Minutes for an opening statement. A bedrock tenet of the United States economy. Free flow worldwide has always been a bipartisan goal and to that end im proud to serve as cochair of the Global Investment in america caucus as well as mr. Holden, mr. Himes and mr. Manes. It promotes Global Investment in the United States economy and helps educate members about the importance of Foreign Direct Investment. Today the United States is the largest foreign investor and recipient of the greatest amount of Foreign Direct Investment through the capital is provided a good deal of the energy that has kept her economy vibrant and compensated for the notoriously low National Savings rate to provide the fuel for growth of u. S. Businesses and jobs. On the site of u. S. Workers and jobs are related to foreign men. Most of these jobs pay handsomely, far better than other u. S. Job, but of Foreign Investment is to be a force for good, and must not be welcomed unthinkingly any more than one might be the front door of the house open around the clock. Investment that my weakness is not good and we must guard against it. That investment might come from purely economic reasons but especially in the era of international turmoil, conflict and Economic Uncertainty individuals are nationstates that might weaken our economy in comparison to bears are spread technology or knowhow strengthens the military to gain an advantage over our spirit to continue vigilant watch on Foreign Investment in the United States reviews many investments to determine if they pose a threat to National Security. This involves rigorous scrutiny of proposals by l. Departments or agencies including described by the Intelligence Community and the president has the power to block Block Transactions or order divestment of such concerns cannot be mitigated by changing the original proposal. Today we face new threats and never threat and how the data sector but also major nations of economic investors but also mainly to china but concerns risen sharply in past years about Chinese Companies using the financial reserves to Keep Technology with an eye towards taking the lead and industrial markets of the future. The Chinese Government has set aside 250 billion to be used in dominating the semiconductor markets. Its not a new phenomenon but a new challenger president ford set up in 1975 out of concern that vast influence coming from opec countries could weaken our economy. 1988 among concerns japan for seeking to buy a criminal to knowledge eight, Congress Gave president reagans the authority to block deals. The authority has been used sparingly. Interestingly, the first use came in george h. W. Bush blocked the sale of the airplane component maker to a Chinese Company. More recently, president obama before he left office but chinese dylan President Trump has bought the proposed purchase of semiconductors by a Chinese Company. Also approved Foreign Direct Investment conditionally, proven a deal when divestment technologies or activities has occurred. The statute under which it operates has not been updated in a decade and clearly we should think about modernizing it aside for the intentions burdens from the complexity of the post is about 40 more reviews in 2017 and 2016 and more than fourfold expansion in the number of deals since 2013. To that end our colleagues represented ettinger and senator cornyn has spent more than year studying the process and possible reforms at the same time, we must aspire to the greatest extent possible welcoming Investment Climate so that the capital needed to grow. As well we need to be mindful of the investment overseas is not unnecessarily compromise. To start the process today the subcommittee is a panel of witnesses with unique abilities to discuss the operation southern challenges faced. This hearing in their testimonies intended to prepare members to make wise and cautious decisions on this topic here this should provide the beginning of a strong and thoughtful review. With that, i would now recognize a member of the democratic side, the gentleman from washington, mr. Heck for an opening statement. Cnet is chanting, i ask unanimous consent for a letter he sent to you in chairman of the full committee on December December 8th requesting a witness from the department of treasury be added to this hearing. Without objection. Loads rejiggering from todays witnesses they believe there is no substitute for hearing for the people who actually are administering. Ive given treasury a hard time in this committee and some of you may recall that was a very hard time about this issue in past hearings. I want to make clear they have begun to engage in what i would characterize a constructive manner. I acknowledge that and express my hope the committee could benefit from their expertise during a future hearing and i would be happy to yield to chairman barr if you would like to respond. I appreciate the gentleman yielding. Just to clarify this is the first of a series of hearings. We most certainly will be extending to treasury officials who obviously have a large role in the southern process and youll have that opportunity. Thank you, mr. Chaiman. Thank you again for convening this hearing. I believe the cfius process generally works well for private commercially motivated transactions, but in the 10 years since Congress Must pass legislation that this issue, they seen some countries and their resources and sophistication needed to pursue the conservator strategy were dominating strategically Important Industries adopting cfius strategies were not designed insufficient to deal with that challenge. Although many witnesses will know this is a problem every part of the u. S. Government will have to Work Together to address. I believe some aspects of the problem can only be addressed through legislative action to close gaps existing cfius authority. When i asked secretary mnuchin about this in july he said this is what we could not afford to do. The urgency of how this approach is the work onsite for reform with the urgency and need to be i know this congress can still bring to bear on issues critical to our National Security because here we are dealing with just such an issue. Certainly things we need to keep in mind as we move forward. Im glad many of todays witnesses have raised issues, will raise issues that they need to improve information sharing and cooperation with allies and partners in the process of reevaluating their own equivalents. Im glad they will raise the need to provide more resources which i agree are urgently needed to keep pace with the times, demand and the need. I am proud that the United States is in fact a place that welcomes Foreign Investment. The broader legitimacy and acceptance of the principle of openness, which i believed then and the ability of the United States stand up for a free and open Global Economy is in fact dependent on interNational Security. Secretary mnuchin firm doing nothing is not an option but im confident starting with this hearing we can find a bipartisan path forward and straight at balance between continuing to allow robust Foreign Investment, which i think does serve our nations needs, our economic prospects of the same time balancing against very legitimate security concerns which are growing in number and velocity. Cfius needs to be reformed. Starts at this committee in this hearing today. Thank you again for convening a. Thank you at the gentleman yield back. Today we welcome the testimony of the honorable mr. Kimmitt bayfront 20052090 served as deputy secretary of the u. S. Treasury. Responsibility for the International Agenda which included a revamp of cfius producer to the Reagan White House for general counsel from 19831985. He was a member of the National Defense panel and from 19982005 as a member of the director of essential Intelligence National visor panel. Mr. Kimmitt urban combat in vietnam at the 173rd Airborne Brigade and also served as the u. S. Ambassador to germany. The honorable mr. Estevez is a National Security strategy and logistics at Deloitte Consulting mr. For 36 years at the department of defense. At 2013 to january 2017, mr. Tran for served as Principal Deputy under Acquisition Technology and logistics. He represented the department of defense has said through a Chinese Investment in the United States accelerated rapidly. Previously of several key positions including secretary of defense and logistics material readiness under secretary of defense for supply chain integration. Mr. Rove is a partner from 2010 to january 2017 the assistant secretary for export administration. Primarily responsible for the policy administration of export control system and the reform acts expert and during this time that the representative to cfius. Mr. Sokol and emerging technologies and National Security director that did show Cyberspace Program at the council of Foreign Relations is an expert on Security Issues and chinese domestic Foreign Policy before coming to cfr was an arms control analyst for the China Project at the concerned scientists. As a visiting scholar at Stanford University for International Studies from the Shanghai Academy of social sciences and the university in beijing. Ms. Mclernons presidency of the organization for International Investment representing the unique interests of u. S. Subsidiaries of global conch subsidiaries. Her efforts focused on subsidiaries played in the American Economy issues that would make the u. S. A. More competitive location for direct investments in job creation. Prior to be named president and ceo, ms. Mclernon was Senior Vice President where she focused on Strategic Communications are not pc. It do we recognize to give an oral presentation of your testimony that without objection, each of their written statements will be made part of the record. Honorable mr. Kimmitt cannot recognize her five. Thank you, mr. Chairman. Thank you for your invitation to offer perspective on Foreign Investments in the u. S. This is one of those rare instances where including three decades of service on the cfius has some benefits. The experience began in 1985 as treasury general counsel under president reagans and secretary baker. You noted, cfius was signed in the 75 by president ford because of concern about saudi petrodollars being recycled. By 1988, concern shifted to japanese purchases which let the passage of the amendment and in 1992, concerned about stateowned Companies Led to passage of the byrd amendment. A return to treasury as deputy secretary with the Chinese National overseas oil company in dubai court blocked by congressional concerns Congress Passed the Foreign InvestmentNational Security act of 2007. Today, growing concern about chinas investment particularly Stateowned Enterprises in the Technology Sector has fought the legislation proposed by congressman pittenger. Some observations that may assist in your deliberations. Earlier this year the committee helped legislate the secretary of the treasury of the security council. It is tightly linked to our overall security. It makes an important contribution to the u. S. Economy 7 million americans receive their paychecks this month from companies headquartered overseas. Close to 40 during manufacturing jobs and as you noted, pay almost 25 more. The more open investment policy is integral to u. S. Economic success and president trying to issue the u. S. Open Investment Policy Statement at the early opportunity. Initially in the statement is important to make clear the u. S. Government must ensure investment do not harm u. S. National security interests. It has an appropriate a high priority because china seeks to compete strategically against the United States in multiple spirits, militarily, diplomatic and economic using all elements of the state including Stateowned Enterprises. Current legislation provide significant authority. As he noted, the first acquisition unwound by president. They did not proceed under president george w. Bush and President Trump recently block the acquisition of a semiconductor by Chinese Investment group. As you consider new legislation i would discuss the authority. There is particular concern between legal structures to conclude deal short of leadership in control but could nonetheless impair u. S. National security. I believe this is a stricter scrutiny in the United States. I would be careful about outside the United States. His intended to give the president into a turn exceptional Authority Without superseding important authorities in other statutes. For example, the joint venture about Technology Transfer compromise the export Administration Regulations or International Traffic in arms regulation should be the first line of defense. Though additional legislative authority is so into the greatest problem facing cfius today is the lack of resources as cases 250 this year and with the prospect of agencies led by treasury next year in a major legislative implementation exercise, the increase in workload may begin to delay the investments that do not raise National Security concerns. But she requirements to resources continue to be a Central Point in your further deliberations. Todays hearing in your future actions are being watched closely overseas. Of particular concern the European Commission has established an investment review mechanism even though under european law the commission has no authority and National Security matters so the new d. C. Review may become a political screening process to create a new barrier to u. S. Investment in the important market of over 300 billion consumers. In conclusion, i am more concerned today about growing protectionism and trade detection is done. If we want wellpaying jobs to Foreign Direct Investment boy must send a clear message to the United States open to investment except in those instances were a cfius process focused squarely on National Security determines an investment must be bought. I know youll strive to strike the important balance. Jonahs time is expired. Mr. Estevez for five minutes. Distinguished members of the committee, to iraq for the opportunity to it. Today on Foreign Investment in the United States or cfius. I am now at deloitte, want to be clear that my views are my own views, not those of my firm. I believe its important to review why cfius is critical to the National Security from the dod press active. Many reasons the subordinate to men and women who volunteer to join the force. However, another reason for