the face of this pandemic and provide the necessary supplies to help our frontline workers and communities stay safe during this unprecedented time. For example, u. S. Members in South Carolina make rubber stoppers for is a ribbon stoppers for syringes. The demand increased and our members stepped in working safely to produce these small but vital components. At the beginning of the crisis, american roots in maine faced layoffs. The company retooled to produce face masks and face shields using a Paper Company in new york as a supplier for the filters. This effort led to american roots recalling all laid off members and the Company Hiring 75 more employees. These are just two examples of the Untold Stories of how u. S. Workers of the domestic Manufacturing Industry step up in a time of extreme crisis for this country. They represent a small fraction of what an interconnected manufacturing economy can do in the face of crisis. We also have to recognize the value of manufacturing as a bread and butter issue for American Workers. Manufacturing workers are in 13 more in Hourly Compensation than others in the private sector. With that, ill touch on a few Items Congress should consider as part of a broad plan for u. S. Manufacturing. First, spurring innovation. We must uplift the r d, engineering, and Manufacturing Capabilities that sustained innovation. The American Association for the advancement of science highlights the historical trends on federal r d spending consistently dropping from 1. 2 of gdp to less than 0. 71 today. We need to improve our domestic pharmaceutical supply chain. The u. S. Pays the highest prices in the world for its medicines, many of which are derived from research. According to the fda, only 38 of active pharmaceutical ingredient manufacturing is located in the United States. We need to update our export facilitation programs. It will take federal resources to increase export. For example, the International Trade administrations most recent budget proposed a decrease of 35 million from the previous year. This is the agency that investigates our countrys trade enforcement cases and without adequate resources, manufacturing workers will face continued dumped and subsidized goods. We need to address existing foreign and industrial overcapacity in many based comedies. That is why our union continues to support steel and aluminum and the strong trade enforcement mechanism. Until there is a real Global Cooperation to contain industrial overcapacity, the u. S. Should not let other countries export their unemployment and we need an empowered labor force. This requires an investment in our workforce and an ability to negotiate safer processes and conditions at the worksite through collective bargaining. Over the years, we see the jobs, manufacturing capacity, technology and innovation to other nations. We cannot adequately reopen and restart this country without the policies needed to support a strong domestic Manufacturing Base. Our union is ready to work with congress to craft a manufacturing plan that recognizes the Critical Role of americas workers and invests in and encourages the injagenuity of domestic manufacturing. Ingenuity of domestic manufacturing. Thank you for the opportunity to testify. Ms. Glass. I want to make sure everybody is muted if theyre not speaking. Mr. Chairman, Ranking Member, think thank you so much. I am the president and ceo of the National Council of textile organizations. On behalf of our 600,000 American Workers who manufacture 80 billion worth of u. S. Textile products, i want to thank you for the opportunity today. Before i begin my formal testimony, i want to acknowledge yourrofound loss of colleague and friend, congressman john lewis. He was a friend to our industry and we extend our deepest condolences to all of you, his dedicated staff, his family and constituents. The topic of your hearing today is a vital one to examine and its a timely discussion. The ppe crisis is the most illustrative example of how our overreliance on china and the sheer breakdown of our Global Supply chains. I feel its important to document the efforts of our domestic textile industry to the ppe shortage and acknowledge our heroes on the front lines. U. S. Manufacturers are now supplying hundreds of millions of urgently needed items including face masks, isolation gowns at a time when Global Suppliers failed to meet the needs that this crisis required. The workforce is proud to serve the American People and want to work to help on shore this industry long term. Regrettably, the economic crisis spawned by covid19 has forced the cancellation of virtually all normal u. S. Textile production outside of some ppe production. In fact, as hard as this might seem, we have companies who can make ppe in our own backyard but simply dont have enough orders. Existing conditions are so severe that textile companies that survived the Great Depression and the Great Recession are facing the reality of extinction. If this persists, the goal of making the u. S. Selfsufficient in ppe production will be unattainable due to collapse of key parts of textile manufacturing. Theres no doubt that china is the dominant supplier. The practices have been allowed in china to become the dominant player for ppe. Where they possess more than 50 of the Global Production precovid. Since the onset of the pandemic in february, chinas production has increased five times. And over the weekend, many of you saw the New York Times released an investigate video highlighting the production of ppe in weaker cams with forced labor. We need strong rules to help incentivize investment. We released a report with other key Industry Associations earlier this week outlining a pathway forward on domestic procurement policies. This includes procurement policies to expand the amendment rules for ppe purchases across the federal government, to instruct federal Government Agencies to fully exhaust u. S. Ppe Production Capacity and were also urging the government to award multiyear contracts to u. S. Industry to help on shore some of these investments. We have outlined plans to help the robust stockpiling efforts with respect to the strategic stockpile and other tax and grants and other incentives for our industry. We also believe we need to preserve the integrity of our tariff structure. We need to crack down on trade practices that i exacerbate off shoring. We need to eliminate loopholes in our tariff structure that may have unintended consequences like the section 321 that mass distributors are using to exploit for millions of tarifffree entries each day that is impacting manufacturers here at home as well as the health and safety of the products going to your consumers. We must also block effort to expand treatment to cover textile and apparel products. Theres a reason that these products have not been included in gsp over the many years. This would have a devastating impact on our textile manufacturers and our trade partners many of who have stepped up to help in this ppe crisis. In closing, the time is right for a revival of american ppe textile manufacturing. It has already begun but we stand at a crossroads. With the right policy framework, the domestic ppe supply chains built overnight can endure and grow and we can create a selfsufficiency and diversity diversify our supply chains outside of china. Thank you so much for the opportunity to testify and we look forward to working with you. Thank you. Very interesting. Duesterberge tom from the hudson institute. Welcome. Thank you, chairman, Ranking Member, members of the committee. Thank you for this opportunity to speak about the crucial issue of the resilience of our supply chains at a time of pandemic, economic crisis and the growing challenge of chinese cancelism. The ability to meet economic and security needs, especially by cutting off not only the supply of goods, but Transportation Networks and the movement of people throughout the world. These weaknesses were already becoming evident in recent years as china and other competitors eroded Americas Industrial base. My recommendations in my testimony are intended to strengthen the Overall Economic policy environment for our robust sector that will meet short and longer term National Security, medical security and advanced Technology Competitiveness needs. While i support targeted measures to for specific security needs, my overall framework seeks to avoid overreliance on subsidies for individual industries and on protective trade measures. We have reliable allies that complement our roursesources and our own resources and we are a major exporting power. We need to avoid contributing to a destructive cycle of competitive subsidies and Market Opportunities and to convince our friends to be more active in supporting our actions to combat chinese unfair practices. Let me turn to some of the recommendations i outlined in my testimony. In terms of tax policy, i support a Corporate Tax system which keeps Corporate Income tax rates competitive with the oecd average. I also support increasing the r d tax correct to promote more credit to promote more reinvestment we should also incentivize as several panelists have mentioned, investment in skills training to ensure that we have the workforce required for advanced manufacturing. Some especially vital areas such as crucial Material Products in the medical sector or in things like rare earth metals, which are needed to support most hightech electronics, may require even steppedup tax incentives. I also support a sizable increase for basic Scientific Research and for enlarging our s. T. E. M. And Skilled Workforce human capital. One of the other panelists mentioned the decline in u. S. Investment in basic research and development and i support at least 100 billion a year increase in our investment in these areas. In terms of trade policy, we should continue to push back against chinese hermercantilism. Ism, using cancel i all of our tools at our disposal. I note that a competitive race over industrial policies and overreliance on purely Domestic Production can erode our ability to keep markets open and gain support for efforts to convince china to adhere to the accepted rules of international commerce. We also need to have allied support to achieve much needed reform of the World Trade Organization whose rules fail to cover egregious chinese practices such as state subsidization, ipr threat and failure to adhere to the normal rules of transparency required by the wto. Other measures such as reducing chinese access to western Capital Markets and prohibiting purchase of Sensitive Technology companies can supplemental trade policy. Finally, i pay some attention in my testimony to chinas increasing control over Raw Materials needed for advanced manufacturing such as rare earth cobalt and magnesium. The u. S. Depends on china for much of these materials. Trade policies need to address the chinese exploitation of the Beltandroad Initiative practices in asia, and south america and their abuses of International Standards on labor and environmental practices in their minds and processing plants that are under their control. Such actions are needed for u. S. Firms in the semiconductors, solar power, fiberoptic cable , telecom equipment, and electric vehicles industries. Let me stop there and i look forward to your questions. Professor, you talked about Infrastructure Investments. We just recently passed hr2, a massive multidimensional bill ranging from transportation to the grid, sewer water. I dont want to take time on it right this minute, but i wonder if you would have a moment to look at what we passed and reflect on the extent to which this meets our needs or if there are gaps in this massive bill that remain unaddressed. I would welcome thoughts that you might provide to us at some point. Were not done with that. Its going to go back and forth between the house and the senate, hopefully. But i would be very interested in making sure that infrastructure meets the needs that you care about, if you wouldnt mind. I would be honored to. Thank you. Thank you very much. Ms. Brown, you talk about having the capacity to be able to develop the workforce. We talk about this all the time as you know. It is a topic of much discussion. But we seem to fall somewhat short. Youve been around the block on this several times. Do you have some thoughts and observations about what we might be able to do differently this time in the midst of the pandemic, in the midst of some of the concerns we have for equity in development . Is there something we can do different . Thank you, chairman. I very much appreciate that question. You know, i would say that overall and this is something that youre probably going to hear me say a lot today we are significantly lacking in this country in a just overall broad industrial policy that includes a lot of what my fellow panelists have spoken about today. You know, from the Steel Workers you know, from the Steel Workers members perspective, this has been a decadeslong struggle. Our union in particular has been before this subcommittee many times before on the issue of trade and unfair trade. And, you know, for us, there are some really critical pieces that we need to see. Im getting a little feedback on my end. Hopefully you all are not hearing that feedback as well. But the investments and domestic manufacturing in terms of r d, the strengthening of our trade laws, in terms of a workforce, making sure that we have the workforce of not just today, but the future. Training is a big piece of what needs to happen within the manufacturing space. When people often think about training, its always directed to predominantly Building Trades unions. But theres a huge opportunity as we talk about the role for domestic manufacturing and investments in manufacturing in this country for there to be a manufacturing workforce of the future, and so there needs to be a lot more partnerships at the local level with schools and colleges, with manufacturers in those communities, to train up, not just, you know, current manufacturing workers, but go into the high schools. Attract young people to want to come into the manufacturing space. I think a lot of young people feel that this is not a sector thats viable anymore because of the devastation that weve seen over the last, you know, four decades or so in manufacturing. So theres much that we can do in the way of trying to strengthen domestic manufacturing and the workforce that will play a role in it. Thank you. Thank you very much. Ms. Glas, i was struck by your description of how reliant we are on china. The fact that people are able to make transition to help us move forward, but we still have gaps where theres an inability to take advantage of some of the capacity we have there now. Do you have a sense of what it is that we do so that we end up being stronger when were done, not more reliant on china and other countries . Mr. Chairman, you raised a good point in our opening remarks about the fragility of the supply chain and this certainly exposed fragilities within our own Manufacturing Sector for textile. A lot of the finished products and the making of finished products have gone offshore for a variety of reasons, low labor costs. A lot of our industry, some of them have made ppe and have been in that business for a long period of time. But a lot of that has gone offshore decades ago because of the consumers chasing the lowestpriced product. Our industry, to almost everybody in our industry that i speak to, wants to make Major Investments to plug those holes and to bring automation and technology needed necessary to making ppe here. But they need some level of certainty. You cant invest in technology and equipment without purchase orders or a sense of what that horizon will look like. And what we are asking for the federal government to do is to help us help ourselves invest in this sector. And that can be done for a variety of reasons. Right now, the government is moving forward with trying to purchase products for a Strategic National stockpile. Its going to be significant purchases. Everything from testing kit swabs to isolation gowns, try to give our industry some longerterm contracts so that we cant realize that investment. Realize that investment. There are holes in our domestic text tile industry, but that being said, regardless, we literally had Companies Get calls from governors, from the white house, from state legislatures asking for ppe and created supply chains overnight. So this is a very versatile industry. They want those calls to happen. They want to be part of the solution and they recognize that we have a crisis on our hands still months after covid19 really came into full force in march, and were here to try to help on shore this industry. Thank you. Professor yadav, for the sake of timing here, i want to move on and let my colleagues have their opportunity to make comments and ask questions. But i would like to follow up with you in the future about how we make sure, when the next crisis hits, that we arent facing the same issues of supply chain fragility. How do we learn from this experience . With your permission, i would like to explore that with you offline. Thank you, chairman. I would be glad to. Youre very kind. I appreciate it. I want to move on here. We have Ranking Member buchanan. You are recognized for your inqueries. Thank you for the critical hearing. I want to thank our witnesses for being here today. Doctor, theres a bipartisan concern, i believe, in the congress that were too reliant on china and other adversaries for key products. Its clear that chinas not a reliable trading partner, especially during times of crisis. How do you suggest, in terms of trade policy, we make that work with our allies to present a united front against china . What are some of the prime opportunities you see in bilaterally, regional, and multiregional approaches . Thank you for that question. We are too reliant on china for in a lot of different areas. I highlight in my testimony while materials Raw Materials, such as rare earths. We are not the only country that is reliant on china for the products. The european economy and the German Economy is highly dependent on the automobile sector. Theyre also trying to develop pyro technology in semiconductors, where the United States is dominant. Theres ample opportunity for us to Work Together to fight back against chinas control of mining and processing and even production of these materials. Thats just one area. In terms of medical products, i think the pandemic has highlighted the ability to cooperate with our friends in the u. K. , especially, to develop vaccines and other medicines to deal with the pandemic. Doctor, ive got limited time. Let me ask another question. Can you hear me . I can hear you now, yes, sorry. Let me move on just quickly, because were just limited on time. Ive got a bill ive introduced securing americans medicine cabinet act about stockpiling drugs. The understanding i understand is that china produces, whether the ingredients or the production or the manufacturing of 70 , 80 of our drugs. Im in sarasota, florida. We have one of the most Senior Communities in the country. Many of these are critical, lifesaving drugs, so id like to get your thoughts on how do we minimize that and get back or make some sense where we can produce ourselves in america. I know for a lot of years, a lot of things were produced down in puerto rico, but seemed like its moved offshore, so i guess the question is, is it your understanding as much as 70 , 80 of a lot of the critical drugs being produced, manufactured, or managed out of china . And then if so, what can we do about it . Theres a lot of controversy over the data, but the data ive seen indicates were not that dependent on china for basic products nor the manufacture final drugs. Were much more dependent, if you will, on ireland or germany or switzerland for advanced pharmaceuticals. Nonetheless, we produce about 70 of the pharmaceutical products that we need. I think tax policy is key to returning production to the United States, as your committee and your colleagues, to make it more advantageous to produce in the United States. I also think we need to have serious consideration, as one of the other panelists said, of more stockpiling of drugs and doing stress tests so that the next pandemic that comes around will be prepared with the necessary stockpiles. Depending on china is not the problem. We do need to bolster Domestic Production with a variety of initiatives that your committee and your colleagues have. Thank you, and i yield back, mr. Chairman. Recognized for five minutes to question our witnesses. We will not observe the gibbons rule in this remote setting, but instead go in order of seniority, switching between minority and majority members. We request that you unmute yourselves when youre recognized. Our colleague, congressman pasqual, unfortunately is unable to join us today, but sent a statement hed like to enter into the record and i hope theres no objection to it being included. Is there any objection . If not, it will be so inserted. Congressman kind . Thank you, mr. Chairman. I want to thank our witnesses for your testimony here today and listen, we are all heartbroken with the loss of our dear friend and colleague, john lewis, and our thoughts and prayers certainly go out to his family during this difficult time, and i, too, want to express our best wishes to bill pasqual and hope that he has a speedy recovery so he will join us shortly. Get well, bill, if youre tuning in right now. Professor fuchs, let me start with you. In regards to a Global Pandemic, and just in time delivery, most companies, most manufacturers dont want excess inventory on the shelves and warehouse. Yet just in time delivery catches us flatfooted from time to time. Are there any answers other than the federal government buying up supply and storing it in some warehouse, waiting for the next pandemic to break out . Thank you. I would say that just in time delivery as a manufacturing system should not create any problems for our response. If anything, it would enhance our ability to respond. The key would be to have that capability or any other manufacturing capability, at least in some part, domestically, in our response. Well, staying with you for a second, is there a way for us to encourage greater coordination between various federal agencies, im thinking ustr, nih, commerce department, so we have a better ability to look around the corner and better anticipation of a Global Pandemic and what we need to ramp up quickly before its at our doorstep and before its really too late. Were in the 7th month now, when the virus hit our shores, and still running into ppe shortages, still running into testing shortages. That is inexcusable for an Industrial Power like ours. Do you have any suggestions . Absolutely. The type of agency that im describing that would have the capability to guide Strategic Technology decisionmaking should be able to address those challenges. Some people talk about events like these as black swans, but theyre not. To quote one of my colleagues, they have probability distribution over time. You need the analytic capabilities to identify, we dont agree today on what is a Critical Technology. Is that about being able to reinforce our human values and nor should we ever have agreement, but we need analysts that can help us identify the tradeoffs in those technologies, and we also need Program Managers who can invest then strategically in what our holes and gaps are in the nation and combine with other agencies to do that. Dr. Yetoff, can i ask you to look around the corner and to be in a better position to coordinate the supplies we need to deal with a crisis like this . Thank you, congressman kind. I think two responses. One is, like you rightly pointed out, i think interagency coordination in both looking at whats likely to come and then getting prepared in terms of supplies and resilience, having the right manufacturing capacity both domestically, but also with our trading partners, is an area that requires more work. This pandemic has highlighted where we have gaps in agencies coordinated. The second is in response to your question of just in time inventories, i would say if the purchases in the market, whether it is the federal government, the state purchasers, or private purchasers, if they are constantly looking for the lowestpriced medical products, then companies in the quest for efficiency do go to just in time mflg and manufacturing and just in time inventory. If we engage in the concept of stress testing where we Ask Companies to demonstrate how they will meet large surges in demand and disruption of Global Supply, that will bring some more emphasis on moving away from a very just in time driven philosophy of inventory and manufacturing and secondly, it may also bring about diversification of supplies, so that would be an area which will help us get to that means. Thank you, congressman. Id like to follow up to explain the anom me in the marketplace, demand for scrap steel thats low, and yet prices are increasing, and thats typically not what happens in supply and demand marketplaces, so id love to follow up at some point and get your perspective of why thats occurring. Thank you, mr. Chairman. I yield back. Happy to do that, thank you. Thank you, congressman kind. Congressman noonans . Thank you, mr. Chairman, and thank you to our witnesses who have joined us today. Global supply chains are complex enough without having to deal with dishonest trade partners and maligned global actors. As a member of the intelligence community, i have unique perspective on the issue and the dire economic and National Security implications. I have seen firsthand the unfair barriers and predatory practices american businesses face. If they wish, china could swiftly and easily block medical supply chains critical to our Nations Health ware system. That is one reason why i introduced two bills that would help reshore our critical medical supply chains. To secure the supply chains we must unleash American Innovation. Chinas economic abuses affect our medical supply chains as well as every other sector of our economy. For example, an Agricultural Company in my district recently discovered one of their products was being counterfeited, built in china, and then sold back to the United States. I have one question today, mr. Chairman, for mr. Oosterberg. Welcome, thanks for being here. I would ask, give you an opportunity maybe, you talked about it in your opening statement, but to talk about some of the corruption thats occurring in our supply chain by chinese companies, kind of using that example that i gave of a company in my district, where they copy something, start making it, and reselling it back in the u. S. I was hoping thinking maybe you had some more opinions on and examples, possibly. Thank you. The theft of intellectual property, including the design and production of materials, has been going on for 20 or 30 years in china. I remember when i was the head alliance,ufacturers one of my members came to me and said well, Chinese Company just came to me and asked me build this product that goes into automobiles. I said, i already build this product for another american company, and this looks like exactly the same design that has already been used, so this is going on for a long time. In terms of medical products, there were good examples early on, especially when the pandemic was unfolding, especially in europe, the chinese first cut off supplies of personal protective equipment and other needed products and then they started trying to flood the market, especially in europe, and claimed to donate supplies and some of those were so defective that the europeans were more friendly to china than we are, simply sent them back because they were so defective. We had examples as well here in the United States of subpar products being exported to us and chinese taking credit for trying to help out in the pandemic. I noticed that even a lot of the tests that people have been sending me for the covid tests are still coming, the swabs are at least coming from china. It shows that we have a real vulnerability there. Thank you, mr. Chair, for your time and thank you to all the Witnesses Today and i yield back. Thank you, congressman. Congressman davis. Danny, youre not unmuted. We cant hear you. Danny, we cant hear you. Now . Yup, got it. Ok, thank you. Thank you very much. Let me thank you for holding this very important hearing, and i certainly want to thank all of our witnesses for being here. I am so accustomed to following bill pascrell, i wasnt sure it was my time, but bill, were missing you and look forward to you coming back. I also need to just acknowledge that weve already begun to experience life a little bit without john lewis, and john, it will never be the same without you. Miss brown, let me ask you, before covid19, while the Unemployment Rate was steadily decreasing, in many parts of the country, but in other parts, including areas in my congressional district, you could see Unemployment Rates as high as 20 to 30 , mainly among those i refer to as hardtoreach workers and those that have aged out of traditional Vocational Training and other programs. I have been working on legislation to expand work opportunity tax credit in construction trades to capture those individuals and also to expand Work Opportunities postcovid19 in manufacturing. Let me ask if youre familiar with the work opportunity tax credit and how important do you think it is to expand programs like these to meet our covid19 needs, and to expand the workforce in the future. Thank you very much, congressman davis, for that question. Youre absolutely right. Before covid19, the Manufacturing Sector and districts like yours was already struggling. So the pain that were talking about right now that manufacturing has been experiencing during covid was really bad, and what this crisis did was exacerbate it on the part of a lot of our members and communities across the country. And im not very familiar with the work opportunity tax credits. What i am, unfortunately, familiar with is trade adjustment assistance. On the manufacturing side, that is program that exists to help manufacturing workers who do lose jobs as a result of unfair trade, which i know that this subcommittee is very aware of that program, and we would agree with you, that its really important to expand and strengthen these types of programs, especially at a time where manufacturing workers continue to feel the weight of unbalanced and bad trade policy, and thats something that we would love to talk to this, the full committee, but certainly the subcommittee about more in detail because we definitely have ideas about, you know, how programs like taa can be strengthened and, ironically, you know, this week, there is a verso mill in mr. Kinds district, paper mill in wisconsin where on friday, tomorrow, were getting ready to file a taa claim on behalf of our 900 workers who are losing their jobs at that mill. So again to your point, mr. Davis, you have 900 workers at this mill, a lot of them who are older and i think anyone who knows where paper mills are, theyre in some of the most rural parts of this country where, oftentimes, the papermill, the post office, and the school, so there are no real Viable Options when you lose an 85,000 a year paper mill job that includes benefits like retirement. I completely agree with the sentiment of your question and absolutely look forward to talking about more how we expand programs like these. Thank you very much. If i could quickly ask for your perspective as to why we cant seem to have the kind of supplies that are needed for the covid right now. Whats been happening . Congressman, that is the quintessential question. I think for our industry would say that we have not fully maximized Domestic Production thats in our backyard today that could be retooled in real time to help with the ppe crisis. Theres a disconnect between those who are seeking ppe and those who can make ppe. We need to better link the industry up with the needs of our local communities and our federal government. Its a shame to me to read headlines in a newspaper that Everyone Needs ppe right now and recognize that our industry has capacity to help. We have some of the best manufacturers in the world, who are developing research and technology to ensure antimicrobial fabrics are being made that ensures infections do not translate in the hospital setting. But we need to be doing a lot more here and its a complicated question, congressman, but i appreciate it because its certainly the forefront of this hearing today. Thank you very much, chairman, i yield back. Thank you, sir. Thank you. Congressman rice . Thank you, mr. Chairman. My focus in congress has been trying to make our country competitive in tax policy and trade policy and regulatory policy and structure and so forth, because i always felt like if we got the government out of the way, playing that they can compete with everyone, many times from the other side i heard, well, the jobs arent coming back, but i think i hear you, dr. Fuchs, that we can get some of those out back, is that right . Absolutely. As a matter of fact, by investing in Critical Technologies that involve innovations and advanced materials and processes, we can have greater demand for middle skills, for hardworking High School Graduates. Dr. Fuchs, do you think that competitive tax policy matters . If a company can pay half as much in ireland as in the United States or half as much taxes in china, do you think that factors into their decisionmaking on where they locate . Absolutely. I think we need to put everything on the table, right, so we have tax policy, we have sbir programs, so alone, if we dont align these various incentives, its not going to be enough. We need to align demand and reduction in costs, as well as the appropriate funding mechanisms. Uptick inseen an manufacturing jobs as a result of the tax cuts and jobs act . I have not studied that directly. Ok, thank you. Dr. Yadov, i am a disciple of your compatriot at harvard, michael porter, who is an expert in competitive theory and a lot of the ideas that ive put forward, i have gotten from reading his materials and meeting with him. You mentioned that china, mexico, and india are a lot of our imports, you were talking about medical supply chains. Is that correct . Yes. You said that the reason is of tax incentives these other Companies Offer in their proximity to Global Supply hubs. Is that what you said . Proximity to rnd hubs. What i was referring to, congressman rice, is the production of certain pharmaceuticals, which is carried out in ireland, switzerland, germany, and they are the top exporting countries to the United States, it is driven by a combination of tax incentives, but also the fact that Technology Knowhow and proximity to where r d occurs, those factors are converging. Dr. Yadov, what about our protection of intellectual property here . It seems the pharmaceutical companies and others really like our intellectual Property Protection we offer here in this country. Is that correct . Yes, i think the United States, yes, the United States is a great example of trying to balance intellectual property, access, and affordability. What if we conditioned some of that production in the United States, would that be a good incentive for people to bring production back here . Congressman, i havent studied this in detail. I presume it would, but im happy to explore this and send a written response. Mrs. Brown, you were talking, youre with the steelworkers, but youre talking about paper mills. I have four paper mills in my district and i have a couple of steel plants as well. One thing we saw, you know, as a result of the Regulatory Reform that weve gotten done for covid, as a result of the trade reform that weve gotten done for covid, as a result of the tax cuts and jobs act with the Unemployment Rates at below 4 nationwide, one problem that we were running into is that even with that, even with opportunity that hadnt been seen in decades in this country, we were struggling to get people off the sidelines and coming to the manufacturing job. My tech schools were telling me they could place a thousand people in manufacturing jobs if they could find the students. How do you engage a lot of these poor communities, how do you engage people to take advantage of these opportunities that, how do you get them out of generational poverty . Thank you for that question. I appreciate it. I will say that yes, while manufacturing precovid was an improved place, it definitely was not anywhere where we need it to be as a country. Let me ask you this to follow up on that question. Umhm. Do you believe that if our countrys regulatory tax trade policies were sufficient, just put American Workers on a level playing field, do you believe that the american steelworkers and the american paperworkers could compete with anybody . Absolutely. I think if tax policy is fair and puts American Workers first, and not american industry first, certainly we would see some benefits for sure, and regulatory policy, when crafted correctly, can actually lead to competitiveness. So i completely agree. Sorry. I was going to say to your earlier question, mr. Rice, in terms of attracting chairman, are you wanting we need to move on. The times expired, im sorry. Thank you. Thank you, very much. Congressman kildee . Thank you, mr. Chairman and thanks to all the witnesses. I want to start out by echoing some of the comments that my colleagues and some of the witnesses have made about our friend, john lewis. You know, the country will never be the same, because he lived and what we do every day is the same because its gone and i think one of the ways we honor this incredible giant is not just by commemorating his life, but actually trying to continue the work that his life was dedicated to. So im going to try to do that every single day, and im going to try to do a little bit of it right now. A hearing in april of 2015, congressman lewis said, and i quote, what does it profit a nation such as the United States of america to gain a trade agreement, but to lose its soul, leaving so many people in america around the world behind when it comes to human rights, labor rights, the right to organize, collectively bargain, check the environment . So i think we need to think about all of this in a very broad context. So id like to take a leap off of what john said a little over 5 years ago and ask a question that relates to this question of human rights. I think we have to enact fair trade policies and deal with these issues that contribute to opportunity for everybody, but not engage in a race that hurts American Workers by embracing trade relationships with nations that exploit their workers. My districts become a bit of a victim to this phenomena. A company in my district, hemlock semiconductor, makes polysilicon for solar cells. These panels used to be made right here in the u. S. By our workers. For a long time, the u. S. Didnt care where the solar panels came from, as long as they were cheap. Now our American Manufacturing has been decimated and were heavily dependent on foreign countries, especially china, for solar panels. Today, more than 40 of the worlds global polysilicon used in solar panels are made in xinjiang province in china. I know the place is notorious for its human rights abuses. Employing thousands of people in my home state, we, by extension, support those abuses by supporting that market. If i could start with ms. Glass, and then perhaps have dr. Fuchs also comment, can you talk about some of these . [indiscernible] thank you for that question. Our industry is the largest employer, globally, of workers by far none, and often in developing world countries, a lot of women are employed in our sector, making apparel and other textile products. Human rights abuses in our industry has been something thats been happening globally for decades, and its no secret , even though its getting attention in the media, the atrocities happening with the uyger population are atrocious, and we, even in this covid19 pandemic, believe it or not, prior to covid, there were four manufacturing facilities that were in these essentially concentration camps and outpost covid, there are 51. The New York Times did an eightminute video, i encourage you all to watch it, about the ppe production happening. This was happening not just on ppe but not just on your solar panels, but also on yarn, on apparel, on other items, and this has been going on for a very, very long period of time. I know congress has looked at this and started to act with respect to this. It is important that we look at every enforcement tool with respect to cracking down on human rights, in the spirit of congressman john lewis and all of your commitment on human rights issues moving forward. These are some of the predatory trade practices, not just china, but in other areas of the world, but this is an illustrative example of that overall abuse. During the course of the hearing, others want to make comment or followup later on, thank you. You are muted. Im now you are muted. There you are. We can hear you now. Lucky you. Want to take it away . Thank you, mr. Chairman. I know we have all started with saying something kind about our departed colleague. Photo with amazing him and my little girl when she was there in the committee with us. Is one of her hall of fame in her room. Im hoping that situations like that where we can keep his memory alive and service to the country and even with someone like my fouryearold, the next generation. To our panel, i want to get more granular and let see if we can do this. The conversation has been wonderful but i think it has been very textile and ppe. , a complexnderstand Worldwide Supply chain with a china concentration today, if we produce tax policies and incentive policies and regulatory policies that through certain types of manufacturing, using the word fragility and robustness, i have always been concerned because we had discussions, so many products, so many pharmaceuticals, there may be one simple ingredient or one simple component that exists one place in the world, so even if you make your supplys more robust, do we have a competent way to actually look at everything within that production line so you dont have one thing that is sitting in a dodgy place that gets held up for extortion . We see this particularly with even the discussions to bring pharmaceuticals back where it turns out there is one small precursor that exists in one location that actually stops the entire manufacturing process. Panel,t question to my do we have the ability to audit and understand all those components, and when we are talking about making ourselves robust, is it bringing all of that to north america the usmca or is it making sure that there is never that one fragility, that one in one country, that those things are in multiple places . Ever would like to step up mi fixating on something that is either too complex or not important enough . You for this fantastic question. Three brief answers. One, tax policy with where we are today, i believe, is important but not enough. That is why i was proposing a strategic Infrastructure Investment. Notsecond is that we do have the capacity, even within the department of defense. Tos is an enormous problem map all the supply chains. The, when i cochaired economy commit on science and innovation leadership for the 21st century, in their opening remarks, the department of defense, strategic protection they did notthat have the capacity they wished they would have in terms of understanding our Competitive Position in different technologies and where to move around internationally. Supporting that we need to develop that strategic decisionmaking capability, which we dont have today. Including around areas that are areasst defense, but also where our values for human rights, around privacy, to uphold those. Does anyone else have something on the concept of an individual component or individual ingredient having a rare concentration . Even if we got a lot of the policy rights, you could hit that level of extortion on certain products. In manufacturing maxines, one particular thing comes from a specific tree. It will take us many years to start manufacturing with that tree, which at this point is native only to chile or a couple countries in latin america. I know examples like this where as we look at [indiscernible] up. E need to wrap this we have congressman panetta. Thank you, mr. Chairman. I appreciated that, and Ranking Member, i appreciate this opportunity. This is the first hearing i have been part of on the committee since the passing of congressman john lewis and as a fellow congressman, as a fellow member on the ways and Means Committee, ive got to say, i never got used to being the colleague of john lewis. Something i never got used to. Can honor hise we memory by working hard and working together to try to live up to his legacy to ensure super economic and social equality in this country not just during the pandemic but thereafter. As we have seen and as we are discussing, this pandemic has tested our supply chains, which have proven to be less resilient than we thought with devastating consequences. These concerns go beyond our economic panic about tour the paper and disinfectant wipes as we have seen, supply chain weaknesses hinder our ability to fight this virus, especially with the lack of supplies and testing and ppe. What it comes down to, and it is stated by our expert witnesses, if we are to make it through this pandemic and to be prepared for the next one, we must prepare our supply chains and that means making greater investment at home and building up our to mr. Capacity and ensuring a diverse supply chain capacity. One of the areas i think this has become evident is testing. I have always said that the lack of testing, be it quantity and quality, is the original sin of this pandemic. I think we know without a vaccine the way we are able to get through this is by testing more and better. Especially with asymptomatic nature of it. We have been blind. When i visited a testing site last week in my district on the Central Coast of california, they said we are able to get out of tests, so we have the quantity, but the quality was not good in the sense they were getting results back in seven to 10 days. People, thatmany does not work. There is a reason why we read an oped by one of our prominent governors who had to go outside the normal supply chains to secure tests from south korea when this first started. I believe that stems from a lack of unified, coordinated strategy when it comes to testing. Ideally, i would have liked to have seen and have called for in ensuretion the dpa to proper production of testing kits, supplies, swabs, you name it, to get more, better, quicker, more advanced types of including point on contact, where they can get the results instantly. So professor, i want to address my first question to you. Do you believe it is important to have a National Strategy for supply chains when it comes to testing for covid19 . I believe we do need coordination of the type you described. Think the coordination both to expand testing but also to push forward innovations, if they are able to improve the falsenegative rates, for example. Instead of one in every three testing falsenegative, if that were down to less, we would have to do less testing. If you can speak to this, do you think the use of the production act could help that . There is many ways the defense production act can be used, but i do believe this is a National Problem. I cant think of anything more obviously eight Network Externality and a National Problem to solve. Thank you. Ppe, wouldve the use of the defense production [indiscernible] from our vantage point, yes. The defense production act would allow for Contracting Authority with guaranteed purchase for a period of time in getting to your point on testing kits, we have a u. S. Company prior to the pandemic, there were only two testing producers in the world. One is in italy and the other was in maine. We were in dutch we were in touch with Peter Navarro who makes swabs and are making testing kit swabs today. Now we have three big producers and the companys name is u. S. Cotton in cleveland, ohio. We have to think about what it means to help the production chain. Thank you. I yield back. Commerce murphy. Congresswoman murphy. I join my colleagues in expensive sorrow in the loss of our calling john lewis. My prayers are with his family and staff. We mourn him. Thank you to the witness for joining us today. I think the hearing was a great idea and double our subcommittee should like in trying to understand what is a complicated subject in the middle of the pandemic. I appreciated this opportunity to hear from experts and give us an opportunity to process the information you provided and thank you to for your leadership here. The pandemic has exposed some serious vulnerabilities in our response, produce in as we have discussed, with the questioning. About whatuestions we should do to make sure we always have access to supplies, to save lives and protect our National Security. However, i am concerned that some people who are already skeptical of global trade are using this crisis to advance their goal. I think it is important that while we address the issues at overcorrect in response to this pandemic. Tax cuts to businesses to increase domestic capacity. I think having exclusive domestic sourcing is both unrealistic and counterproductive. It would leave us as vulnerable to shops at home as to ones abroad. If your your testimony rings true to me and i agree that the goal should be diversification, not to miss vacation not domestication. In some instances, diversification will include increasing capacity, what you call reactive capacity. It should not be the only solution to build our resilience. Can you explain how diversification could have eliminated some problems that have emerged during card 19 during covid19 . Thank you you and thanks for that question. I believe only Domestic Production will lock up the supply chain. When we say diverse and , if ppeically diverse supplies, instead of coming largely from china, imagine they came from a number of manufacturing sites in the u. S. , in addition, from manufacturers that were in latin america, southeast asia, east africa perhaps, that would have helped us be more resilient and not have so much dependence on one particular region. That is what we imply when we say diverse. It sounds to me like the anecdote to this crisis is not necessarily retreating from global trade, but more global trade. Just a more smarter, more diversified global trade. My next question, you have this idea about testing the supply then, how we stress tested baking sector. Can you explain about how this might work in your view in what the results might be if we conducted a tests right now . Conducted a test right now i think the result would be that there is little ability to absorb a shock on the demandside or supplyside. What we imply by a stress test would be asking all companies who have a license to sell medical parts in the United States demonstrates to a federal agency, health and human services, every quarter or Something Like that that not only the manufacturing capacity but the suppliers and their suppliers suppliers can go with a certain increase in demand in a certain kind of supply construction, including export and trade restrictions by certain countries. If they can demonstrate that, we would have resilience. The thing to keep in mind would be we should not otherwise Smaller Companies will find it difficult to participate. Thank you. Thank you and i yelled back. Back. Ld thank you. Thank you you, mr. Chairman. Can you hear me . Loud and clear. I want to acknowledge the passing of our dear friend john lewis. He may have represented a georgia 433 years but he will always be the boy from troy and alabama native son. We show that in common. I was always greeted with a smile when he would call me the girl from selma, alabama and it was my honor to help cohost those tech images those pilgrimages from summit to montgomery and i am in awe that we no longer have don with us but his actions, his deeds he gives us a roadmap if we are willing to follow it. My question is to miss class. Ms. Glass. We fight for human rights and equality in all its forms, especially in the ways and Means Committee, whether it is trade policy, health care policy, or everyday lives. I know if john were still with us, he would have been troubled by the report coming out of china which found that forced labor is being used to make ppe and these products are making their way into the u. S. Supply chain. Report, onlythe four companies produce ppe in the providence before the outbreak, now there are 51 producers and 17 of those companies are using forced labor. Take toorts can we ensure that ppe produced by forced labor stays out of the United States and Global Supply chains . Onuld we be focusing strengthening tax enforcement, trade enforcement, trade procurement . What can we do to strengthen our Southern Hemisphere supply chain , that has been a particular interest of mine. Congresswoman, thank you for your leadership. You have been a strong supporter for our industry in the western hemisphere region. To the question this came up a little earlier, related to the uyger population at the atrocities happening with ppe production, it is not just ppe production, it is beyond that. It is astronomical to think about that in this period of ,ime, the Companies Making ppe that portion of the country, under the most horrific human rights standards, is allowed to happen. In terms of trade enforcement moving ahead, we need onsite verification for those companies on the ground. We need a level of transparency that the Chinese Government is not getting to our country or other countries to help crackdown on this supply chain. There is a buyer of these products being made in the most horrific Labor Conditions that we can make. Who is buying these products . Let hold them accountable. For the question you have related to diversifying our supply chains in the wasnt hemisphere, we could not agree more, we have a strong relationship with our western inisphere partners the red general, 70 of u. S. Textiles go to our western hemisphere for exports that come back as finished products. How do we ensure our trading partners get the benefits of the trade agreements to ensure they are making ppe and there is more on showing of these products as well as selfsufficiency at home . We are trying to push in our bill the helping the western hemisphere and making sure our trade partners are given the same benefits and we should make sure they are not receiving these kinds of supplies made by forced labor. Erica. Question is for i agree with your testimony that emphasizes the need to strengthen workforce developing here at home. The pandemic has highlighted how dependent we are with on Global Supply chain for medical supplies during emergencies and reducing that dependency by producing Health Care Supplies at home is important. My question is, can we collaborate on the importance of workforce developing and supply conversation, like how can be elaborate on the importance of that and we want to know from you if you could talk about the importance of Workforce Development and supply chain reform in that conversation, how we can elaborate on it . I have been i have a Strong Manufacturing race in my district and we want to uplift that workforce. Yes, and automobiles are assembled for the regional market so that is a good one. I would like to wrap in member murphys comments in my response to you. I dont believe we should be manufacturing all aspects of the domestic supply chain in the United States, having studied Additive Manufacturing and the future of semiconductors as well as the automotive industry, electronics from coming occasions in computing, there are certain capabilities that we able toe in order to be innovate and continue to lead in Critical Technologies. So i want to make sure i emphasize that. On the workforce front, i would like to emphasize that i believe we can not just believe, our Research Shows that the types of activities in advanced materials and processes can lead to better jobs for skilled High School Graduates. Thank you mr. Chairman. Thanks for all of our witnesses for joining us. I share with my colleagues the incredible loss we have had in losing our colleague, john lewis. It has been heartbreaking and yet he will continue to inspire me and i know and inspire us to do better. Honor to serve him. I would also like to tell congressman pascal to get back with us soon. About when we look at supply chains and the , bringing of clusters groups together has been products to make sure are manufactured and researchers are nearby and you talked about innovation happening where manufacturing might be happening. I wonder if you can elaborate on that. We talk about how we need to find all the components and put them together. How we might bring more of that back to the United States. Really, there is a longterm approach taking place in terms of bringing appropriate suppliers together. You talked about the strategy we would need to do that. The key point is when a company chooses its location for manufacturing, likes to be in a place close to the key purchaser. It wants to look in many componentclose to a suppliers they want to be close in proximity. The medical supply chain given medical vices require hundreds if not thousands of components. The subcomponent assemblies are in the cluster. Having a Manufacturing Base for some medical products, we have to think about how to create , but create a structure that attracts they cluster and that goes similar to comments abouts creating structures domestically. Fuchs, do you want to elaborate on that as well in terms of what we are going to have to do to bring those components together and maybe the longterm thinking its going to require . Believe what is particularly important or interesting about Infrastructure Investment beyond the agglomeration economy mentioned by my colleagues is we havent really thought of infrastructure which is currently dilapidated in the United States. As an opportunity to build the capabilities to build. If we want to build the products of the future here, we need to build the infrastructure of the complementarys across that, we should be leveraging strategically. You mentioned how import and it is we talk about very basic Raw Materials and you talked andt Rare Earth Minerals , you talked about one belt, one road in terms of International Investments that have made to secure that supply chain. U. S. Can we do in the standpoint in terms of trade policy to address these areas that would be critical for us to have resiliency in our supply chain . Incentivized to Domestic Production and there are plenty of ideas on the table. Supporting the processing plants and the purchasing of final the rare earth. I would like to focus on another component which is for electric batteries. Lithiumion batteries are the key to mobile phones, computers, electric vehicles, and boeing 787 aircraft. China has acquired minds in the exhibit appalling environmental and Labor Conditions. Literally picks and shovels in many instances. Allows anyone to prohibit the import of products that are based on exploitative poor environmental practices. We need to call out the chinese, we need to get together with our to call out their theree practices and also financing through the belton road is often exploitative and opaque and china needs to join wtoprocurement code of the as they claim they will do, so toshould work on our allies adhere to international rules. I think it is very important for u. S. Many parts of the Manufacturing Sector to call out the chinese on these practices. Thank you. My time has expired. I appreciate your testimony. I yield back. Congressman buyer. We all knew that john lewis was dying. We hadnt seen him in six months. We got regular updates on his health, but we had plenty of time to pregrieve, but still, something changed. You can send this vacuum now. Despite the fact that he was more famous and accomplished than any of us. I miss him and i want to be like him. Hearingsubcommittee withoutseem authentic billy best real. He talked about the importance of unions in training workers in the Manufacturing Sector and im continually struck by the mismatch that we get so concerned about the off shoring of jobs, get the last time i was at the national manufacturing, i said to the cant find the right workers and the average salary is 77,000. To overcomebe doing this mismatch . Especially with the role of unions. Back tonk this harkens about mentioned earlier training. Obviously across the country, there are a lot of industrial communities that have been hollowed out and devastated by job loss. When those jobs go, a lot of the skilled workers that work at both the saudis, welding and performing other jobs, they have to leave to find other jobs. Part of it is where are these facilities located and is there already a group of workers that can perform the tasks and jobs needed to fill those jobs . Thats one piece if it. The second piece is training. A lot of the technologies around manufacturing are changing, and we need to make sure we are scaling up manufacturing workers across this country. Unions do play a role. Our union is a manufacturing union. We dont do a hiring hall like building trade unions to where they hire workers, but we do onthejob training at our steel mills and our refineries and paper bills. But we need to go outside of that. This is where i talked about partnering with local colleges, partnering with high school, tapping into schools and colleges and expand upon them. Communicate better about what manufacturing jobs are. Across thisple country dont feel like it is a viable option anymore. Those are some of the kinds of things we can do. Thank you very much. Ms. Glass, you talked about using the fda as a way to secure market demographic reforms. Raise thed environmental and labor standards of countries around the world, it would make us far more competitive. Which brings me back to my ofcern about us pulling out ppe which is going to allow us to set the rules. There is a reason, toationale for recommitting multilateral trade agreements around the world . This is a very sensitive issue for our particular sector. Often during trade agreement thetiations, our sector is sector that has traded away for other products. When we go into a negotiating session, we are in a defensive posture and we are working hard rules of pppthe that would do no harm or do us harm. But even at the end of the day, according to the Congressional Research service, our industry would have lost some jobs. Overarchingffs, the view is tariffs play an important tool for Market Access to the u. S. Economy. Its important for our freetrade agreement countries you have Market Access that we live up to the commitments of that agreement. Im not naive enough to think a prideet access is because of purchasing power. We need to be smart about the purchasing power and trade agreements with nonmarket economies and how to ensure china does not gain backdoor access. We are going to have to wrap it up here. Thank you. We have gone through all of our committee members. We have some guests, other ways and means members not on the subcommittee and we will recognize them. Thank you, mr. Chairman. I want to echo something my colleague, mr. Panetta said. Me, someone who never plan on running for office, to sit on a committee, especially with john lewis is an amazing experience and i think you said it really well. I appreciate that. Always a gentleman. What an honor. Thank you chairman, thank all the witnesses. I look at the issue of supply chains, i look at it through the lens of ourh the National Security and certainly, this pandemic has underscored the fragility of our supply chain and revealed we are too reliant on strategic competitors for key products. That has become very clear. Somehow i got muted again. Am i back . Im back. Sorry. I wont try taking a too much more time but i hope you heard what i said about mr. Lewins mr. Lewis. We cant wait for the next crisis and the conversation has to begin with strategic come datadriven assessment of where our supply chain vulnerabilities are and terriers and bottlenecks producing the key products, identifying a critical need. To look through the lens of a doctor in the army as to what we have, what we rely on and then take a look at the active pharmaceutical ingredients, who owns the product, the companys where we are the countries where we are getting our supplies and start to focus on where we are vulnerable and go ahead with so many of the great ideas we were talking about today but targeting i offered to amendments to do that, requiring the secretary of defense in consultation with agencies like the faa to require and identify allied partners with whom we can work to realign our Manufacturing Capabilities. I think that is what everyone is agreeing to today, that we have to look at that. I want to start with the datadriven effort and redundancy in our supply chain is necessary as well. About tax incentives, partnerships, reducing tax burdens. I think all of those things are on the table. Think we have to identify exactly what we are talking about. I have been mind, shocked to find out how little data we collect on things like active pharmaceutical the components that make up a drug, for example. The center for drug evaluation and research testified before the energy and Commerce Committee that there are a number of limitations in the fda data, including the fact manufacturers are not required to report whether they are producing avi at a given facility or the volume of api produced. I want your thoughts to discuss these limitations and what we need to truly understand the problem. I think you put your finger on the issue. We do need to get on this. Thousands of manufacturing facilities around the world on which we depend. It has probably been a little exaggerated about how much we depend on china, but fda simply does not have the resources to actively investigate every single facility. I believe it is your amendment that would give a little somebility and identify critical manufacturing on inties we can depend the United States and allied countries as well. I think that is one step, but we also need to ramp up, as you indicate the analytic capability controlst on quality and its just going to take more investigative,e analytic side. I dont know if anyone else wants to comment but getting tot data is going to be key targeting where we need to go most rapidly, i guess. Thank you. Congressman schneider. Thank you, mr. Chairman, and i want to specifically thanking you for allowing me on the subcommittee and thank the witnesses for their testimony. Like all before me i am heartbroken at the passing of john lewis. Im so sad he died but so grateful that he lived and the example he sets is something that is not just something i hope personally but share with my kids and everybody. I also want to wish dr. Pasqual a full and fast recovery. As the witnesses have noted, covid19 has shone a harsh light on the underlying issues, ethic and racial dispar i. T. S to americans living paycheck to paycheck. One of the unexpected problems to most is the fragility of our critical supply chains. The issue is evident early. I raised persons over our supply changes with secretaries azar and mnuchin in february and march. Sadly by the middle of july we havent resolved this issue. Hospitals in many states are over capacity in air icus, understaffed and anxious about looming shortages of ppe. Six months into this pandemic, it is truly unconscionable we are a facing shortages of the masks, gloves and gowns we need to safely treat our patients, protect our workers and residents in our Nursing Homes, confidently open our schools and get our economy on the road to recovery. All the economic stimulus in the world will do nothing unless were able to control the spread of the virus which is important we shore up our supply chains and make them resilient and redundant redundant. It would be easy to say lets make it all ourselves but the picture as our witnesses have discussed today is far more complicated than that, and its important i think to explore that closely. I want to start with dr. Fuchs. As i was listening to your testimony, i was reminded of the saying for want of a nail the kingdom was lost. We must make Innovative Products in the product that can be made here best and demanded by the world, and i understand that, because that is the valueadded, what i like to say just in general we need to invent it here, make it here and ship it around the world but my specific question is how does that apply to the commodity products like the ppe were talking about, that the gloves, the gowns, the masks that are not technically sophisticated, but are absolutely necessary to safely open our economy or take care of our patients . Its a great question and i actually think i can respond to congressman winstrop and your question in somewhat of a single unit in that regard. I would argue that there is the capability to pivot into new areas and that lies in our workforce, so one of the problems in the company we were talking with in masks they didnt have the workforce capability to adapt that machine to take other forms of latex or we didnt have anyone signalling to create a new mask that just suctioned to the face with certain adhesives rather than having elastic. Some of that is signaling where we need to bring in innovation. When i think of congressman winstrops question, were using web describing to scrape to understand what our capacity is in medical equipment supplies. There are opportunities to use top world class analytic capabilities like machine learning, and other capabilities to understand our supply chains because right now in a crisis like this we cant use the an vul survey of manufacturers which is skewed toward the largest manufacturers and our data suggest we can increase, the capacity of small and mediumsized manufacturers here is quite significant. We dont know whats happening domestically. Sorry, i only have a minute left. You touched on the key point i want to make, because we dont know whats happening domestically and dr. Yadov talks about the need to diversify, deconcentrate and also manage our strategic supply. This is why ive been calling for a supply chain czar, because i think we need that oversight to be able to do it and i also want to touch on a piece of legislation i introduced the covid prepare act because its about being prepared. You hope for the best but always have to plan for the worst. The act would require every federal Agency Within the administration to report to congress within 30 days their plan to deal with the expected spike in cases in demand on supplies, resources, people, et cetera, come the fall. I introduced this as Bipartisan Legislation and hoping its something my colleagues can support. Im out of time. I have so many questions and notes, i need a bigger desk but thank you for letting me be part of this conversation. It is critical we get our supply chains resolved, not just for this crisis but future challenges we face ahead. With that i yield back. Thank you. We deeply appreciate your joining us, brad, and adding to the qufrgs. Congressman gomez . Mr. Chairman, thank you for allowing me to wave on as well. Appreciate you are being inclusive. Before i start on the, my questions, i just want to make a point of clarification on some comments that were made. Something seemed wrong, so i looked it up, the top source of u. S. Imports by volume, the actual medicines themselves, where they come from are india, mexico and china. Only if we measure medicine imports by value are ireland, germany and switzerland top sources. So by that measure, but that measure on value reflects transfer pricing and tax that is not where the actual medicine is being shipped from. I want to point out that clarification. One of the things that ive, working on the usmca working group is really learning the lessons of the past, right opinion it looks only 20something years to learn the lessons and change nafta and try to address those. One of the things i want to do is really ask some of our speaker s speakers what are the right lessons to learn from the covid19 supply chain problems and what happens if we dont learn those lessons . Miss brown, lets start off with you first. Its actually really simple. I think the right lesson to learn is just how absolutely critical it is to have a strong domestic supply chain in the United States. I mean, at its core, that is the lesson, right. This is a conversation that for decade has only existed in spaces like this, that are very focused on trade and trade policy and the covid19 the crisis ripped the bandaid off of the failures of trade policy, moving policy, industrial policy and in this country and the average american knows we dont make masks here. China is the number one producer of masks in the world. We dont make enough ventilators here. We had folks scrambling for gowns that some of our members producers were trying to produce, you know, quickly. So that is the very basic lesson that is here, and there is a very serious opportunity that we have to do good on this, and i really hope that this conversation leads to some good. Miss fuchs . Thank you, congressman gomez. I argue the dlap dags of the the dilapidation of the u. S. Domestic manufacturing capability is what we learned and we need to respond to that. So not to be here again. Having to invest in domestic manufacturing. When i work with Investment Companies and they look at Global Manufacturing sites and where they should locate, theyll often move to a site that proefl had worker erpreviously had workers at another facility because the workers are up and ready to go in whatever country we need to be looking at at the timethe time. Its less exactly what we make except for Critical Technologies, but when we think beyond this, we need to have the workers who can pivot. Miss glass . Ill just reiterate the comments already made here about our industrial base. We cant have a conversation about the ppe crisis without having a china conversation. Prior to covid, 50 of these supplies were coming from china. Theyve increased their production five times. They are going to not only cement, they are definitely going to cement postcovid their strategic priority to ensuring they are the Global Supplier moving forward on ppe. Without comprehensive solutions, tax, grants, procurement, and trade, showing a signal to u. S. Industry, its time for you to invest, and to get industry that has not invested to come to the United States, those signals need to be sent now. It cant be during a year from now, two years from now. These policiescon concurrently to help ensure we have the supply chains here. One of the things that i want to mention is that something that i have always noticed is that people always go back to the policies they are used to. I guess the policy that theyre used to, right . Some people tax cuts. Some people workforce, and i appreciate your point that its a comprehensive approach that does make it, brings back the manufacturing to this country. One of the things that im concerned about is that the role that immigration plays in our supply chain and our Domestic Production of these goods, and this administrations attack on immigrants, even highly skilled immigrants from other countries. Does anybody want to add anything to that . Did i go over time . Your time is expired. Well, i appreciate your time. I couldnt see the timer so thank you so much. I hear you. Thank you. Really appreciate it. We had an opportunity this afternoon to understand the use of trade manufacturing policies to build more resilient supply chains. I really express the committees appreciation to the witnesses for their testimonyier that engagement and opportunity to follow up with you. Be advised member two have weeks members have two weeks to submit written questions to be answered later in writing if you would be willing. The questions and your answers will be made part of the formal hearing record. With that shall the Sub Committee stands adjourned. Thank you very much. , q a. In his 2012 program, john lewis talks about his involvement in the civil rights movement. After that, prime ministers questions, the private the final one for this season. Then, john lewis item credit cancer at the age of 80. He was awarded the medal of freedom by president barack obama in 2011. He is being widely eulogized and we thought it would be appropriate to reair the 2012 interview he gave about his memoir, across that bridge, so you can hear john lewis in his own voice