Our second panel. We will start with dr. Go paul who is a former executive and author of a book. He will provide an overview of the evolving supply chain landscape. Then we will hear from the next panelist a senior fellow with the trustee chair and China Business and economics. She will address the rapid rise of we very much appreciate both of your testimony. Why dont we begin with you . Can you hear me . Now we cant. Talk backwards. Ok. Something is happening with our sound with our witness. Do you suppose we could correct that . Because i know i cant. Why dont we move to miss mizzoco . Could you begin while we fix that . Thank you. Thank you, members of the commission and staff of the commission for the opportunity to be here. I have been asked to discuss electric vehicle sector of china. Let me start by saying like with other Clean Technologies like solar panels, china is important in the eb supply chain. Vehicles made in china are affordable and of increasing quality. I can hear you. Mr. Gopal, we have ask your colleague to go ahead and speak because we cannot hear you so we are trying to correct your technical difficulties. Can you hear her speak . I can hear. Yes. Ok. When she is finished testifying, we will turn to your testimony. Thank you. So vehicles made in china are affordable, making them attractive to consumers worldwide. The cost of these vehicles undermines supply chain efforts underway in the United States although it could also help advance the elected vehicle adoption worldwide. The consequence policies should take into consideration the tradeoff as well as cost competitiveness. I was asked to brief on the industry of china and the manufacturing capacity there combined with increasing International Demand to drive certain exports then discuss what the pattern in exports looks like and then International Manufacturing on the part Chinese Companies. I will also offer some recommendations. The ev industry is considered one of the most successful instances of the policy in recent years. I can hear you. Government interventions including subsidies, market, and technological trends, most evs today i made in china. After a wave of overinvestment, we may be headed to overcapacity and intense competition is underway. Every large number of companies entered the market attracted by subsidies, but they are now navigating the most competitive ev market in the world, driving down prices. Consolidation of the industry may be complicated, but the web of relationships between companies and local governments, something that has been in the traditional sector as well. Tax breaks and procurement contracts, but they are also invested in the success of companies. Several Investment Funds are investors in ev companies. This is an example of the low market equity but access to belowmarket credit is also widespread. An industrial policy to a china that ev companies have benefited from. Some nonChinese Companys have also benefited, especially from local government. This competition is driving down cost and putting pressure on companies to find new markets. As a result, the exports from china are growing fast. They have doubled in dollar terms from 2021 to 2022 and based on data from 2023, it looks like they are probably on track to double again. Europe and asia are the main destinations of these exports. In the first half of 2023, tesla counted for 40 of exports from china. Joint ventures between chinese and European Companies account for combined it is almost half of the exports. China is becoming a manufacturing export hub for Multinational Companies and chinese owned firms are becoming increasingly competitive in exporting more to new markets. As these chinese firms expand their market presence outside of china have an increased incentive by making vehicles and batteries locally, companies can avoid tariffs and hydrants petition cost, benefit from government incentives, and mitigate backlash. There are multiple factories of this kind and if you already existing. Thailand is by far the greatest recipient of these investments. Host governments are not passive players. They are actively trying to attract investment. This is the case in thailand and brazil, for example. Even in europe, where imports from china are so far, most investments are in the battery segment, not vehicle construction, but it is not clear whether china will be able to maintain the very low costs and prices when operating abroad, especially in regions like europe with high energy and labor costs, so this adds up to a complicated picture because growing experts in china created a dilemma. Chinese supply chains can help reduce costs, and the other, the mode of manufacturing continues to be unimportant important sector for many advanced economies, including the United States. If production moved, it could undermine the risky efforts. What can be done . I would strongly recommend against trying to slow down the transition to electric vehicles in the United States. United states tried this and it did not work. It would be counterproductive because transition is underway globally in the United States would become more of a laggard if it tried to reverse this. Instead, policymakers should continue to try to provide dust and and promote innovation. To this end, i recommend policymakers, one, identify under what conditions they can and cannot play a role in ev supply chains. To make this judgment, policymakers will need access to better data on supply chains and the cost and require more transparency from Companies Consistent with recommendations the commission made last year. Two, trade tools can be powerful instruments in achieving derisking and policymakers should explore their use, but they should also evaluate the impact on costs very carefully as they could undermine the industry more broadly. Three, this is not a uniquely american challenge. Cooperation with other companies that are grappling with this change and what it means for the economy. I will stop here and look forward to your questions. Thank you. Thank you. Mr. Gopal, can you hear us . Are you prepared to testify . Please proceed. Jamison . Mr. Gopal, we could hear you a few moments ago. For some reason, can you hear me now . Yes. Thank you. I hear somebody else talking. You probably do the congressional studio. Can we turn those off please so he is not distracted by that chatter . Why dont you proceed . Oh, good. Can you hear me now . Yes. Ok. I heard about three different people talking at the same time and one of them was not me. I want to thank all of the members of the commission. For the opportunity to testify. I think this is one of the most important topics and one that impacts pretty much every citizen in the country. So i shall talk based on a supply chain perspective. And that is not an economic perspective. I can hear everybody. Could you describe what it is you are hearing so we can maybe clear it out . What is the problem . Should i . Ok. Again, so today, i would like to lay out dr. Gopal, close your other internet browser that house has the livestream going. Ok. Now can you hear me . Yes. Terrific. Let me start over again. Thank you everybody for this opportunity. Let me know if you cant hear me at any point. So i think i will talk from a supply chain perspective, from a global level, from an executive level. Accurately summarized the situation well in the opening statement. We have come to the realization over the past years driven by the pandemic, global conflict, and events our critical Global Supply chains from the point of the first applied to the end consumer and back, which means global dust to dust. Highly vulnerable and dependent on china. This is a result of what somebody called willful blindness on our part to the u. S. China relationship. Let me describe some of that from a supply chain perspective. Critical supply chains, all the products capable of these technologies and investments that impact all areas of our National Security, defense, health, and wellbeing. Everything from antibiotics to defense to hypersonics to electric vehicles and artificial intelligence. And disruption to any one of these can have cascading effect on the supply chain and pretty much bring our economy to a halt. So the situation is driven by several different issues. A lot of them, we talk about the china issue, but a lot of them have been our own doing. For instance, our trade philosophy, the globalization functions, the movement of goods , money, people, technology would flow across countries with no Government Intervention very smoothly. Competition with pure growth with Small Businesses. Lower costs. In other words, the level playing field. What we found is that has not happened. The Aggressive National supply chain policies, and there are several. Market incentives, financial incentives, labor, access to markets to become the Manufacturing Center of the world we see that very clearly. The question of companies to give political and social standards, the acquisition of technology and intellectual property by almost any means available. Location in first party countries, u. S. And other government policies, and this was discussed by the earlier panel, investment in initiatives in other countries to corral the supply of essential elements and minerals which drive our supply chains. And finally, the most obvious one, lowcost. I think we can agree this has to be successful from a supply chain perspective. And then something of our own doing in the situation, financialization of the supply chain. Basically, decisions made by individuals to drive costs down, reduce assets, offshore capabilities to basically address the benefits to the shareholder, not other stakeholders or National Security or communities. More shortterm wall street demand. As well as executive compensation based on share price. And finally, the concentration of various industries and the domination of distributional channels maybe because of our laxity in enforcing rules and regulations. The combination of all of these external and internal forces has been to develop fragile supply chains. In other words, supply chains that are built to break under stress. And that is everything that comes at us from the outside. The supply chain is that dangerous chokepoints in china and other places that would disrupt our industry, intellectual property and technology. Our education system, manufacturing, supply chain, technology, education, our own communities, and lets not forget the vulnerability to National Security. The reason we have been brought together by this commission is 2002 and forward thinkers. Let me read one particular extract from the 2002 report. U. S. Policy to china has been driven by narrow commercial interests, specific human rights issues, or security issues. The increasing transfer of u. S. Research and manufactured facilities to china could have a negative impact on our technological and Industrial Base as well as relative military strength. Nobody could have said it better than this was said 20 years ago. So hence the term willful blindness. So what can we do to help our supply chain . I have written about in written testimony but a brief summary. First, it is a tugofwar between National Security, between individual wealth, and company wealth. Have to get around that. Essentially, i would suggest we must continue to fund u. S. Manufacturing. Great start. A lot more has to be done. It has to be expanded. Critical supply chains are not just semi conductors and not just artificial intelligence. They are everything. We need to help Small Businesses with financing and help them with innovation. We need to know what we are dealing with. We need to map our supply chains from end to end. We need to mandate sourcing and Foreign Ownership parameters so that we can look at Critical Industries not being tied to one country, but mainly reassuring anything other than stuck in one country with one source. We need to preserve and protect our research and technology. This is what the Biden Administration has done recently. We need a lot more of that, including restricting access to our technologies as well as restricting foreign enrollment in our private technology at our universities. And finally, we have to emphasize funding our vocational schools. With that, i will stop. And thank you very much for the opportunity. Thank you, dr. Gopal. I think, caroline, are you there . So we will begin with the commissioner. Thank you both very much for your very interesting takes. From my viewpoint, you were very specific talking about evs. Dr. Gopal, a much more general look at what is happening and what needs to happen. It is hard because i cant ask a question or i am not capable of asking a question that applies to both of you after listening. I know that a huge percentage of the ev Battery Market is 100 what is it, 80 controlled by china . Lithium batteries are just their purview at the moment and yet it is clear that america chose to get involved in that in some fashion. We have immense resources to be able to do that here and near here. Our ev vehicles are selling extremely well domestically that are made here, and you pointed out not well at all in europe or china. Given the fact that the batteries are such an integral part of this, is there even a way for us to grow our market . I am concerned about the domestic sales of evs. Ford has a waiting list for their trucks. There vehicles are in great demand their vehicles are in demand but they are not making the batteries. My question is, is that a lost cause or in your opinion something that can be corrected . So actually come as a result of the efficient reduction act, there has been a surge in investment and Battery Supply chains in the United States. I would say, what is something to keep an eye ons a lot has to do with assembly of the batteries and the battery pack as opposed to the components of the battery. The battery pack is where 80 is made in china. Now, in terms of whether it is a lost cause, i think the question is not whether they can be made here. I think they can. There are concerns about cost to get that is a big one. Environmental cost as well. That is why they got up short in the first place. But also it is which companies will be doing that. That is a big concern here. As part of my recommendation, that we need to have a better conversation about whether or not to allow or embrace it from china because it is already happening. We already have the ford deal, the factory in michigan, and that is because there are no real American Companies that are making these batteries had a largescale. We do have the Inflation Reduction Act facilitating other companies from korea or japan but because those companies are so advanced in these batteries and there is technologies that other companies dont have. I dont doubt in fact, i am certain a lot of American Companies and scientists have the technology to produce more advanced batteries, but the problem is creating them at scale and at cost. Chinese companies have had a lot up adopting, a decade of experience making these, in part because that is where the market was until recently. They have been selling electric vehicles for a much larger time. I think it requires time and it will be very difficult to do without foreign investment. I think frankly it will be difficult to do without any involvement on the part of Chinese Companies. Now. That might be investment on u. S. Soil or in countries in which the u. S. Has a deal in terms of refining or extracting minerals. I think it will be important to maintain the derisking mentality and encourage more investment in the u. S. From partner countries, but i think we need probably to have more realistic assessment of where Chinese Companies may be entering and whether that is a risk or not because in some cases it may not be as risky as the situation. Thank you for that. I would point out that a man from america won the nobel prize and invented all of those. Recently before he passed away, invented batteries that will last for decades, and we gave that away to a foreign country because we wanted to save money on construction and manufacturing. It is unfortunate we did it that way. We have about 20 seconds left. Dr. Gopal, if you can pop in and pop out if you are interested. I certainly am, sir. Thank you. I agree with everything my colleagues said. Looking at it from a supply chain perspective, which is the perspective i always look at things from, the upstream end of the supply chain is at risk. In other words, lithium, cobalt, nickel, all of those minerals are things we do not control right now. That would require not only investment but a lot of political will about mining and so on, but right now, we are busy building the short end and downstream of electric vehicles. And it is the upstream that is the concerning part of it because we dont own that a lot of that is controlled by china and Chinese Companies. It is something they are going to have to look around and discuss. Thank you very much. Thank you, commissioner. I am next. So i am interested, miss mizzocco. You talk about evaluating supply chains. Those people moving materials, technologies. Automated vehicles amongst others. Is it really possible for us to define to determine a definitive list of what comprises critical items for our supply chain . Or is this a fools errand . I believe that was not my statement, but i can comment on it. Yes. I do think it is challenging to identify what is critical. I actually think it is important to identify what is critical because otherwise everything becomes critical and so i would actually encourage to have a narrow view on what is actually for example a National Security threat as opposed to something that makes presence in certain elements of the economy. I think for example when it comes to the electric vehicle industry and battery, this is very important from an economic standpoint. I think it has great implications in the economy. National security wise, the implications are far less concerning, so i think for example here that does not mean one should take action but you can take action in different ways. The types of risks that are involved are different. So that is part of my recommendation, to take a very clear glance and identify what the objectives are and how to act upon them. Cooperation with Partner Companies can be more effective when it is not a National Security concern and there may be certain flexibility when it comes to allowing certain types of companies perhaps being at Different Levels of the supply chain. Thank you. Dr. Gopal, is this possible to establish a definitive list of what is or is not critical . I believe it is. Let me back up for a minute from the statement you read. We have to look at the criticality, the things that would seriously hurt us if they get disrupted. There are a number of friends. This does not mean anything that will hurt a few companies, a few investors, things like that, and the second part of that is, what are the risk profiles of these things . So a critical supply so a critical supply chain may not be something you want to focus on if we can recover from disruption very quickly with our allies. A critical supply chain is something we have to focus on if it will take a lot of time and money and effort to recover while the economy is being hurt. It is not an inexhaustible list. It is a fairly short list. It has to be looked at from the point of criticality and risk. Is there any evidence that in these items you have identified at least as the preliminary list is there any evidence the United States is taking action to stockpile Critical Materials or items that you view as National Security risks . I believe in the defense arena, yes. But otherwise, i dont see much of that from the point of view of private supply chain companies. And i am hoping we build with capability to manufacture and get them out, which is a better way of doing it. I am not sure i agree with you, but i also dont think that we should stockpile everything. But if we do believe something is both at risk and necessary, it would be interesting to see if there was any effort to map to stockpiles. Mr. Friedberg, are you there . Thank you very much. I have a question. I would like to post one question to each of our witnesses. Dr. Mazzocco, you started out by making the point that the incoming flood you did not use that term, but it could undermine the efforts of the United States and others to build up their own sources of production and supply for the components of these vehicles and the vehicles themselves. My question to you is, will it be possible in fact for other countries to catch up with china, to build up their own industries, the evs, the batteries, and so on, without imposing some restrictions on imports of these products from china . And what are the implications of that if it is true . Dr. Gopal, you used a very interesting term, a supply chain war, which is a good question of what is going on. It has its own objectives and its own strategy. China seems to have a Clear Strategy of reducing its dependence on the west for various things while doing things to maintain. So my question for you is, what are the implications for the u. S. And wider allies strategy of the strategy china is pursuing to try to prevent us from reducing our vulnerability and dependence . Because it appears that we dont have much of a strategy. The private government actions in a few cases but no overarching strategy. Dr. Mazzocco, first to you. Yes, thank you. That is a big question. I would say currently most countries have some level of protection when it comes to it. We have 27. 5 tariffs right now in this country. These already exist. It is more of a question of whether they should be increased or changed. I think in reality what needs to happen is some sort of balancing towards the trade side of things and attracting of the level of the types of policies. On the one hand mother needs to there needs to be far more investment drastically to build up manufacturing, and on the other, maintaining certain level of tariffs. I have not suggested to increase tariffs, but i think reducing them would not be ideal. I think there is a risk of overcapacity in certain countries. I think that is basically where we are headed towards in china. That is one of the issues, that we will see more exports because of that. There is a question whether these companies can keep it up. In some cases, many Chinese Companies are operating at loss, so that is something to take into consideration. Thank you. Dr. Gopal . Thank you, sir. What i want to say probably makes me unpopular with my colleagues and that is ok. Yes, i dont believe we have a national strategy. I believe we should. It should be based around economic wellbeing with a long sustainable National Security. We dont have all of that. Everything is in different pieces and a lot of our National Trade strategy is subject to individual and individual companies. For instance, we talk about auto tariffs, we talk about some restrictions in technology. Media companies are giving away our ips to china. Building factories in china. Working with the chinese to circumvent any restrictions and we dont have any policies as what defines sourcing allied sourcing, friends sourcing, furthermore i do believe we need to have a National Trade policy that addresses all of these and that addresses it from a national, not an individual industry interview. I hope that answers your question. Thank you very much. Many thanks to both of our witnesses for coming before us today. I have a few questions, that duck from panel number one. What we know is there is fragility in the chinese economy. That has created a lack of Consumer Confidence to the same extent it used to exist in china, lack of consumer spending. We have Party Officials who was trying to paint a different picture on the world stage, maxing masking what is a recession in china. I am trying to think about supply chains in that regard, lack of consumer spending, looking at export markets, secondary markets to the u. S. Economy, investing in other markets to give access to the u. S. Economy as a workaround to the current trade rules that exist including the section 301 tariff. I loose sleep at night, in terms of what are the implications of u. S. Manufacturers and Service Providers because the Chinese Government is its party and officials are doing everything they can to help prop up industries right now. To what extent . I know weve talked about evs during the session and we have a an ev expert but what are the implications longerterm and do we have enough trade tools in our toolkit to address what could a very severe be a very severe economic harm to the u. S. Economy and our allies. That is my read on the situation. Please disagree, if you have a different perspective. I would just like to jump into that. Quickly. Yes, i completely agree with you. From a supply chain perspective, what we are looking at, across the ocean is not what economistss look at economist look at. Were looking at an economy in china going down slightly. Consumer spending is going down. The capacity is still there. What have countries traditionally done with that . We are looking at dumping. Dumping lowcost, lower than cost items in our market. Either directly or through subsidiary locations, mexico or other places, or through other companies that are controlled. Were looking at that is one of the main issues. The way we can handle that is through our restrictive laws, as we have it, about dumping, and things like that. That is a serious concern. Meanwhile, there will be no letter in the chinese attempting to take our technology, because the development of systems and their own military capabilities. They will buy stuff. I see no letter in the degree of competition in supply chain world, with those velvety in china. Developing in china. Yes. This is clearly something that is very concerning, that the u. S. Should keep an eye. Eye on. I think about clean supply chains. That dilemmas acute. This is an industry that the u. S. Does not have a handle on. This is an industry we are trying to develop currently. Similar efforts are underway in other countries, like the european union. But, even in some developing countries, like india, they are trying to develop clean Energy Supply chains. Costs are continuing to fall in china. That is not a bad thing in terms of consumers globally. There is access to these technologies. But, it is not good from a perspective of our domestic economy and the risking which is are important topics. I dont think there is an immediate panacea. I dont think there is one trade tool we can point to that can solve everything. There needs to be far more thinking about this and to happen quickly. There are none of these the flood of chinese evs has not happened in the u. S. But the cost is so low that even a 27. 25 tariff may not be that big of an obstacle. That may not this may take time or very little time, we dont know. There needs to be more creative thinking about different tools that can be utilized. I worry that cost will be a concern. That is what trade tariffs do, they raise costs. Once the costs are not competitive, there are alternatives such as fossil fuels, traditional automotives. Which then undermines the broader transition which makes the u. S. Less competitive and innovative. There is a bit of a a lot of juggling that needs to happen in this. If i can just say, i agree with everything she said. Thats terrific. I would like to point out another implication. Reduction costs in other countries lead to our own costs being uncompetitive. Because our executives and share prices, it will lead to increased outsourcing and off shoring of critical things which have led to hollowed out communities. This is an issue we need to look at from a nuanced and multifunctional perspective, not just the economics. Think you. Thank you. Thank you madam chair. Dr. Mazzocco, in your testimony you indicate the chance to completely insulate us from competition is not the right approach and instead continuing to approve incentives to advance our domestic capacity and investment in ev supply chains like the ra ira is the right approach. You need to identify under what conditions Chinese Companies can play a role in our ev supply chain. I wonder whether the ira and the significant rep investments you reference, which is under what conditions should Chinese Companies be able to benefit from the financial incentives to encourage ev production in the u. S. The question is under what conditions they should be able to benefit . Do you see that is different than the way you framed it, and what ways will they be able to consider under what conditions may be it would Access Financial incentives that would what in place to encourage investment in ev vehicles in the u. S. So, i think my recommendation can extend from the fact that there has been a lot of confusion over whether these companies should fall from subsidies in the u. S. And also the fact that there has been increasing investments on the part of Chinese Companies upstream in countries that would then qualify under ftas for supplying Critical Minerals for the production of batteries. The question is my question is not so much that i dont necessarily have the exact condition at hand because it really depends on the segment of the industry, and then on the companies themselves as well. It is worth raising the issue that we dont have clear framework of how to deal with Chinese Companies. That is what i would point to in my recommendation. I think if the two companies we are talking about qualified, if they are meeting the legal record armens cash requirements to requirements to be in the u. S. , if policymakers think it is risky based on data, they should amend legislation. I have not seen anything that suggests these companies are a risk to the u. S. They are helping expand capacity. I may be wrong. I may not have access to the documents. That is part of the issue, exactly what types of investments we are talking about. Its going to be unavoidable that we will see these questions coming up. We need to just have a very clear framework. This is also going to be helpful for American Companies as they engage with Chinese Companies, to be able to know what they can and cannot do. There needs to be a clear framework. I hope that answers the question. Sure, thank you. Dr. Gopal, do have any thoughts . Same thoughts i had. That is, we have to decide when we look at investments, what our key priority is. Is it National Security . Is it jobs and the economy . Or is it the proliferation of one particular industry. I think as, what was pointed out, we have no framework in which to analyze Chinese Companies. We never need to forget that in the long view, it is not necessarily how we get the best or Green Technology ev or Green Technology in the u. S. , it is how we can profit over this in the long term . Given that, theres a lot of issues in allowing Chinese Companies at this stage to be part of the spending that is the structured spending we are talking about. We have to look at that carefully. Thank you. Thank you. Are you finished, mr. Goodman . Thank you. Is commissioner held burglar helberg there . Thank you to all the witnesses for insightful testimonies. I agree with one of the testimonies that too many parts of todays Global Supply chain were built to break and without any regard for National Security, chinas obsession for the wto was one of the greatest miscalculation in the Foreign Policy historym and fueled the rise of the hostile geopolitical adversary, the likes of which our country has never faced. My question is addressed to all witnesses. If you could wave a wand and get the administration or congress to do anything, was specifically with specific types of bills or orders do think the government can take to administer a Shock Therapy to revive our Manufacturing Base and secure our independence in critical Raw Materials . Maybe we can start in alphabetical order with the witnesses . Ok. If i could wave a magic wand, i would have a few different things, none of them are surprises. Number one, i would increase our funding of u. S. Manufacturing and infrastructure, and the scope of it, to build up the capacity we have lost. Number two, a wave of the magic wand, would be to look closely at the critical supply chains, and impose some restrictions on who can buy into them, who can invest into them and how we can protect them. Those from the point of view of the supply chain in the Technology Companies from the supply chain. Third i would provide with my wand, sourcing parameters that i would require our companies to look at and adhere to in terms of different products and industries to where they can source how much of a percentage they can force from a particular country, what their distribution is, what their diversification is and what the regionalization of the supply chain should be. Finally, i would hit the education front where we lost a lot of talent, a lot of research , we are short of stem talent. We need to emphasize and fund those programs. Thank you, sir. Before we move onto the next witness, what types of infrastructure funding do you view as being particularly contributing to Manufacturing Activity . Transportation, infrastructure, Energy Infrastructure . I am curious if you are thinking about pacific types of infrastructure that specific types of infrastructure that need funding. Firstly, transportation. Eric, road, rail, air, road, rail, and ocean. Secondly, digital infrastructure. 5g internet, satellite, positioning systems, and cybersecurity that supports them. Thirdly, energy. I have no answer to the energy. No one does. But i do know, that we have to be practical and see what energy our Industries Need to be competitive as opposed to telling them they need to do this or the other thing. Those are the three issues i would look at. Thank you very much. Thank you. I would agree on the r d and the education piece that dr. Gopal outlined. I would actually increase in efficiency efforts on the usage of these minerals, recycling efforts. Theres a lot of potential there as well. Alternative chemistries for a lot of these batteries for example. These the Research Side of it could have more investment. But there should be a framework to help commercialize. Which is where china has excelled in the u. S. Lacked and the u. S. Lacked. We have Strong Research in american universities. That does not get commercialized in the u. S. , because that piece is missing. Im talking about something you are all familiar with. The second part is there is a potential for more. This is already happening, but, it could be enhanced. Partnerships with other countries and collaboration and seeking ways of in enacting or derisking. It cannot be done, only in the u. S. , it is neither achievable nor desirable. The permitting form conversation is important. That is already undergoing, its a complicated one. That would be important, moving forward. Thank you. Commissioner price. Thank you both for your participation today. Several of my questions have been answered in part. So, excuse me if i am a little redundant. Before i get there, dr. Gopal in your recommendations, you talk about mapping of critical supply chains. My first question is, should we have the data that would allow us to do that. Number two, what already exists, and number three, we dont seem to have a whole lot of time, when you came up with this idea, how long were you thinking this would take to do . How do we implement it . Why dont you document . Let me start with the last one. How long will this take to implement . No more than six months. This is an exercise that requires a lot of thought. But not much data. Because, lets take a simple one of semiconductors. The different types of semiconductors. We can get that from the semiconductor industry. One of the industries that depend on it, semiconductors drive computers, which in turn drives airlines, tourism, information technology, which in turn drives a whole lot of other things. The key is mapping the impact. That will require some modeling, rather than much data. I think that can be done fairly quickly, with a solid task force. And i dont believe it should be made to complex. Complexity is always the enemy of action. I think it should be made understandable and fairly simple so that you folks in the commission and government can prescribe action to work on the front and bills, critical supply chains. I hope that answers your question. Do you think we have the data we need. I believe we do. Thank you. Do you have anything you would like to add . My sense is that a comprehensive and Data Collection effort, would probably be it would require some effort in collecting all the data and putting it all together. I dont question that the data is out there. Finding it and making sure it is uptodate and actually understanding what is happening on the ground in many cases the mining is happening in countries that may not have very good data. I think of the cobalt industry in the drc, they are understanding which mines are open, which ones who was relying on artisanal mining. There efforts and data. But it may take, from my perspective, it may be a bit complicated. But that may not be what dr. Gopal is suggesting. It is important to have a sense of all the players involved that may not be completely comprehensive. I think my sense is, there is quite a bit of infusion at the moment, due to not very good data. And exactly which Chinese Companies are involved at which levels of the supply chain in which Foreign Companies and what type of Foreign Investments and some points with the Chinese Companies as well. As well as what the host governments are doing and how much they control some of the supply chain as well. Thank you. One other question clarification on the piece, the recommendation you have about talent. Just a few minutes ago, you also said something about, we need to restrict foreign enrollment. Can you clarify what you are talking about absolutely. Absolutely. Let me start from the top. Theyre getting increasingly dependent on foreign students. Chinese students, who pay full tuition. That is point one. Point two, there are disciplines that the government based off of research, that are critical to our National Defense and the economy in some ways. We have to vet, seriously, students who are allowed to enroll in that so that, this is not a revolving door and pipeline for china, korea or russia to have technology and research. Coupled with that, we have the ability in how we apply this and take it commercial, and take it to use. Yes, the answer is we have to look at we have enrolled into many of these disciplines in universities and take a good hard look at that. Thank you very much. Just adding my thanks to the witnesses. Most of my questions have been addressed. Thank you. Dr. Go paul i appreciate dr. Gopal i appreciate your various work. They have been toiling in this field as you have for many years. You referred and use the term willful blindness and i appreciate the recognition of the longterm work of this commission. I would argue to you that willful blindness and to news to Cloud Visibility as to many of the challenges we face. Recently in im appreciative of the work of the administrator on an Outbound Investment executive order, it is Still Limited in terms of providing us the data on the critical supply chains, batteries pharmaceutical, etc. We have existing u. S. Authorities that the commission has referred to in the past. For example, at the department of commerce, the power to compel u. S. , any multinational business to respond to questions that can be used to provide a state on supply chains whether it is batteries, Critical Minerals, materials, aerospace. You serve on the defense business board which i ink has mostly been focused the last couple of years on Talent Pipeline issues. What new tools in terms of transparency and data do you think would be needed. Dr. Mazzocco for you as well, for example, the efforts dont fully identify what is going on in the batter supply chain and the ip that is being utilized. How do we get the data, when business has been opposing any of those Data Transmission effort . Do you want to start . I will start. You posed the question of the decade. In an economy like ours, how do we get business to help with the national profile, and we have seen what has happened in the past. The only way i can think of from a purely some mystic simplistic view of an executive is mandating. , making sure that the data is going to be highly confidential, the security of the data but in effect mandating the data and secondly looking at data as a two and a one. Asking for the little data that matters, whether you can make that is an iffy way of putting things but it is actually true. We have so much data, we need to specify specifically what we need from companies so that you folks can make your decisions on policy. Focusing on the data, and what data we have. The data is there. The transparency is there. We need to focus on the what. Let me pull on that if i can. You remember the defense board which, as leaders of an industry from cfos to ceos and otherwise all of whom depend on data that make the right. Kind of decisions for their businesses. Should that be a higher priority at dod in terms of supply chain transparency. Transparency in a bpi sense. I dont mean that it has to be fully expressed. But we dont know where all the Critical Minerals come from or where the processing facilities come from. China just became just sold commercial jets, and is going to be making further incursions into the aerospace. What would you as a Business Leader need . You can do this as a followup. Are you seeing enough within the defense establishment to be able to get the kind of data needed to make those decisions. The shortterm says yes. Everybody recognizes, the need for data, and the infrastructure that the data needs. [indiscernible] i think we are on the path to getting that. I still think that for the five its a there. Need to turn over the right type of data. Quick response . I think it is a very broad question. I appreciate the challenge. I think theres different parts to that. To be honest, if i have to pick something, what concerns me more is lack of transparency. There was a Previous Panel discussion about poor access to Economic Data in china. Its something i would focus on which i think it is data that will be hard to get, the actual chinese supply chain. And what which companies are operating in which sectors, and their background, when theyre doing fdi in the u. S. So, i think that is one thing to focus on. That will probably require a lot of external research, auditing, and perhaps even some level of highlevel dialogue with china, with the Chinese Government. This is part of an ongoing challenge, that may be undermining american and companies in china as well. So, that is one piece of that. The other piece is, you mentioned ip in the ctl ford deal. I cannot speak to that but i think it is an interesting point. That points to something that indicates a reversal of reviews concerns in the u. S. Where American Companies were giving ip to Chinese Companies but now we are much more concerned about Chinese Companies providing access to American Companies. Again, that is something that should be explored and clarified in the legislation. I dont think there is any requirement for c atl to give its ip. If that is identified as a real challenge, that is something that should be clarified as i mentioned before. Identifying actual goals and what companies can and cannot do in the u. S. Is probably important. That is all there is time for, this is a long conversation. Thank you. Do you have questions commissioner . Dr. Mazzocco thank you for your testimony. Im just having i dont know if you have it on hand. What is the current chinese tariff on u. S. Auto imports . I cant remember it off the top of my head right now. It is significant. I remember they raised it to 40 in 2018. There were some reports that they were going to lower it. I am not sure if they ever did it. If they were part of the phase one. I cant remember. Suffice to say, i think there is at least a 25 tariff on u. S. Autos in china. There have been long disparity between the tariffs we have placed on chinese auto in arts before 2018. I think it was to 5 before we raised it 2. 5 before we raised it. Would you agree with me that the chinese advantage in evs came out of the combination of a number of policy choices. One is the subsidies, the purchase subsidies, which were tens if not hundreds of billions of dollars. The second is protection of tariffs of the largest automobile market and ev market in the world, the u. S. Is second. Number three is lower Environmental Standards which allows them to refine and mind Critical Minerals at a cheaper rate. As well as lower labor standards. I think at the beginning of the ev industry in china, theft of intellectual property from western companies, particularly American Companies. Are those factors correct in building the chinese advantage. Yes they all played a role. It came at the right time. These policies were initiated around 2010. By 2015 we started seeing the Technology Technological advancements. Consumers were interested in evs. It is something that not many predicted in china. I think the one dimension played a role. I would say that the tariffs into china probably were especially significant in ensuring that Companies Invested domestically in china to produce capacity. That was the case for tesla for example. I think to qualify for subsidies in china the vehicles have to be produced in china. If im not mistaken i think the tariff levels between the u. S. For a long time, that china applies to the u. S. Versus those applied to european cars had higher tariffs than u. S. Cars for a long time and still do. Am i right . I actually am not sure. I dont have that data at hand. We will research that. I think there is clearly a strategic impetus behind these policy choices. Namely, it seems that there is a conscious decision by the chinese to develop, obviously an industrial leadership position in evs. But in particular to build dependence throughout the western world, including in america on these technologies but also to undermine the u. S. Industry. Is that correct, or would you disagree with that . I would say that when the policy was first launched, the actual focus was to reduce chinas dependence on foreign technology. This was very clear that they identify technology that where Chinese Companies stood a chance to compete more directly and the nonwestern foreign automakers, since basically the 1980s there had been several policies in china that aimed to do that and completely failed on the Combustion Engine vehicle industry. The reason why there are so many joint ventures is because that is mandated. As an effort to help the Chinese Companies upgrade and that never really led to their advancement in the industry. By shifting to electric vehicles, the hope of the Chinese Government would be that we have talked about how there is not a homegrown industry but a Homegrown Technology but technology that was developed further in china where supply chains could be more controlled by Chinese Company would which would reduce reliance on americans and european and japanese automakers. That is what happened initially. As the time progressed on the industry took off, i should note that based on my research, when these policies were launched it was fairly obscure and not necessarily something that most of the Chinese Government was focused on. After a few years the market took off. That is when we saw more of an understanding of the potential of this industry as a next work industry. I think now, i am sure there are considerations about how this could be increasing for dependencies on china in line with dual circulation. That was not the case originally. I appreciate your answers and the subtleness of your research. I just think a lot of these factors we will have to consider. I am very worried and question the wisdom of what i see as the current trend in the u. S. Of adopting policies that are said to be a duck tail of the impetus in china, mainly purchases in the u. S. , outright bans on internal Combustion Engines. Either extremely difficult permitting processes for mining or refining here. That would seem to back us into the strategic pocket of what the chinese are trying to do in the ev industry. I think we should take a strong look at that. Thank you for your testimony thank you to our witnesses. This is the last hearing. We will begin we are in the process of wrapping up the report but we appreciate you offering your report. That, the hearing is adjourned