The chair is authorized to declare a recess at any time and you have five days to submit materials for inclusion into the record. This hearing is entitled examining the operations of the committee on Foreign Investment in the United States. I now recognize myself for five minutes to give an opening statement. The free flow of capital is a bedrock tenant of the United States economy. It ensures that the free flow worldwide has always been a bipartisan goal into that and im proud to serve as cochair of the Global Investment in america caucus along with our colleagues mr. Holding, mr. Heinz and mr. Meeks. Promotes Global Investment in the Global Economy and helps educate members about the importance of Foreign Investment. The United States is the largest foreign investor in the recipients of the greatest amount of Foreign Direct Investment. That capital has provided a good deal of the energy that has kept our economy vibrate, compensating for our notoriously low National Savings rate to provide the fuel for growth of us businesses and jobs. Today almost 5 of us workers in jobs related to Foreign Investments. Most of these jobs pay handsomely, far better on average than other us jobs. But if Foreign Investment is to be a force for good and must not be welcomed unthinkingly anymore than one might leave the front door of the house open around the clock. Investment that might weaken us is not good or welcome investment and we must guard against it. That investment might come from purely economic reasons but especially in this era of international turmoil, conflict and economic in certainty it can also come from individuals or nationstates that might wish to weaken our economy in comparison to theirs or try to spirit away technology or knowhow that could strengthen their military to gain an advantage over ours. To maintain a vigilant watch on investment the multi Agency Committee on Foreign Investment in the United States or sabias revealed investments to determine if they pose a threat to National Security. This involves rigorous scrutiny of proposals by inter agencies including a scrub by the Intelligence Community and the president has the power to Block Transactions or order divestment is such concerns cannot be mitigated by a change in the original proposal. Today we face the press on a number of fronts, not just the thought of a hollowed out industrial sector but also from terrorism from major nations that are economic competitors but also potential military competitors. Im referring, of course, to china. Concerns have arisen over the past years about chinas Companies Using that countrys vast financial reserves to acquire Key Technology with an eye toward taking the lead in the Industrial Market of the future. The chinese government, for example, has set aside 250 billion to be used in dominating the the semiconductor market. This is not a new phenomenon but just a new challenger and president ford thats in 1975 out of concern that the vast inflows coming through opec countries could weaken our economy. In 1988 among concerns that japan was seeking to buy Critical TechnologyCongress Gave president reagan the authority to actually block deals. That authority only has been used sparingly. Interestingly the first use came with president George Hw Bush blocked the sale of an airplane component measured to a Chinese Company. More recently president obama just before he left office blocked a chinese deal and president already has blocked a proposed purchase of Semi Conductors by Chinese Company. It is also approved Foreign Direct Investment conditionally approving a deal only when divestment of divisions was sensitive to technology or attorney has occurred. The statue under which it operates has not been updated in a decade and clearly we should think about modernizing it. Aside from chinas intention there are burdens on the process the volume and complexity of proposed deals there are about 40 more reviews in 2017 and then the 2016 and more than expansion in the number of chinese deal since 2013. That senator cornyn has spent more than one year studying the process and considering possible reforms. I commend their work. This hearing is the beginning of the committees study of sabias and will be followed by further hearings soon. And considering reforms the committee will ensure that it has the tools and the resources it needs to examine Foreign Investment. As members it is our duty to advance the National Security of the United States and at the same time we must aspire to the greatest extent possible a welcoming investment so that us companies can have the capital needed to grow. We need to be mindful that us companies is not compromised. To start that process today the subcommittee has a panel of witnesses with unique abilities to discuss the operations of and challenges that ziphius basis. This hearing and their testimony is propelled intended to prepare members to make conscious decisions on this vital topic. This should provide the beginning of a strong and double review. With that, i now recognize a member of the democratic side, the gentleman from washington, mr. Heck for five minutes for an opening statement. Thank you very much. I would enhance a letter that i sent you and the chairman of the full committee on december 8 requesting that a witness from the department of treasury be added to this hearing. Without objection. Why i look forward to hearing from todays witnesses i believe there is no substitute or hearing from the people who actually are administering ziphius. I have given treasury a hard time in this committee and some of you may recall it was a very hard time about this issue and past hearings. I want to make clear that they had begun to engage in what i would characterize as a constructive manner. I acknowledge that. I expressed hope, my hope, that the committee could benefit from their expertise during a future hearing and i would be happy to yield to chairman if you would like to respond. Yes, i appreciate the gentleman yielding and just to clarify this is the first of a series of hearings. We most certainly will be extending an invitation to treasury officials who obviously have a large role in the ziphius process to testify in you will have that opportunity. Thank you very much, mr. Chairman. Im glad to hear that i thank you again for convening this hearing. I believe the ziphius process generally works well for private, commercially motivated transactions but in the ten years since Congress First passed legislation dealing with this issue we have seen some countries gain the resources and education needed to pursue a comprehensive strategy to acquire Us Technology or dominate strategically important industries. Existing ziphius authorities were not designed and are not sufficient to deal with that kind of challenge. And many of our witnesses will note that this is a problem that every part of the Us Government will have to Work Together to address and i believe there are some aspects of this problem that can only be addressed through legislative action to close gaps in existing ziphius authority when i asked secretary nguyen about this in july he agreed this was a pressing issue and that we could not afford to do nothing. I hope we can all bring that sense of urgency to how this committee approaches its work on ziphius perform in a kind of urgency and unity which 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. There are things we need to keep in mind as we move forward. Im glad many of todays witnesses have raised issues, will raise issues like the needed to improve information sharing and cooperation with our allies and partners. Many of whom are in the process of reevaluating their own ziphius equivalents. Glad many of todays witnesses will raise the need to provide more resources to ziphius which, i agree, are urgently needed to keep pace with the times, the demand in the need. Im proud that the United States is, in fact, a place that welcomes Foreign Investment. But the broader legitimacy and acceptance of that principle of openness which i believe in and the ability of the United States to stand up for a free and open Global Economy is, in fact, dependent on our National Security. Secretary nguyen affirmed doing nothing is not an option and i am confident that starting with this hearing we can find a bar partisan path forward. Strike that balance between those robust Foreign Investment which i think does serve our nations needs and economic prospects while at the same time balancing them again legitimate concerning concerns which are growing in number and velocity and in complexity. Sabia ziphius needs to be a reform. It starts here this hearing today. Mr. Chairman, finally, thank you again very much for convening it. Thank you. The gentleman yields back. Today we welcome the testimony of the honorable, Senior International council and former hail from 2,522,009 in the Service Equity deputy of the treasury he also served as the Reagan White House is executive secretary and general counsel from 1983 to 1985. 31997 he was a member of the National Defense panel and from 1998 to 2005 he was a member of the director of Central IntelligenceNational Security advisory panel. He served in the airport. Grade and retired as a Major General in the army reserve. He also served as a Us Ambassador to germany. Mr. Estevez is a National Security and logistic executive at Deloitte Consulting served for 36 years of the department of defense. From 2013 to january 2017 he served as the Principal Deputy undersecretary of defense Acquisition Technology and logistics. In this position he represented the department of defense at ziphius while Chinese Investments in the United States accelerated rapidly. Deviously he helped several key positions including assistant secretary of defense logistics and material readiness and assistant secretary for supplychain integration. The honorable mr. Wolfs apartment and from 2010 to january 2013 he was the assistant center of commerce for administration. He was primarily responsible for the policy and administration of the us and will use export control system and as a result of export control reform effort he helped lead part of the defense trade system. Also during this time mr. Wolf was the primary Commerce Department representative for ziphius. Mr. Stegall is the ira chair in emerging technologies and national securities. An expert on security issues, Technology Development and chinese domestic and Foreign Policy. Before coming to cfr he was an arms control analyst for the China Project at the union of concerned scientists. He has been a visiting scholar the institution at stanford university, Massachusetts Institute of technology, the Shanghai Academy of social sciences and the university in beijing. Mr. Clinton is president and ceo of the organization for International Investment in association representing the unique interests of us subsidiaries of Global Companies with a strong background in economics, her efforts focus on the Important Role they play in the American Economy that make the us more competitive location for direct, Foreign Direct Investment in job creations. Prior to be named president and ceo, ms. Mclaren was Senior Vice President where she focused on efficacy. Each of you will be recommended for five minutes to give an oral presentation of your testimony. Without objection, each of your statements will be made part of the record. The honorable mr. Kimmitt you are recognized for five minutes. Thank you, mr. Chairman. Thank you for your invitation to offer perspective on the committee of Foreign Investment in the us. This is one of those rare instances where advancing an age including three decades of service on ziphius health benefits. My experience with ziphius began in 1985 as treasury counsel under president reagan and secretary baker. As you noted mr. Chairman, ziphius was governed by an executive order signed in 1975 by president ford because of concern about saudi dollars been recycled by american assets. By 1988 concern is shifted to japanese purchases which led to passage of the exxon of boreal amendment and in 1992 concern about the state owned Companies Buying sensitive Us Technology led to passage of the [inaudible] amendment. In 2005 i returned to treasury as deputy secretary after deals involving Chinese National overseas oil company in dubai ports were blocked by congressional concerns Congress Passed the Foreign Investment in National Security act of 2007. Today growing concern about Chinese Investment particularly by state owned enterprises and especially in the Technology Sector has led to legislation proposed by congress, senator cornyn and bipartisan cosponsors. Unlike two other observations that may assist in your deliberations. Earlier this year this committee helped legislate the secretary of treasury as a dispenser for a member of the National Security council. Mistreating that us strength is tightly linked to our overall security. Foreign direct investments as both you and mr. Hackett noted makes an important contribution to the us economy. Almost 7 million americans will receive their paychecks this month from the companys headquarters overseas. Close to 40 of those workers are in manufacturing jobs and as you noted fbi jobs pay about 25 more than the economy wide average. More open investment policy is integral to us economic success and i urge President Trump to issue the traditional us open investment policy segment at the earliest opportunity. Initially in that statement is important to make clear that the Us Government must ensure Foreign Investment does not harm us National Security interests. Chinese investment has an improperly high priority for closer scrutiny. China seeks to compete strategically against the United States and multiple spheres. Military, diplomatic and economic. You they use all elements of the state including state owned enterprises in that competition. Current legislation provides significant authority to block troublesome chinese acquisitions. As you noted, the first exhibition by a president was under George Hw Bush in 1990. The acquisition of three com do not proceed under president george w. Bush and President Trump recently blocked the acquisition of Semi Conductor by a Chinese Investment group. As you consider new legislation i would be sure to address actual gaps in existing authority. There is particular concern the Chinese Companies may be using creative legal structures to conclude deals short of ownership and control that could nonetheless impair us National Security. I believe this is a v