Transcripts For CSPAN Commerce 20240705

In additn, the district sll. Gave the Police District information leading. And gentlemen, plee welcome. Member of the bod of trustees of the Ronald Reagan president ial fndation, linstitut de theodore olson. Good morning. Welcome to theorning fireside chat. Were doing this without the fire. Theyre told us in simi valley. Thats not a good idea. So use your imagination and welcome the longest u. S. Aircraft carrier measures a thousand feet longer than three football fields. A fully loaded f15 can weigh over 30 tons. But the biggest, most sophisticated and most menacing weapons of war rely on microchips whose components are measured in just a few nanometers in visible to the naked e. Congress enacted the chips and science act last year. It was enacted to promote economic competitiveness as a tool for strengthening American Manufacturing and for preventing the chip shortages that presented problems and plagued all of us. For nearly all of us. R for nearly the entire pandemic. But theres is also a defense bill, a National Security priority of the highest order. If americans warfighters are beholden to foreign factories, subject to malign influence ensues in turbulent regions for the critical components of their weapons. Then we can be neither safe nor strong. Among its many other vital responsibilities, the u. S. Department of commerce is charged with administering the disbursement of chip chips act funds. That is just one way in which the Commerce Department is an integral player in strengthening americas military readiness. The department is a center to building our stockpiles as we support our allies around the world whose democracies are now under siege. Which brings us to our guest, u. S. Secretary of commerce gina raimondo, who is leading our government chips policies and programs and other Vital National Defense Export programs. She has a bright, young, energetic star in our government and she is superbly qualied for her responsibilities. She has an economics degree from harvard, a ph. D. In sociology, from oxford, where she was a Rhodes Scholar and a law degree from yale before being appointed as secretary of commerce, she served as treasurer and then governor of the state of rhode island. Were thrilled to have the perspective of the u. S. Department of commerce featured on our stage. Please join me and welcoming the 40th u. S. Secretary of commerce, gina raimondo, along with our moderator for todays discussion onnbcs morgan brennan. Madam secretary, thank you. Good morni. We have a packed house here. Pressures on lot to get to. Very excit to have you here on stage with me. Cretary raimondo. So thank you. Ill be here. Very happy to be here. I do want to start a little bit with the context here. This is the first time weve seen a commerce secrery here at the reagan National Defense forum, one of the biggest defense conferences of the year. And i thk the fact that you are here really speaks to the growing intersection of industrial enomic and tech policy. Were National Security is concerned. So so i want to start right there. Why should commerce be taking on this expanded role in matters of National Security . Yes. Well, good morning. Good morning. Its great to be here. Thank you for having me. I think everybody here knows the fact that our National Defense is more than guns, missiles, tanks and drones. Its thnology. Its innovation. Its working with our allies. Quite frankly, r National Security rests upon our economic security. You cannot be a stng nation th defends itself unless you have the most competitive economy in the wld. And an innovationngine that leads the world. And by the way, its not just at home. Its abroad. You know, o allies around the world want us to show up, not just to nd them fighter jets, but to help create jobs and whether ths in the indopacific or south america. You know, our adversaries, most particularly china, theyre showing up eve day, showing up every day with money. And infrastructurend jobs. And if we want to wi we have to show up, too. In fact, i was delhted to go to panama with general richardson in a few months ago. Ill be going to the philippines with commit commander aquilino next yea like it. This is game on. Game on. Economic prosperity and oprtune Party Matters every bit as much as pure military might to protect our National Security and sustain our place in the world. Is it is it a reflection to have you on stage here and it and to be opening with statements like this is it is it a reflection of how much the world has changed or is it a reflection ofhe fact that u. S. Policy should have been more aggressive in terms of that intersect in long ago . So thats a great question. Look, i think its ways been the case that National Security rests on economic security. That being said, technology is more important than ever to our National Security. And the Commerce Department sits in the center of the administrations tecology and innovation policy. So as our military aaratus depends more and more on technology, whether that is Artificial Intelligence spectrum strategy, supercomputing, cybersecury, semiconductors, its tenology matters more to our National Security and the commerce dartment. You know, we are running the administrate nations air policy. We are, of course, iolved. We run export controls like denying china and our adversaries our st sophisticated technology. We lead on the administration spectrum poly. So i think as technology is more intertwined with national defensoffensively, you know, investing in semiconduor capacity d offensively denying china techlogy like Commerce Departments in the red hot center of that. And thats more important than itever been because technology is more important than its ever been. Were going to dig into every one of those topics here. First, one more question before we do and that is, how are you institutionalizing this National Security role . How do you ensure that these are policies that have a Lasting Impact or at least set the stage or set the precedent for this type of discussion, type of debate, type of approach in the fure through different administrations, regardless of political parties. Yeah. So i would say this is definitely not a flash in the pan. I may be the First Commerce secretary here. I will ctainly not be the last. You know, export controls, we have taken a very aggressivof new, innovative approach to how were doing, export controls. You know, in october of last year, bis, run by undersecretary estevez, w is here with me, did a histoc rule,irst time ever, that we denied an entire country, china access to a suite of semicductors and equipment. Were going to coinue to go in that direction. So were were were building a team. You know, i have 100 people woing fome now that didnt work in the commerce deptment, just focused on semiconductors. Were adding to our technical capacity at bis for Artificial Intelligence. So i think were we are building a moreuscular Commerce Department to take othese challenges. And i think thats you will see that thats here to stay. I will say f members of congress who are here, ill just say this because h the same budget today as it did a decade ago, we have twice as many licensing requests. I get calls fromembers of congress, democrat and republican, constantly. Why ent you doing more . Why arent you controlling more with Artificial Intelligence . Why aret you controlling more of a semiconduor . I agree with you. I have 200 million budget. Thats like the cost of few fighter jets. Come on. If were seriouslets go fund this operaon like it needs to be fund so we can do what we need to do to protect america. You mentioned export controls. You rolled out new updateden seven rules, export controls on chips just recently. Why was that necessary . Oh, we cant. Were trying to get these chips, period, period. Listen, heres the azing thing. I know theres a lot of members of the priva sector here, a lot of entrepreneurs here. Amica leads the world in Artificial Intelligence, period. Full stop. America leads the world in advanced semonductor design peod. Full sto thats because of our private sector. Thats because we have great innovators. Its because of our plic sector to inveing in that. Were a couple of yearshead of china. No way are we gointo let them catch up. We cannot let them catch up. So were going to deny them our most cutting edge technology. And i know theyre ceos of chip company. Oh, thank you i know they were ceos of Chip Companies in this audience who were a little cranky with me when i did that. Because youre losinrevenue such as life, protecting our National Security matters more than short term revenue. And thats what were going to do. Ill tell you this stuff. When i say this stuff, i mean supercomputing age, a technolo, a chips in the wrong hands is as deadly as any weapon that we could provide. And so we have to be serious if were gng to meet that threat and serious about enforcement. The other thing, we need resourcefor at the Commerce Department is enforcement. Every day china wakes up trying to figure out how to do an end run around our export controls every minute of every day, which means everyinute of every day we have to wake up tightening those controls and being more serious about enforcement with our allies, with the dutch, with the japanese, with the europeans. Thats another thing were doing to have a multilateral approach similar to, you know, cocomn the depths of the cold war. We need a multilateral approach to export controls to really you know, meet the threat that chi poses. There haseen you touched on a little bit, but there has en criticism tt export controls have gone too far. Theres also been the criticism that they havt gone far enough so i guess what goes into the decisionaking process around that . And is it still ufor review or are u still looking at changing it or adjusting it as we go here in real time . Its really hard, alan and i talk about this all the time. Its a constant bance. If you go too far in export controls, you deny u. S. Companies revenue, which they need to continue to innovate. And if we do it without our allies, thats doubly problematic. What good is it to deny u. S. Companies revenue if china gets the technology anyway from the germans, the dutch, the japanese or the koreans . Having said that, if you dont go far enough, china gets our technology and they could do Nuclear Simulation or whatever. They want a modern fighting force is more technologically enabled than ever. Thats why commerce matters so much. And so these discussions of where to draw the line, im not going to lie. Its i dont know if wre perfect. I dont know if you can be perfect. So what i tell my team is we need to have aonstant dialog with industry so we know as much as they know about the technology, a constant dialog with our friends in the pentagon. And i have a huge shout out to secretary austin. Hes been an amazing partner to me. And we just have to have like a fidelity and discipline to our process so that were constantly challenging ourselves. You know, are we doing enough . Are we not doing too much . And also, one of the things im doing, ecommerce is really building up our technical capacity. So like i said, we were we know as much as anyone else about the technology i mean, chinas chipmakers have been stockling equipment and preparation of this. Look no further than huaweis new smartphone phone that was released a couple of months ago when i was in china. Yes. Oh, look at that. Thank you very much. To know that theyre moving quickly on this. How quickly can you cnter them when you are havg to take a thoughtful approach . You are speaking to industry. You do have a team that is o a 200 million budget and yes, growing. But theres only so fast you can go. Yeah. So i would say this. The nature of the threat is changing and we need to therefore change our sategy. Historically busy uses whatever. Here. Now the entity list. Huawei, for example, is a Chinese National champion. Theyre on the entity list. Smic like we know for a fact these Chinese Companies aid the inese military, so they are on the list. We cant sell things to them. But thats gets us into like a a mole, right . So huawei spins out another company. Its really a conant whack a mole. So what were trying to move toward which is what we did with october 7th, is countrywide controls. We have to get smarter about what are the technologies . Which are just where we are ahead of china. Theyre capable of doing very bad things. And were going to deny the entire country this class of equipment. So thats one exple of how re innovating on our approach to meet the threat, because, as you s, if youre if youre just doing this whack a mole approach, we find out of it one company thats a problem. And we put them on the list literally a week fronow, therell be another company. You know, china will create another subsidiary. So i thi were getting more serious about countryde controls. And i cant say it enough. We have to get even more serious about working with our allies. Its its not okay if we deny china something and the japanese and the germans areelling them Component Parts to make euv tools. Not okay. So weve got to get more serious about it so th its harder. Theres nothing perfect. Right. The chinese are going to do everything they can to find loopholes. But we have to get faster, more age and. And think differently about our strategies. One more question on this before we start to move on here, and that is, is a us industry or semi industry on board . And i asked that im going to not trying to call out this company specifically. Its just that they were in the news this week. They are the poster child of of ai. But nvidia for example, developing a new export compliant chip for china, the age 20. Its expected to roll out early next year. It meets the export control requirements. But when you see the adaptable city of that dynamic in a global marketplace for american companies, does it mean that the conversation with industry has to change or evolve more than it where it currently is now . Yes, and thats a great point. So and i want to say this to everybody in industry who is here, are is industry on board . I mean, yes, but theyre in the business of making money. Every time i take an aion, it denies them revenue. My own view is that indtry news flash democ pretty is good for your businesses. Rule of law here and around the world is good for your businesses. So it might make for a tough quarterly shareholder call. But in the long run, its worth you working with us to defend our countrys National Security. If youre not selling into china a decade from now, its not because of our expor controls. Its because chinas designing you out, because they want to decouple, not because of what i do. We have to be eyes wide open about the threat from china and Work Together. So your business is a strong and lead the world, but also so our National Security is protected. I would say industry has been cooperative, helpful. We have a goodelationship. Very much so. But of course, theres a bit of a natural tension in the work that we do in the moment. On export controls i do want to say this we do, to answer your question, i think its a really smart question. We need to move beyond and the traditional way were engaging with industry in the following respect. Historically, the Commerce Department draws a cut line like we d within video. We do a particular clear cut line, not surprisingly, within a few months, nvidia released a new chip just below that cut line. Fine. Thats what industry does. Thats what weve taught them to do. Thats the way export controls work. Thats not productive. So we need to. And alan and i are developing this a new w to have a continuous dialog with industry where our engineers can go toe to toe with their engineers and we go to them and say, our intent is to deny china technologies that can do x, y, z. So im telling you, if you redesign a chip around a particular cut line that enables them to do a i, im going to control it the very next day. So we have to get to a place with industry where we say our National Securityoal is to have no special sauce in your chip. For example, and just dont do it. And so its but its a more nuanced discussion because otherwise we just say draw the line. They engineer around the line, we draw the line, the engineer around the line. We have to have a more continue with back and forth with the industry where we make our intentions clear. By the way, the burden burdens on us. This is our intention. This is the effect we ed to have. Almost like the commanders intent. And then industryeeds to comply. Commerce is playing. And this brings us squarely into the conversation of artificial Artificial Intelligence overall. Commerce is playing a key role in the president s first of its kind executive order on ai. You ani spoke the day it was unveiled. How quickly does that roll out . How meaningf is it to providing guardrails for capable ready for ai capability despite the conversation were havin between cing threats and great power mpetitions where we know this technology is going to matter, not only today but in the future, more meaningfully. So the Commerce Department is as you say, in the center of the president s strategy for ai. We have two roles. One is what weve been talking about. The denying china are ai. But i think the more Important Role we have actually is the is proactive. You know, investing with industry through the chips act, working with industry to help them run faster so we can outinnovate china. About a month ago, i stood up in the Commerce Department and ai safety institute, and thats intended to work with industry and with congress and with policymakers to figure out what are the guardrails. I will say theres a view in silicon valley, you know, this move fast and break things. Effective acceleration. We cant embrace that with a. I. Its too dangerous. You cant break things when youre talking about ai. So we have to find a balance. We have to find a balance of, as you say, guardrail laws, ming sure these models dont get into the hands of nonstate actors and bad guys, making sure the models do what we think theyre going to do. Thats a huge thing. Not even the developers know what the model will do. So it has be safe, but we have to be very careful because we cant overreach. Otherwise, well stifle innovation. And america is in the lead because withouinnovative the world, europe is way behind us. China is still behind us. Sonyway, its a once again, its delicate and it is complicated. I will say this, uh, when i look in the mirror, i am constantly asking myself, how can i run a more innovative Commerce Department in the age of ai . I think everyone in governnt needs to do that. Government across the board is watoo slow to know how to procure software care, how to procure a ai, how to use ai for good in what we do. And still a little bit, i think we have a zero sum game of what are we going to do enable industry or, you know, enable innovation in industry or protect our National Security. And thats an Old Fashioned way of thinking. And we cant have that zero sum game. Weve got to do both. Weve got to enable industry. So we innovate and protectur National Security. So what does that what does that actually look like . Because ina might be behind us. Theyre not subjecting themselves to the same ethics, same guardrails, or even same approach to data. We do want to be lowest common denominator. We look were a country that that values privacy, that values rights, that values human rights. And none of thats changing. So we can do both. Thats what makes america great. We can do both d we will do both. We need to make investments in research and development. We need to make investments in job trainingnd technical capacity. Day, wneed to work with industry to enable them to innovate and also have guardrails so th we dont. Like i said, either do bad things ourselves. We have to protect our technology. I mean, the the state sponsored espionage to get access to our technology is so real. So its but we can do it. I have no doubt that we can do it, but it has to be a much a new model to meet the threat that china poses. We have to he a new model of collaboratiobetweecommerce and the pentagon and between the vernment and industry, between universities and theefense industrial base. I mean, it has to be a dif a more modern model if were going to meet the challenges as required. Which brings us to cps act. Big, sweeping, sweeping package. I think we have quite a number of folks. If i had to guess this room who are very curious to know when funding starts to go out any day now. I have a whole team back home working as we speak. I checd in with them all early this morning. Oh, look, ill say this in all seriousness, really soon above, to make an announcement for the end of the year and en continued stream of announcements in the first quarter, first half of next year. Its not to be defensive, but commerce at the time the bill was passed wasnt built to do this job. Weve hired 110 people. Some of the best investors in america, the best credit market analysts in america, the best industry analysts, the best engineers. So weve built it from whole cloth. I im very proud of the work were doing in terms of how high quality it is precting taxpayers money. And so i think youll start, like already said, the timeline. I want to say this especially to members of the audience who may be applying for chips, money. Im going to be in the business of dishing out disappointment because theres just not enough money. We only have. 39 billion for these company incentives. And i have a National Security mission that i must meet. Yes, we want to create jobs in america. Yes, we need manufacturing in america. Fundamentally, this is a National Security initiative. The United States of america really makes no leading edge chips on our shores today. You mentioned nvidia. All of their chips are made in taiwan. Every one of them. Dont need to tell anyone in this aience the risks related to tain or china. So at the end of the dayim going to do my very best to stretch this capital, be creative and get every one a good number. But at t end of the day, for me to sleep, i put my pillow, my head on the pillow at night. Ive got to meet the National Security mission. And thateans making sure we make enough leading edge chips, have enough advanced packaging enough current mature chips for the Defense Industrial base in the United States of america. Its a National Security mission that we need to achieve with this money. Have you gamed out those ris where taiwan is concerned . Because to your point and video or apple or any other countless number of companies and thus economies are going would be impacted if you did see china make some sort of move on taiwan, particularly in the near term. And if we thought we saw supply chain spurred inflation coming out of the pandemic, we aint seen nothing yet in terms of the economic turmoil a sittion like that would entail. So how quickly can you stand up that domestic manufacture ring, especially when fabs are complicated and they can take years to put together . You once again, you hit the nail on the hd. We cant move fast enough. Look at i dont know if and when china will make a move on taiwan and in many ways, i cant control that. Our Defense Department is doing an amazing job with deterrce. What i can control is how fast we run in america. So i have to assume the worst and go as fast as we can. And thats w were going to start getting this money out the door early next year. And were working. And i will say i want to thank all the chips companies who are here whove applied. Theyve all been unbelievable partners. We have its not like they apply and we give them an answer. Its a constant back and forth, back and forth. You know, what are their plans . Theyre amending their plans meet our National Security needs. Thats why i mentioned advance package, for example. So i feel great about it. And thats the attitude we have to say, which is like, we need this for Americas National serity. Whats the fast, this most capital efficient way to accomplish this . And lets get it done. Ive got two more questions for you he. So were going to try and bang through this because i know the clocks ticking down. The first is were talking a lot about chips. Are there other u. S. Origin products or types of technologies that you are looking at in a similar fason right now . Absolutely. In biotechnology. I am models. I products, cloud computing, supercomputing. So short answer is yes. You know, once again, as everythingets so much more technologically enabled and everything that flows from Artificial Intelligence, thats why i said ill be maybe the first year. Im not the last, because technology and our ability to control our technology, it, i think by as if its not already should be soon. The most exciting place to work in the federal government because its this its this. How do w advance a. I. And control a. I. And everything that flows through from it effectively . To win. And thats the work that were doing. You mewith your chinese counterparts in china a couple of months ago. You were in the room for president s biden and xi meeting at apec. You met with youown counterpart, chinese counterparts at a packed. How would you even as weave this conversation on stage, how would you chacterize the relationshipurrently between thtwo cotries . As weve seen, communication relations thaw and increase . I would say communicatn is a good thing because if heres what i know, if you dont have communication, youll move more rapidly to escalation and tension and miscalculation. But dont confuse communication with weakness or softness. Theres a theres a lot of commerce to be done with china. It wont affect our National Security. Itll create jobs in america. And we should do that. And by the way, it should be reciprocal. If they want access to our markets, they ha to give us access to their markets, you know . Unionpay, ipay, their payments happen in america. Lets go mastercard, visa, etc. Ought to be allowed in china. So on a fair, you know, and thats just one example because i only have a second. But on a level playing field, we will compete and we will trade and that is good. But on matters of National Security, were going to be eyes wide open about the threat. This is the biggest threat weve ever had. Its and we need to meet the moment. And so i think that we just you can cmunicate. You should communicate. You have to Work Together on things like fennyl and climate wherever we can. We have no interest in tension, no interest in escalation. The world needs us to manage our relationship with china responsibly, to avoid escalation. We got to do all that. But make no mistake about it. China is not our friend, and we need to be eyes wide open about the extent of that threat. Is there anythg else you want to add before we finish this conversation . The only thing iould say, apart from the fact that im really pleased to be here, is a challenge to all of us to think differently. You know, technology is changing at a rate that weve never seen. And that means we ed to change. We need to change the way we think about spectrum strategy. It cant be a zero sum game. We need to make spectrum available so we can outinnovate the world and make sure the dod has what it needs. We already talked about a. I. We need to change the way we procure technology. We need to change like when doing our hiring internally. How do we get the engineers and chnical geniuses that we need to do the job . How do we attract and recruit young people to the government . You know, to do this work that we need. And so for all of us, i mean, thats the challenge. Its the excitement. Like i, i am ready to win and im ready to do that with all of you. But its time to open our aperture and channel and the way weve done business in every way. If were going to meet the threat china poses and if were going to do what needs to be done with this technology. The honorable gina raimondo, thank you. Secretary of the u. S. Commerce department. Thk you. Thank you. This concludes our fireside chat. Please remain in your seats for panel two or proceed to the air force one pavilion for panel three during our break. Dont forget to the hospitality tent and media center. Ive got a few ideas, but its good its