▶ 0:24:18The committee will come to order. I want to thank the witness Oops. I want to thank the witnesses today for joining us uh and to uh uh to deal with a number of uh of important issues. I apologize. I'm having a Ronald Reagan uh teleprompter mo moment here.
▶ 0:24:48Let me get the script.
▶ 0:24:58One pa one page off. You know the the difference between being too here too long and not being too long is I still recognize when the opening statement and the script have been reversed. For now the subcommittee will come to order without objection. The chair is rec uh is authorized to declare a recess at any time. We welcome everyone here today on a hearing on foreign abuse of US courts.
▶ 0:25:26I want to include that this this is the title but not by any means the limitation and there are a multitude of uh bills which have been made available to everyone here that we believe are open and available for discussion.
▶ 0:25:43So u we have a distinguished panel and I recognize that you're able to go into areas beyond any one piece of I'll now recognize myself for that opening statement. Again, I want to thank the witnesses and make it clear that the Chinese Communist Party is waging what they call legal warfare using the US courts.
▶ 0:26:14Although this is not new, the previous administration elevated it by covering repeatedly a number of the areas in which the CCP has been in fact using our system against us. This is over and above the 10,000 attacks a day that occur on the internet. This is over and above their spying.
▶ 0:26:40This is over and above the abuses that occur on companies in China. This is in fact using our patent system, our trademark system, and our courts to their advantage. We take this seriously that we will not be abused any longer. Legislation and rule changes by the administration need to happen and happen now. Let's let's make it clear.
▶ 0:27:09There are legal actions that the uh that Chinese uh businessmen and others do and we want to make sure they're protected just as we want to make sure that American companies, European country companies and and individuals all over the world have access to our courts, to our patent and trademark system, and to our In fact, some of our own laws have made it easier for the Chinese uh to take advantage of us.
▶ 0:27:38Our courts uh are the backbone of our constitution and we will protect it. Legislation that sanctions the PRC alone cannot be enough. We also have to strengthen the system itself from this type of activity. One of them is in fact open and transparent disclosure of who is truly behind a litigant.
▶ 0:28:06that includes third-party uh funding of litigation. It also includes and should include a thorough recognition that often there are a series of shell companies, even US uh subsidiaries that in fact have little to do with anything except covering their true source. All of that is not new.
▶ 0:28:29We see it in criminal operations, um, in uh, human trafficking, in drug smuggling, in in in commercial fraud. And that is not limited to any one country. But the fact that it's backed by a powerful country who is using and weaponizing this is particularly As we all are aware, often we are just a few weeks, few months, or maybe a few
▶ 0:29:00uh in new technology ahead of China compromising it and using it. That includes a lookalike of the F-13. That includes a duplicate of the CERN super Collider new version. That one will be out before ours is built here in the United States. So, we're not going to be able to fix it all here today. And it's not all within our jurisdiction.
▶ 0:29:24What is within our jurisdiction is to look at and to make available greater transparency to empower our judges to order that transparency and in fact to make it clear that a case should not go forward.
▶ 0:29:44as is constitutional, a person accused of anything criminally is entitled to be faced by their accusers, their true accusers, which would include those who who have people step forward. That is that is our law. But in civil matters, that often is a one-way street. Defendants under rule 26 have to disclose if they are insured.
▶ 0:30:09Have to disclose quite frankly their own financial condition and even the financial condition of their principles. That is not always the case in the case of the plaintiff and we need to have that. In preparation for this hearing, I have met with a great many companies and law firms who use third-party litigation or who partner with other companies.
▶ 0:30:34None of them object to in fact the transparency of disclosing that many of us many of them have cautioned that the discretion by the judge as to admissibility to the jury is a different story and in I want to make that clear because it is not the intention of this chair or of any legislation I have yet seen to interfere with a judge's decision on admissibility.
▶ 0:31:01But when it comes to the right to know, whether in camera or otherwise, this information is critical in making the decision about protective orders and the conduct of the The uh the subcommittee uh has broad jurisdiction as to the courts, but we want to use it wisely.
▶ 0:31:22And in this case, recognizing that transparency is one of the most important tools that we have, we want to make sure that it is brought to the attention of everyone. As I said earlier, this hearing does include a number of other uh pieces of legislation that I believe our panel is able to answer and we appreciate your indulgence when those questions are asked. And with that, I recognize the ranking member for his opening statement.
▶ 0:31:50Thank you, Mr. chairman and thank you to the witnesses for being here today. This subcommittee has held a series of bipartisan hearings over the last few years on the threat from the government of China. As a strategic competitor, China is seeking to develop cutting edge technology to win the so-called AI arms race with the United States.
▶ 0:32:14It also competes for soft power around the world, competes for economic predominance and competes for strategic resources. There is nothing wrong with competition. There is a problem with breaking the rules to get ahead and that is what China has sought to do.
▶ 0:32:32Over our hearings, we have examined cases of economic espionage, threats to American intellectual property, cyber security risks, and the different ways these actions by China threaten US national security. Today, we're here to examine the use of our court system by Chinese actors.
▶ 0:32:53We absolutely agree that China is seeking to gain ground in our strategic competition by encouraging Chinese businesses to harm American companies and that can include through our court system. I've enjoyed working with Chairman Isa and my colleagues on these bipartisan hearings and I sincerely hope we can continue to examine the threat from the government of China to our national security, our economy and our power abroad on a consensus basis.
▶ 0:33:24But there are areas where we have disagreed. Last Congress, this committee slated a partisan bill for markup that would have prevented companies on certain sanctions lists from obtaining new US patents or enforcing the ones they already own, devaluing US patents and violating international agreements.
▶ 0:33:48While the Preventing Adversarial Patents Act was removed before it could be considered by the committee, the bill was a reminder that there are significant disagreements between the two parties on this issue. So, I worry that this hearing on China's quote abuse of the US courts may be a Trojan horse to disguise a different a very different agenda.
▶ 0:34:13I fear that as a so-called solution to the China threat, I will hear proposals like you can only file a case if you disclose all of the funders of your cause. Or you can only file a suit if you are rich enough to pay a huge bond in case you lose. Or let's start limiting discovery rules and make them more restrictive.
▶ 0:34:40or will flip the presumption of enforcing foreign judgments wholesale and adopt China's restrictive approach. The answer to a threat cannot be Republicans tort reform wish list. And our constituents deserve better than a system where only the well-connected and the rich survive because that's exactly what we would get from that list.
▶ 0:35:06This world I just outlined would mean that the big guys, the oligarchs, get their day in court, but the little guys, the Davids to those Goliaths would be shut out. America's justice system has for so long been a shining light of equality in the world. And we must safeguard this impartial justice system now more than ever. Becoming more like China won't stop China.
▶ 0:35:36It won't work in our court system and it won't work in our trade But it's a reasonable concern. Our democracy has been under fire by wannabe authoritarian Donald Trump and his White House cronies. The very big guys who could benefit from all the proposals I just mentioned who do not care about justice and the rule of law.
▶ 0:36:01These folks are the ones who let Democratic senators get tackled to the ground at news conferences and who block members of Congress from federal facilities. These are the leaders who tell the DOJ to investigate members of Congress who dare criticize the president and who nominate far-right MAGA loyalists like Emil Boie to federal judgeships knowing that these sycopants will put Trump's whims above
▶ 0:36:31the Constitution. And if we start chipping away at our impartial justice system and make it harder to access, Americans will lose their ability to challenge these assaults on our rights against these rich connected oligarchs. We cannot let our system become the playground for the big guys, the oligarchs like Donald Trump and his cronies. That's not justice.
▶ 0:37:00And we must protect the system where no matter their status, anyone can walk into a US courtroom and be treated as an equal. So again, I thank the chairman and our witnesses and I look forward to exploring this important issue. And with that, I yield back.
▶ 0:37:17The gentleman yields back. I now pleased to recognize the ranking member of the full committee for his opening
▶ 0:37:25Thank you very much, Mr. Chairman. Um, and thanks to the witnesses for joining us today. Like its ally, the authoritarian government of Russia, the authoritarian government of China presents a serious threat to American democracy, our economy, and our national security. And China's intensifying economic and technological competition with the US has at times led to pitch battles in courtrooms across America. We've seen cases affecting our national security, intellectual property, and the safety of Chinese dissident living here in the United States.
▶ 0:37:53It'd be great if we had a partner in the White House to help us respond to the threat of these repressive autocratic regimes. But Donald Trump has consistently bragged about his marvelous personal relationships with Vladimir Putin, who he has called a genius for invading Ukraine and has consistently praised.
▶ 0:38:11And President Xi, who Trump calls a brilliant guy who controls 1.4 4 billion people with an iron fist in whom he is praised for sending weaggguers to labor camps, saying this was exactly the right thing to do. Trump's been systematically dismantling the programs that protect America against espionage, propaganda, and malign political and electoral interference by Russia and China while simultaneously dismantling the domestic programs that make us strong.
▶ 0:38:39His administration has been deleting the programs designed to combat malign foreign power interference in our elections, including the Foreign Influence Task Force at the FBI, the Global Engagement Center at the Department of State, the Critical Infrastructure Partnership Council at the Department of Homeland Security, while simultaneously cutting billions of dollars in critical foreign aid to poor countries for development and democracy assistance and for humanitarian which
▶ 0:39:09China is now gladly taking up in our place. They are filling the void left by Donald Trump's abandonment of the space of foreign assistance. Trump, meantime, has been systematically destroying Radio Liberty, Radio Free Europe, Radio Free Asia, and other broadcast vehicles that we use to counter Chinese and Russian propaganda and disinformation all over the world.
▶ 0:39:32Trump has put Kerry Lake in charge of world communications, an election denier, a January 6 denier, an all-around mindless repeater of garbage conspiracy theories and lies totally consistent with the Chinese and Russian agendas for the destruction of American democracy. This hearing is important, but it ignores the structural shift in our government in favor of the autocracies and kleptocracies who are Donald Trump's political soul brothers.
▶ 0:40:02It is also, of course, a distraction from the mounting failures, scandals, and embarrassments of this administration. Republicans this month passed a bill to throw 17 million Americans off of their Medicaid health insurance. The recision package Congress passed last week cuts a billion dollars from public broadcasting and billions more from foreign aid. All of which is nothing but music to the ears of propagandists and foreign recruiters for China and Russia.
▶ 0:40:30Meanwhile, Trump is refusing to release um the Epstein files, more than 100,000 documents, which he was demanding for years in order to blow the lid off of what he and Pam Bondi and Cash Patel and Dan Bino and the mega media were describing as a massive global child sex abuse and human trafficking ring for the rich and powerful.
▶ 0:40:58Bondi, acting under the direct supervision of Donald Trump, ordered more than a thousand FBI agents to work as part of continuing 24-hour shifts pouring over uh more than a 100,000 documents in the Epstein file, photographs, videos, emails, and texts.
▶ 0:41:19They were instructed to immediately flag all references to Donald Trump, all appearances of Donald Trump and all images, likenesses, pictures, and videos of Donald Trump. At the same time, Cash Patel has been administering loyalty tests and lie detector tests to FBI agents.
▶ 0:41:42So, this is a profoundly troubling and suspicious turn of events as Donald Trump seeks to sweep the whole thing under the rug and our colleagues in the majority have now cancelled all bills because they don't want to go before the rules committee to have to face more votes on whether or not to release the Epstein files. So, we're examining the threat from China as though Donald Trump is not seeding more global power to China every single day. But he is.
▶ 0:42:10During his first term, he received millions of dollars personally from the Chinese government in state-owned companies to say nothing of the valuable trademarks Chinese authorities rushed to grant him and Trump family members. In exchange, he opposed sanctions against Chinese telecom companies and banks, even when they threatened our national security. He even tried to cancel military exercises with Japan and South Korea because Russia and China voiced objections to it.
▶ 0:42:38His second term has seen more catering and appeasement to the autocrats. Over the last six months, the administration has weakened America's soft power abroad by defunding foreign aid programs systematically and closing embassies. It's hurt America's economy with illegal and arbitrary tariffs that leave us isolated and hless in the world.
▶ 0:43:01In his second administration, Trump appears to be hellbent on remaking his administration in the image of she's regime, cracking down on media outlets he disapproves of, destroying academic freedom with attempted hostile takeovers of colleges and universities, including America's oldest university, Harvard, attacking attorneys for representing clients or causes he disfavors, purging libraries, and censoring books.
▶ 0:43:26sending masked agents in unmarked vans to arrest foreign students without arrest warrants for voicing opinions he disagrees with. Shipping people to El Salvador's notorious prison of torture and using AI to surveil individual social media posts and to create a mega database of all Americans information.
▶ 0:43:48Look, in America, everyone is allowed to petition the court for relief, regardless of the depth of their pockets or their country of origin. Making it harder for litigants to access the courthouse doors, even in the name of strategic competition with the foreign power, would make us less like America. That's not acceptable, obviously. Yet, that's exactly what some have suggested.
▶ 0:44:08instead of actually developing government policies that make us strong versus China and prevent illegal subversion and interference from China in Russia. In the context of our competition with China, we should never forget that those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety. That's Ben Franklin. This has been a matter on which there's been strong bipartisan agreement in the past.
▶ 0:44:33I hope Republicans and Democrats on this committee can continue to uphold this basic yet vital framework as difficult as Donald Trump has made it. I yield back the balance of my time.
▶ 0:44:43I thank the gentleman for uh his opening statement and I will note that in September we have uh both the FBI director and the uh the AG coming. Uh so we are not ignoring any of your concerns and I thank the ranking member. Without objection, all other opening statements will be included in the record. It's now my privilege to introduce uh our witnesses. And uh if you don't mind, I'd like to go out of order a little bit.
▶ 0:45:13We have the gentleman from North Carolina, Mr. Moore, here to introduce his witness.
▶ 0:45:20You could use your w
▶ 0:45:23You don't You don't get that on this committee, but we we will we would like you to introduce your your witness. Well, well, thank you and good morning. It's an honor uh to introduce a constituent of mine, uh Brad Mohler, who's going to be testifying before the committee, and I'll read briefly about his bio, and then I'll I'll just talk like we do from North Carolina about him. Uh Brad is the marketing communication strategist with uh with more than 35 years of experience, and he works presently for Charlotte Pipe and Foundry.
▶ 0:45:50If you like pipes, uh if you've ever drank water, then you probably drank out of one of their pipes. Uh they're the leading producer of pipes in the United States. They're a fifth generation company based in Charlotte. They were founded, I believe, in 1901. You weren't there then, though? I don't think so.
▶ 0:46:06Not not quite.
▶ 0:46:06But uh but but Brad's got a very uh a very distinguished background. He actually was in Washington for 10 years where he worked for USAID in the Bush administration uh handling the uh he was the desk officer in managing foreign aid programs for Afghanistan and later for Central and Eastern Europe after the 1989 fall of the of the Berlin wall.
▶ 0:46:28He then later went to work for uh the late Michael Dver who was the former deputy chief of staff to President Reagan on a variety of public affairs, international relations and trade issues. and he is extremely active in in in in the community. He is known internationally really as an expert on trade issues and I can tell you I consider it a real um a real honor that to have Brad in our you know back home to be one of my constituents and this company has such an amazing reputation.
▶ 0:46:56But if you want to know, if you want to find out information about how trade is affecting businesses right here, how unfair trade is hurting businesses and c and and and causing job loss, you have an amazing expert to testify today. So, I'm proud to have a fellow Tar Hill from the great state of North Carolina here with you today and appreciate the uh committee hearing from him. So, uh treat him nice if you don't mind.
▶ 0:47:19Thank you. Thanks. Thank you, Mr.
▶ 0:47:22Thank you. And I promise to treat him nice. As a matter of fact, uh I consulted with JM Eagle of California and uh they believe that you are a superb witness uh since you're the two competing top two. Um and with that uh I'd like to u introduce Miss uh Dela Dela Briier. Hopefully I got that close to right.
▶ 0:47:49who is a senior fellow at the Foundation for Defense of Democracy, a think tank focusing on national security, foreign policy. Her work at FDD focuses on China policy. Miss uh uh also is the co-founder of Horizon Advocacy, a consulting firm focused on the imple implications of China's approach to geopolitics. Welcome, Mr.
▶ 0:48:18Julian Coup is the faculty director of the international program at the uh Maurice A. Dean Distinguished Professor of Constitutional Law at the uh the university's Maurice Dne School of Law.
▶ 0:48:38Professor Coup research is focused on the relationship of international law, the US Constitution, and China's relationship with international law. I think Mr. Bradford Müller has been well introduced and we're thrilled to have you here today. And lastly, uh we go to Mr.
▶ 0:49:05Uh Dlesal thank you. Deil um who is uh the Steven A. Kosen Professor of Law at the University of Pennsylvania. Uh, Professor Deil is uh is also holds appointments as a professor of political science and director of the center for the study of contemporary China at Penn.
▶ 0:49:36His research focuses on China's engagement in international order, law and legal institutions and their relationship to the politics and policies of China and the US China relationship. We welcome all of our distinguished witnesses and pursuant to committee rules, I would ask that you rise to take the oath. Customarily raise your right hand.
▶ 0:50:06Do you swear or affirm that the under penalty of perjury that the testimony you're about to give is true and correct to the best of your knowledge, information, and belief? So, help you God. Thank you. Please be seated. Let the record uh reflect that all witnesses answered in the affirmative.
▶ 0:50:25For all the witnesses, please be aware that although we ask that you stay within five minutes, your entire opening statement along with additional material that you either have today or that you can supplement uh will be made in order and permanent part of the record. I thank you and uh Miss Delibri uh it is not Briier, it's your five minutes. Thank you for the opportunity to testify today.
▶ 0:50:55It's an honor to be speaking before you and the committee and alongside my distinguished co-witnesses. Beijing competes with co-option, not confrontation. The Chinese Communist Party does not directly attack its adversaries systems. Instead, Beijing seeks to supplant them, subvert them from the inside such that they advance Beijing's agenda rather than obstructing it.
▶ 0:51:19In the military domain, for example, China positions to control critical information systems, value chains, even political stakeholders such that it can decide where missiles are positioned and how they're perceived rather than having to launch them itself. In trade, China has not sought to supplant the World Trade Organization, for example. Instead, Beijing has sought to manipulate it by holding others to its rules without following them itself, such that China can weaponize international free trade.
▶ 0:51:48And inside the United States, the Chinese Communist Party uses the American legal system to advance Beijing's agenda, punish its opponents, and neutralize US defenses. Benefiting from the reality that China's centralized, opaque system allows it to outresource competitors in courts, to co-opt key stakeholders, and to manipulate information.
▶ 0:52:08This poses a threat to American security and Offensively, Beijing works to shape US laws and regulations and their implementation in many case cases via US entities that have been co-opted by dependence on or resources from the PRC. Beijing has also proven its willingness to use the US legal system to punish those who stand in its way. Beijing does so, for instance, with SLAP lawsuits that are intended to censor and intimidate critics by burdening them with costly legal defenses.
▶ 0:52:39Beijing also does so with IP lawsuits that through the discovery process granted access to valuable technology. And on the flip side, China provides IP litigation funding for its companies in order to protect them from facing the consequences for their tech theft. Beijing also defensively games US laws and regulations, circumventing and neutering American efforts to defend against Chinese bad practices.
▶ 0:53:03In response to US tariffs and other trade restrictions, for instance, China trans shship ships through third party countries, often obscuring country of origin. China also localizes in countries that have preferential trade relationships with the United States. And China localizes in the United States. Doing so allows Beijing not only to avoid US trade restrictions. It also allows China to benefit from preferential policies that are intended to support US domestic and partner industry.
▶ 0:53:31Moreover, localization in the United States allows Beijing to maintain and to expand its united front. The network of co-opted stakeholders through which it undermines the US system from the inside. This entire program, offensive and defensive, benefits from Chinese government resourcing directly and indirectly. The Chinese state provides the resources necessary for its agents to outlast and outspend their competitors and their targets in US courts.
▶ 0:53:59The Chinese state also provides subsidies and guidance for goout companies such that they can expand their presence abroad. And the Chinese state provides policy insurance mechanisms that are intended to de-risk in d-risk investments that might be vulnerable to regulatory hurdles as well as instructions for navigating US procurement and policy. Because Chinese abuse of the US legal system is systemic, it demands a systemic response.
▶ 0:54:24Tactical measures like anti-slab legislation and protections to defend American companies from exposing their IP to China via discovery are important. But the US response cannot end there. Chinese and Chinese backed entities should have increased information sharing and transparency requirements when bringing cases. Those receiving direct or indirect funding from the Chinese government should face a higher pleading standard in the US. So should American entities that work with them.
▶ 0:54:49US-based actors that engage with Chinese statebacked and government linked players operating in or importing into the US market should have to disclose as much. law firm and lobbyists that work with those entities should not be eligible for US federal government funding or defense industrial-based procurement. More generally, sovereign immunity should not be extended to PRC entities. Foreign entity of concern provision should be expanded to apply to all government authorities and support programs and strengthened with presumptions of denial.
▶ 0:55:18Across the board, the chi the definition of a Chinese entity should be tightened such that Beijing cannot circumvent through shell companies, joint ventures or China is an adversary. This has been internalized in the United States if belatedly. So has the strategic imperative of decoupling from China economically and industrially. But to do that, the United States also has to decouple its legal system. Thank
▶ 0:55:46Thank you, Professor Coup.
▶ 0:55:50Thank you u Mr. Chairman, Ranking Member Johnson, and distinguished members of this committee. Thank you for this opportunity to address what I call China's asymmetric lawfare challenge to the United States judicial system. Um I just want to define lawfare as a term for us to understand here. Lawfare is the systematic use of judicial proceedings to accomplish strategic or military goals, political goals. This involves manipulating legal processes to undermine, discredit or impose substantial financial burdens on adversaries through judicial mechanisms.
▶ 0:56:22The Chinese party state lawfare demonstrates consistent patterns. Initiating entities maintain a sensible independence from the Chinese government. Chinese plaintiffs often retain most prestigious the best US law firms to represent them. And even if their litigation is often in the preliminary phase and doesn't uh it will impose substantial costs on defendants.
▶ 0:56:43I call these tactics asymmetric lawfare because China is exploiting the weaknesses in its own legal system to gain advantages in US courts while the US and US plaintiffs cannot reciprocally use China's legal system for its own strategic goals. Uh these tactics that we're going to discuss here can only really be employed by China and never by the United States.
▶ 0:57:06And I was China's lawfare raises particular concern uh because China's unique control over its private sector through stateowned banks, communist party cells and United Front partnerships means ostensibly private Chinese companies are vulnerable to being co-opted to serve the party states political goals. I want to give two examples of what I call Chinese party state lawfare to illustrate the problem. The first case is from Long Island where I'm from.
▶ 0:57:35Uh it involves uh Maju, a qu Muslim activist who has testified before Congress and the UN against China's repression of his ethnic minority within China. He was served papers in Nassau County Court in New York State seeking enforcement of a $12.5 million judgment uh that was issued in China. Uh Ma claims that this judgment was fraudulently obtained and that he couldn't defend himself before fleeing China.
▶ 0:58:02Despite this, the court in Nassau County ordered Ma to pay the full $12.5 million court judgment based on the Chinese court's ruling. This is not isolated. US authorities have identified at least seven similar lawsuits filed by Chinese entities over six years with three under invest FBI investigation that's reported. And more broadly, Chinese companies have increasingly pursued commercial litigation US courts as plaintiffs, not as defendants.
▶ 0:58:30and uh often against Chinese nationals who happen to also be wanted by the Chinese party of state for either uh claims of corruption or maybe for uh political um opposition to the party. So that's one example I think of the kind of lawfare that we're up against.
▶ 0:58:47Another case um from California uh Maadong's the former chairman of the communist party uh Lee his secretary Lee Ray became a prominent critic of the communist party uh at the end of his life and uh Mr. Lee agreed with his do through his daughter to donate his personal diaries to Stanford's Hoover Institution. Um and after his death in 2019 though the widow of Mr. Lee in China filed suit in Beijing claiming ownership of the diaries.
▶ 0:59:18The Beijing court ruled in Miss Jong's favor, ordering Stanford to return the original diaries despite Stanford's attempt to defend itself. And Stanford argues that it received inadequate notice in Chinese courts and was denied an opportunity to contest when it tried to appear. Miss Jong who has recently passed away um but sued in US court alleging copyright infringement and seeking title based on the Beijing court judgment.
▶ 0:59:44Uh the US trial court uh allowed some of her claims to proceed and the case dragged on for over has dragged on for over six years um five to six years. Um and it demonstrates even if it doesn't result in a positive judgment or successful judgment for um Ms. strong. It demonstrates some of the ways in which a Chinese party state uses lawfare for ideological purposes beyond just harassing opponents.
▶ 1:00:09Furthermore, it raises a different problem which is uh Miss Miss Jong is very unclear the sources of her funding. She was a widow uh without any sort of obvious means of wealth and she funded a six-year massive lawsuit in California courts which uh went on for years where Stanford has the resources to defend itself but not all US defendants would necessarily uh be able to do so. So I want to uh close by discussing some possible legislative solutions.
▶ 1:00:38One would be uh taking on the American Law Institute's proposal to change the rules in the United States for enforcing foreign court judgments to require reciprocity before enforcing a foreign judgment. Um or at least change the rules to require foreign uh someone like defendants to mis uh to essentially allow defendants a better chance to defend against Chinese court judgment enforcement.
▶ 1:01:01And finally, I think there are things we can do to bolster disclosure of foreign funding of litigation through third party litigation or through amendments to the Foreign Agent Registration Act to address litigation funding. These reforms will protect American court's integrity from manipulation by the Chinese Party State while preserving what makes our legal system exceptional and valuable. Thank you for your
▶ 1:01:25Thank you, Mr. Muller. Chairman Isa, Ranking Member Johnson, and members of the committee, thank you for inviting me to testify today. Charlotte Pipe and Foundry is the nation's leading maker of cast iron and plastic pipe and fittings for plumbing. We're a fifth generation family-owned business.
▶ 1:01:45We've been in continuous operation in the United States for 124 We employ 1,800 associates and through our wholly owned subsidiary, Nenina Foundry, we have another 1,000 uh employees spread across 11 plants uh across the United States.
▶ 1:02:04In 2017, we filed ADC CBD petitions through our trade association against imports of cast iron uh pipe and The Department of Commerce determined that Chinese exporters had undersold and subsidized cast iron pipe in the United States up to 345% less than fair value. For cast iron fittings, commerce determined the Chinese had undersold those products up to 494%.
▶ 1:02:34Duties to counteract these unfair trade practices have been in place since August of 2018. Over the last seven years, unscrupulous foreign entities have turned to trans shipping piping fittings through third countries and deploying other forms of evasion and customs fraud to obscure the true origin of their products to avoid paying these duties. The Enforce and Protect Act or EPA grants US Customs and Border Protection tools to to combat customs fraud.
▶ 1:03:06In the seven years since our orders were issued, we have received 10 positive EPA determinations of trans shipping against producers of our products, primarily in Malaysia and Cambodia. When customs investigated the locations of these alleged producers, they found an empty warehouse, a bus stop, even a massage parlor, but no foundaries.
▶ 1:03:28Despite customs good faith efforts, they have been unable to stop the illegal flow of These entities have no intention of ever paying the duties. When caught trans shipping, these companies simply dissolve and the bad actors reconstitute under a new shell company and resume their unlawful activity.
▶ 1:03:47Chinese shippers have been so successfully evading US trade enforcement that they freely advertise their capabilities to quote avoid high duties by exporting goods from China to Southeast Asian countries where we change containers and then reexport to the destination Multiple news outlets are reporting on the many ways Chinese companies exploit gaps in domestic enforcement to bypass tariffs, duties, and other trade restrictions.
▶ 1:04:15I was quoted in the front page story of the New York Times on May 27 lamenting the whack-a-mole nature of the process of tracking down these fraudulent shell companies and shutting them down only to see them right back in business under a new name. CNBC uncovered a quote of illicit activity that's propping up these shipments from China. Reuters wrote about quote Chinese exporters offering sweet deals to US businesses that come wrapped in fraud.
▶ 1:04:46The Financial Times reported on how quote Chinese exporters are stepping up efforts to avoid tariffs by shipping goods via third countries to conceal their true origin. Evasion and trans shshipment have be have been so successful that customs effort to collect duties has become feudal. Based on our calculations, Chinese producers of our products have successfully evaded more than $44 million of dumping duties, money that they have robbed of the US Treasury.
▶ 1:05:16And we have spent $7 million of our own money filing trade cases and EPA petitions in an unsuccessful attempt to enforce US trade law. Customs simply does not have the tools to overcome this determined fraud, and current penalties for such behavior are woefully to address this.
▶ 1:05:36Uh M uh Representative Boss and Representative Su have referred to the House Ways and Means Committee the Fighting Trade Cheats Act to strengthen enforcement against trade fraud. This bill attacks evasion of ADCBD orders by increasing penalties, denying a person and their affiliates engaged in fraud and importer of record number and allowing private enforcement action to gain immediate injunctive relief against illegal trade flows.
▶ 1:06:07To put it bluntly, the AD CBD process is broken. Without far stronger remedies, industries will be reluctant to undertake these cases. The cost to file and win these cases are exceedingly high, and the promise of relief has become non-existent in the face of lack trade enforcement. I'd like to thank Chairman Isa and Ranking Member Johnson and the committee again for investigating these threats to to American economic security and for allowing me to testify today.
▶ 1:06:37Thank you, Professor Dal.
▶ 1:06:41Uh thank you, Chairman Isa, Ranking Member Johnson, members of the committee. Thank you for the opportunity to testify. I'm going to address two types of concerns that I think arise in the context of what would be described as problematic uses of US courts and legal processes more broadly by entities linked to the PRC or the Chinese Communist Party. The first category is essentially what one might call abuse, targeting individuals and entities in lawsuits brought against uh brought in the US and US courts.
▶ 1:07:09for example, against exiled dissident or US companies that are rivals of favored Chinese companies or that attempt to deny US parties access to US courts or to the application uh or the attempted application of Chinese law or enforcement of Chinese judgments in way that harm ways that harm such parties interests. The second kind of problem is what one could call avoidance of accountability.
▶ 1:07:32that is Chinese parties seek to avoid the application or challenge the applic challenge the the validity of US laws either through keeping cases or evidence out of US courts or by avoiding the application and enforcement of US law. So how to address these problems? Well, it's challenging.
▶ 1:07:50And the challenge stems in part from the fact that the problematic cases, and they do exist, are not facially or easily distinguishable, certainly not at a wholesale level, from many ordinary claims that should be allowed to proceed in the US under principles of applicable US law and fair access to justice. These are things that should be heard in our courts and often align with the interests of US parties um indeed of US nonparties to cases that have similar interests.
▶ 1:08:18US courts have a number of tools available to deal with these problems. Some of them might be sharpened, some of them might be used better, but they exist and they have been used often quite well uh and are better than many of the alternative more broadbrush or wholesale tools that might be contemplated. So in terms of of vexacious litigation targeting dissident in exile or disfavored companies for the benefit of Chinese companies, US courts can and have evaluated the claims in individual cases, sometimes finding them credible, sometimes finding them not.
▶ 1:08:48US courts can dismiss cases and impose rule 11 sanctions, something which perhaps they should do more often. They can deny abusive or burdensome discovery requests, easy enough to do under the usual rules of US discovery in proceedings in the US. and requests for production of evidence for use in Chinese proceedings, especially when they come from parties or individuals rather than courts in China could be scrutinized more closely, tightening in effect the 28 USC 1782 process.
▶ 1:09:18The US can and is increasingly going to have to deal US courts are going to have to deal with the question of recognizing or not recognizing anti-suit injunctions. China started to issue these particularly in the Fran SEP uh cases for technology.
▶ 1:09:33form non-convenience motions which are often uh attempted by Chinese parties to get cases out of US courts can be denied and are often denied on the grounds of the public interest in the US and having US parties bring their cases and applying US law or on the basis of the burdensome effect on US-based parties of litigating in China or on a judgment in the particular context in which a case would be litigated in China given the parties the courts uh and the nature of the claims uh can decide that this would not be an adequate or alternative adequate and available alternative
▶ 1:10:03form in a Chinese court. US courts can also use choice of law rules to deny the application of Chinese law whether it's inappropriate or where such law would offend US public policy. We see this going on with respect to blocking statutes where US courts have been unwilling uh to allow Chinese parties to plead state secrets law, data or cyber security laws or personal information protections laws as reasons for not to comply with discovery requirements.
▶ 1:10:30US courts can decline to enforce problematic Chinese court judgment rules and can invoke notions of reciprocity and comedy to restrict such enforcement either retail or wholesale given the lack of Chinese enforcement of US judgments in many cases. Uh and US courts have and do uphold relevant US regulatory laws and their application against Chinese parties challenges. Think of CPHAS decisions, PCAOB disclosure requirements, Huawei's exclusion from markets for national security reasons, the Tik Tok ban, and so on.
▶ 1:10:59Here I would note the US sovereign and official immunity doctrines and limits to the extr territorial reach of US statutes have taken away some methods that might be available for dealing with problematic Chinese behavior. But the point here in all of this is the problem of abuse and avoidance of accountability. Um the tools are there uh and the legal tools we have or could readily imagine uh being available are quite suited to the kind of granular factecific and case specific analysis that courts are suited to do.
▶ 1:11:28more broadbrush approaches I think have uh challenges and problems. They risk embedding in US law the idea that because abuses by Chinese actors can and sometimes do occur. US law and courts must assume that they do occur that is odd that is at odds with notions of due process and fair access to justice um and harms the interests of US parties.
▶ 1:11:48things, disclosure requirements or other measures that would impede access to US courts um would create uh quite messy mini trials on collateral issues of the degree of entanglement with the Chinese state. This is a very complicated issue uh that that could be overexpansive and chill the bringing of legitimate claims even by US parties that happen to have some limited connection to China.
▶ 1:12:13measures explicitly or clearly targeting China, risk accelerating a spiral of tit fortat moves by China that would indeed adversely affect the interests of the US and US parties. Those may be costs worth bearing, but they are costs that need to be calculated. They also risk making more credible China's narrative that US law and courts are political tools wielded to keep China down and serve US
▶ 1:12:35and thank the gentleman.
▶ 1:12:36Thank you.
▶ 1:12:37Uh the remainder of your opening statement will be placed in the record. Without objection, Mr. not will be permitted to participate in today's hearing for the purpose of questioning the witnesses if a member yields him time for that purpose. And we welcome the gentleman.
▶ 1:12:53Thank you.
▶ 1:12:54I now recognize the chairman of the full committee, Mr. Jordan.
▶ 1:13:02Pursuant to the rules, the gentleman is
▶ 1:13:04Thank you, Mr. Chairman. It's my privilege to be here. Uh I'm familiar with one of the witnesses and the company that he comes from, Charlotte Pip and Foundry. I've had the the privilege of touring their facilities. I know them well. And this is a company that does it the right way. They put their their heads down. They do great work. They deliver worldclass products that will compete against anybody. Uh but what any company cannot compete against is fraud, manipulation, unfair markets, um lack of free markets. And Mr.
▶ 1:13:32Miller, thank you for coming to the test to come and testify today. And I want to I want to be uh quick and to the point. What legislative proposals are you familiar with that could protect industries like yours that benefit not only just North Carolina but the entire country and then the world by extension? Thank you, Congressman.
▶ 1:13:50Uh in addition to the Fighting Trade Cheats Act, which I mentioned, which would impose uh stiffer penalties on these bad actors, uh take import licenses away and allow us a private right of action to enforce US trade law. There is also the protecting American industry and labor from international trade crimes act and I urged the congress to pass and fund that which would stand up a trade fraud crime unit at the department of justice.
▶ 1:14:19Uh the bill calls for $20 million in funding. As I mentioned in my testimony on our two products alone, we believe more than $40 million has been uncollected in uh duties by customs. So if they just had been able to collect on our products, we could double the funding of this trade crime unit to $40 million.
▶ 1:14:41We believe that in order to stop this behavior, we have to start prosecuting some of these bad actors because they continue to set up these shell companies. When confronted, they dissolve them and they're right back in business with a new shell company.
▶ 1:14:57And in your experience, sir, how do these foreign entities gain entry into the United States? Do they have participants in the United States? Are there are they blind actors? Are they willing and knowing? What's your
▶ 1:15:08Uh there are US-based importers that engage in this fraud and and we know some of those uh Glendale Fire in California is one. Um Wells in Chicago, Wells Plumbing is another. These are US-based importers that are engaged in this uh illicit activity. And those are the the companies that we should be targeting uh with something like the Pale Act.
▶ 1:15:33And in regards with your experience, sir, given the amount of fraud and sort of the the suppressed pricing that the Chinese Communist Party engages in, how responsive have the United States authorities been fielding your complaints in this area?
▶ 1:15:46Well, we tip our hat to the to customs. In fact, we met with them last week uh our trade association and we have engaged very cooperatively with customs and they do their best to enforce the the law. We try to educate them on our products, how to spot the fraud uh fraudulent products coming in and so we we uh are very pleased with customs. They just don't have enough tools to stop this behavior.
▶ 1:16:11Right. Professor Coup, let me let me transition to you quickly. What are ways that we can disincentivize the Chinese Communist Party on a macro level from continuing to engage in this? Because it's not just Charlotte Pipe and Foundry, obviously, it's everything from biioarma to engines to computing. The the theft and obstruction is real and across every sector. How do we dissuade them from continuing this?
▶ 1:16:34Uh, thanks. You know, this is a there's no easy answers here. I think I wish there was a silver bullet. I think passing the legislation um could certain certainly help. I do think that uh making clear that the first and foremost that we take these things seriously then that we force um bad actors to disclose the sort of the network of funding. The problems in trans shipment is some of the bigger problems we see is the way the Chinese party stays intertwined with each other. Yeah,
▶ 1:17:01we have to assume unfortunately that a lot of what look like normal private companies we want to welcome here to the United States have to unfortunately play by different rules because we can't trust them because they're intertwined with the party state at home. And I think it's just unfortunate that's the way we have to be tougher. We have to demand greater disclosure of connections um between uh Chinese companies and uh the party sort of or partnership groups that they're involved with.
▶ 1:17:29Is there a way to separate doing business with Chinese companies from the Chinese Communist Party?
▶ 1:17:35I mean, I think there is. I mean, I think we do business with we should do business with whoever. But I think we have to assume that the those companies which are private much of the time can be co-opted very quickly in a way that we can't in the United States force a private company to do something that the government wants us to do wants it to do where so we have to you have to proceed cautiously. It's really just it's not the United States government's fault.
▶ 1:17:57It's China's government's fault for creating this weird web of influence and control that makes unfortunately even honest Chinese companies suspect.
▶ 1:18:07Yep. To the witnesses. Thank you, Mr. Chairman. I yield back.
▶ 1:18:10I thank the gentleman. Uh I would note for everyone in attendance the reference to HR 1284, which is a bipartisan bill for the private right of action. Just to make sure everyone can look that up. I thank you, Mr. Muller, for mentioning it. With that, we go to the ranking member, Mr. Johnson, for five minutes.
▶ 1:18:30Thank you, Mr. Chairman. For many years, the American judicial system has been a shining light of fairness and impartion impartiality to the world. A system independent from undue influences or of the other branches with checks and balances that promote accountability.
▶ 1:18:49Professor Dil, can you please walk me through some of the specific attributes in the US judicial system that broadly speaking make it a fairer venue to resolve disputes compared to the Chinese court system?
▶ 1:19:08Could you turn your mic on?
▶ 1:19:10I'm sorry. There are um you know the contrasts are are are quite strong. Um the US judicial system is of course open to pretty much anyone who has a cognisable claim, who has a claim that is covered by uh US civil law. Uh regardless of national origin, regardless of perhaps the motives behind the lawsuit uh and US courts have historically been quite insulated from political pressure.
▶ 1:19:36Of course, in every system, there is some link between politics and courts. Courts apply the laws adopted by political bodies, Congress in our case. Uh and judges of course are selected even in our system by um political processes. But the the contrasts remain profound.
▶ 1:19:54One of the unfortunate developments in China in recent years has been a ratcheting up of the position that the that courts should take into account party policy and national interests and should be accountable uh to the party should be subject to u various forms of of towing the line as it were.
▶ 1:20:14Well, let me stop you right there because now we're starting to see some blending. Uh, you know, unfortunately, many of our judges have been under vicious attack from our executive branch and MAGA loving members of Congress.
▶ 1:20:29When judges make a ruling, Donald Trump doesn't like our felon in chief, takes to social media, and uh and he bashes and slanders that judge in a way that often leads to threats of violence from Trump's base. At the same time, his cronies in Congress raced to file articles of impeachment against that judge without a legitimate uh shred of evidence of a crime, a high crime, or a misdemeanor.
▶ 1:20:59Professor Dil, you've spoken about the unique, you were speaking about the unique qualities of the judicial system of the United States that make it among the fairest systems in the world. But if we keep politicizing our courts, like threatening to punish or fanning the flames of violence against judges who dare rule against President Trump or his interest, how could this impact the impartiality and dependability of our courts in the long term?
▶ 1:21:30That obviously is a concern. I've spent a great deal of time watching Chinese courts for the last 30 or 40 years and I have seen progress and backward motion on this issue.
▶ 1:21:45um and the form in which the erosion of the shoots of judicial independence and fair-mindedness of Chinese courts and and here the accomplishments were you know quite impressive for for several decades have been under threat because of the the demand that courts take political uh concerns more directly into account. At one point the president of the Supreme People's Court in China several years ago said that party policy was one of the principles along with law that should decide cases. We've seen judges face lifetime responsibility for so-called erroneous decisions.
▶ 1:22:15Uh and we've also seen populist pressures on courts. People in the streets expressing opposition to the way courts are ruling. Those are the hallmarks of threats to court independence and judicial independence. Stepping outside my lane as a Chinese law expert here. There are things that look to me disturbingly familiar going on in the United States.
▶ 1:22:35Thank you. Uh some proposals I've heard from my colleagues during my tenure on this committee would diminish access to the US court system putting logistical and huge financial barriers in place for folks for trying to bring a lawsuit. This would mean effectively that uh only the wealthy or the well-connected could fully take advantage of our judicial system to resolve their disputes and the little guys would be left behind.
▶ 1:23:03Professor Dil, you are an expert in the civil justice system. Is it a good Is it a good idea to make this system harder or exponentially more expensive to access? And if we start mandating that anyone who wants to bring a suit has to pay exorbitant fees to get in the door. Uh how could that impact our impartial system of justice in this country?
▶ 1:23:29Um I see my my time is expired. May I
▶ 1:23:32Of course. Um I mean I think a cornerstone of the US US judicial system is fair access to justice. You should be able to go to court if you have a legitimate claim. And that applies to Chinese parties as well as US parties. We've talked about how to screen that out. And I think there are many things either in the form of fees or in the form of creating barriers where you must prove the legitimacy of your claim. We talked about some of the disclosure requirements which could chill and impede access.
▶ 1:23:59One of the things I think that US courts, as I mentioned earlier, could do to deal with problematic issues from China is to uh is to take measures to dismiss claims before they proceed to a point of being highly burdensome to parties. Uh I would advocate that, you know, we look at that stage rather than closing off litigants wherever they're from before they can get through the courthouse door.
▶ 1:24:20Thank you. And I yield back. I think the gentleman, if I could ask your indulgence for just one clarification. Uh, professor, you you mentioned political pressures in and the nature in both countries. Briefly, can you simply say is there any real comparison between our lifetime appointment federal judges and their likelihood to rule against the politics that may have in in in gotten them the job and the Chinese government
▶ 1:24:52I'm not sure there's a simple answer to that question. These are obviously matters of degree. I don't think either system exists at a complete poll. As I suggested earlier, there had been welcome signs of progress in China and there's been some but not complete backsliding and I don't think and you know my personal opinion the US uh is where it has been or or should be and I think judges are human beings and they worry about uh the way they are uh uh addressed and discussed by the politically powerful. I think that's probably something of a universal.
▶ 1:25:21I've certainly seen it in China.
▶ 1:25:23Thank you. We now go to the gentleman from Wisconsin, Mr. Fitzgerald, for his
▶ 1:25:27Thank you, Chairman. Professor Coup, the United States maintains a number of sanctions, export controls, or other measures to prevent certain individuals or entities affiliated with an adversarial nation from gaining access to strategic technologies or preventing equipment produced by such persons from being utilized in sensitive uh US A lot of times the uh the sanctions include restrictions on certain property rights and
▶ 1:25:57generally however uh these do not apply to a sanctioned entity's patent portfolio. Meaning a sanctioned entity can continue to license its patents to US-based companies or assert them in court. Some see the uh the circumvention of sanctions and the subsidization of the uh of a sanctioned entity.
▶ 1:26:24So let me ask you uh why have IP rights generally been excluded from other property rights restrictions under US sanctions and how could adversarial nations like China um which I know we've been talking about take advantage of that loophole to uh the detriment of the US innovation or or obviously the other thing discusses our national security.
▶ 1:26:48Uh this is a complicated question. Um I agree that it's it's a strange thing. Obviously it depends on how we design our sanctions regime which this body Congress has designed um but also which is implemented by the commerce department. Um you could have sanctions that are much stricter and that are completely across the board which in some cases would prevent uh you know uh even intellectual property licensing from occurring.
▶ 1:27:13I think that what's going on here is that that people have uh the commerce department or other entities essentially try to make compromises to account for different interests right the licensing is very valuable right it's very valuable uh for US companies in many cases uh to lose that revenue is a substantial and significant cost so that's I think I think there's no legal reason why we cannot impose such rules across the board I think it's more of a practical problem of balancing the different economic and political interests
▶ 1:27:43that we have here in the United States.
▶ 1:27:45Thank you. Uh, Miss Dea Brewer, you've written extensively on China's military civil fusion, I guess you'd call it. Um, and China has utilized companies like Huawei and ZT to advance its made in China 2025 initiative or plan, I guess you'd call it. So, Huawei held over 3,300 active US past patents in 2024, which is unbelievable to me.
▶ 1:28:15And it's generating the company hundreds of millions of dollars in annual licensing revenue. So when we allow some of these state sponsored companies like Huawei to profit off the US patent system either through licensing agreements or injunctions, I mean obviously we're subsidizing the continued kind of theft of American intellectual property and certainly helping to advance China's industrial What what should Congress do about this if anything
▶ 1:28:45um considering the limiting and licensing of asserting the US patents while on certain national security related sanctions list? I think one big challenge that about fighting back against China's military civil fusion strategy and general tech offensive is that we haven't as a system quite caught up to how advanced Beijing is and therefore the leverage it acquires um and the risks of not only China stealing technology but also the US becoming increasingly
▶ 1:29:15dependent on Chinese technology um and the way that that alongside say US investment into the Chinese tech program and more concrete US tech partnerships with China and end up fueling our adversary. Um, and because we haven't recognized that as a system, we haven't imposed restrictions on things like tech licensing from Chinese entities um that are very real threats.
▶ 1:29:39And one potential avenue that the US could take is that where we through fiak restrictions for example um impose barriers on US tech partnerships with China, those could also cover tech licensing um patent partnerships and other IP agreements beyond simply uh formal joint ventures, formal export of technology, etc.
▶ 1:30:03Thank you. So right now I'm chairing the subcommittee on antirust and we've been investigating kind of this cartel-like behavior in a number of US industries where there's collusion. Um however with foreign companies you know you can have an American corporation working with someone in China and it kind of falls into a different category. I was wondering if you had any thoughts on that.
▶ 1:30:26Well, China's entire industrial and we'll call it private sector, but it's not not a private sector, is a cartel because fundamentally Beijing and the Chinese Communist Party control them um through incentive shaping and through direct directives, for lack of a better word. And that means that we should think of Chinese companies, including their outposts in the United States, as being arms of the Chinese system and
▶ 1:30:52Thank you, chairman. I'm out of time yield back.
▶ 1:30:54Thank you, gentlemen. We now go to the ranking member of the full committee, the gentleman from Maryland for five
▶ 1:31:08Uh, Professor DLO, um, you you said that in in China the courts are supposed to decide according to party policy as well as the law, which is kind of amusing. I just finished reading Alexi Noni's book Patriot where he said in Russia they talk about telephone justice to describe either the literal or metaphorical uh coercion that uh the government plays in the decision of particular cases.
▶ 1:31:35Um I'm wondering is this the same thing happening uh in academia in China where scholars and uh deans are intimidated or uh into deciding things according to uh official government edict.
▶ 1:31:53I ask, of course, because we're in a situation now where Donald Trump is trying to coers colleges, universities, including Harvard, uh, to accept his dictates with respect to student admissions, faculty hiring, and curricular and academic content. And I'm wondering if that's something you find in China too.
▶ 1:32:15Uh, the short answer is yes. Um before turning that I want to stress that in in many cases in Chinese courts and many Chinese judges and lawyers uh admirably apply the law fairly and and play their roles uh the way one would hope they would play them and sometimes do so against the kinds of pressures uh that have been long present in China and that seem increasingly present in the United States. I've been dealing with Chinese counterparts in academia, in law, political science and other fields for many years. Uh there have always been restrictions. The restrictions have gotten tighter.
▶ 1:32:46uh the the ability to publish one's work to express one's views are definitely under pressure. Uh the reach of the party and state in into universities uh have shrunk what was once more capacious academic space. Uh there have also been restrictions on Chinese scholars coming to the US which has been a place where they are able to express ideas more freely and gather information. So all of those pressures are there. Uh and as with courts, all this gets a little closer and more personal.
▶ 1:33:12um what go what we are feeling now on American university campuses resonates in uncomfortable ways uh with what I've seen in China that is the pressure uh not only um the concern about whether you will harm your university by saying certain things or the um concern about the loss of the resources necessary to do research are real as well as the interventions in what we hire and what we teach
▶ 1:33:33and are there attempts to impose government edicts and dictates on lawyers and on law firms
▶ 1:33:38in the United States or in China?
▶ 1:33:40In China. in China. Yes, there are there are always restrictions on on on law firms and lawyers. Um, you know, those who have represented dissident uh or targets of of um repressive policies have faced threats to their law licenses. Chinese courts um do have significant discretion not to take cases that that people might bring uh that are politically disfavored. So while while you know this is not Soviet style justice and many many cases are handled in perfectly ordinary ways.
▶ 1:34:10The more politically sensitive the case, the more party and state officials take interest in the case, the less likely it is to get to court or to be handled fairly once there.
▶ 1:34:18I see. So I had the impression that there was very little judicial independence, but you're saying that in a lot of cases in China, the courts operate relatively free from direct governmental coercion or control.
▶ 1:34:30It depends on the type of case, the type of court, and the type of parties. uh but the kinds of things that your question points to the politically sensitive areas things which would be deemed adverse to the interests or preferences are are ones where that is
▶ 1:34:42so we could very easily in America slide into that kind of system where the vast majority of contract tort uh property disputes are handled without any direct political interference but when it comes to constitutional cases the interpretation of executive powers or legislative powers there could be much more political interference
▶ 1:35:01that kind of bifurcation is a hallmark of systems which have only made limited progress toward rule of all of rule by law or that have backslid from robust democratic rule of law. It's one of the things that can be quite insidious.
▶ 1:35:14the the there's Ersence Frankle a a German scholar from many years ago described the idea of a dual system a dual state where some cases are channeled through the ordinary legal process with fair process and other cases politically sensitive ones face a very different uh regime wherein uh the preferences of those in power determine the outcome.
▶ 1:35:36Can you explain the doctrine of true conflict where American courts will sometimes not impose a US law against a foreign entity if that entity's country has a law that's in true conflict with our laws?
▶ 1:35:48Sure. A true conflict situation is where a party subject to the laws of two countries and that often happens with entities or individuals who work in China and here some some border straddling activity. A true conflict is where you cannot comply with one state's laws without violating another. Uh so to take one example from uh from US litigation, the vitamin C uh antitrust litigation where the claim was that Chinese law required price collusion and US antitrust laws of course prohibited it.
▶ 1:36:15We're seeing more of this and I think one of the areas where it may become quite serious is in China's anti-forign sanctions law where they will prohibit companies subject to Chinese jurisdiction from complying with US sanctions whereas those companies are obliged to provide to comply with US sanctions. Courts are going to have to face this and they have to decide what to do.
▶ 1:36:32Uh and the ordinary international legal principles rooted ultimately in comedy are to decide which state has the stronger interest and to apply its law or to refuse to apply foreign law that is repugnant to the public policy of the host jurisdiction, the foreign
▶ 1:36:47Thank you. Yield back, Mr. Chairman.
▶ 1:36:49I thank the gentleman. We now go to the gentleman from Virginia, Mr. Klene, for five minutes.
▶ 1:36:54Thank the chairman. I want to thank our witnesses for being here. As was stated, foreign entities invest substantial sums in litigation, financing, potentially influencing court decisions to align with their interests. There's no greater actor than China engaged in this activity. Additionally, adver ad adversarial governments or corporations linked to them may use this strategy to shape legal outcomes in federal courts, advancing their geopolitical agendas.
▶ 1:37:17This practice raises national security concerns, particularly when it involves targeting sensitive military and commercial technologies or leveraging US disclosure laws for strategic gain. Um, I introduced the protecting our courts from foreign manipulation act which would require disclosure from any foreign person or entity participating in civil litigation as a third party funer litigation funer in US federal courts and ban sovereign wealth funds and foreign governments from participating in litigation finances as thirdparty litigation funder either directly or indirectly.
▶ 1:37:44Uh, Miss Delar Burier, your work has exposed how the CCP uses non-military non-traditional tactics to gain advantage. Do you see strategic use of US litigation as part of the CCP's toolkit and would a bill like uh the one I explained help address that risk? Use of litigation is absolutely a part of the CCP's toolkit. Beijing uses litigation to censor and intimidate its opponents.
▶ 1:38:11Um and there cases of this abound and they not only have harm the direct opponents but they also create a general silencing across um the US where it's simply too dangerous um to speak about even known risks about Chinese entities um because of litigation concerns. Beijing also uses targeted litigation to acquire intellectual property um including through the discovery process.
▶ 1:38:36And importantly, these efforts are in many cases funded by the Chinese government both directly and indirectly, including through, for example, targeted subsidy programs that um support Chinese companies uh dragging out these cases in US courts.
▶ 1:38:51Now, some would argue that adding transparency requirements to civil litigation, like identifying foreign state interests behind a party, might chill access to the courts or create an administrative burden. From a national security and economic standpoint, is there a real cost to doing nothing uh in instead of uh and how would you respond to critics who say greater transparency in litigation is unnecessary or even
▶ 1:39:16I believe there's absolutely a economic and a security cost to doing nothing. I also think that the US has proven out a system evident in for example the FAR regime of having transparency requirements for foreign adversaries and foreign entities that allow the US to protect its security in that direction um without undermining the integrity of the US legal system and that's by having a targeted campaign that a seeks just generally information on the activities of foreign agents
▶ 1:39:46um and is again targeted at foreign adversaries. Professor Coup, I introduced the bill to address how foreign adversaries, especially the Chinese Communist Party, may be using US courts uh as a strategic tool. In your view, how real is the threat of foreign abuse of US courts? And how might Congress strike the right balance between maintaining judicial openness and protecting national
▶ 1:40:08Yeah, thank you. I think the the answer is kind of boring but obvious is disclosure. I think disclosure may create some administrative obstacles, but it doesn't prevent people from bringing cases. We want to allow foreign companies to feel like the US judicial system is open to them, but there's really no reason why foreign government really needs in its rights protected in the same way.
▶ 1:40:31And so disclosing or maybe restricting foreign government involvement in these litigations which they're not actually directly involved in or through third party litigation or at least forcing disclosure I think would go a long way and I don't think would burden uh people from bringing cases. And one last thing I'll just note that it's very unclear that this could happen the other way that US companies could get involved in third party litigation within China.
▶ 1:40:53So it's a little it puts US companies at a Um, according to Westfleet Advisor's most recent report, third-party financing is behind over 30% of US patent litigation. According to Bloomberg, more than one half of US patents are issued to foreign entities, and our country has no record of when or to whom they are transferred. Isn't this a national security and economic security risk?
▶ 1:41:18I just know I for me anyways, I think it is. And I think that we, as we point out, like we require people to register as foreign agents in other contexts. If you're like have a blog or something and you're promoting the views of the Chinese Communist Party, but actually if you're funding a lawsuit, it's so it's not required to be disclosed. It's an odd strange. We can distinguish between bad actors or at least potentially bad actors and just the average person who's involved in a lawsuit. I think there's way our system has proven we can do that and we can do that here as well.
▶ 1:41:48Would we reduce Well, I have 5 seconds left. So with that, I'll just yield back. Thank you, Mr. Chair.
▶ 1:41:54Oh, there's a there's a first. We're getting our time back. Thank I thank the gentleman from Virginia and I go to the gentle lady from North Carolina for her five minutes. Miss Ross.
▶ 1:42:03Uh thank you, Mr. Chairman, and the ranking member for holding this hearing and thank you to all of our witnesses for testifying today. Um I am going to focus most of my questions for Mr. Mueller because we are bipartisan uh cheerleaders for North Carolina and our businesses. I also want to thank Mr. Mueller for your testimony.
▶ 1:42:25um your ideas about what Congress can do better, but also for your service to this country and in particular um at the beginning of your service working for USAID. Um we know how important foreign relations are. Um so you told us that Charlotte Pipe has filed multiple claims against Chinese litigants at the International Trade Commission.
▶ 1:42:51um and that Chinese companies clearly have been dumping products at anti-competitive low prices. I participated with our North Carolina Secretary of State at a North Carolina Chamber event and it's um it can actually just devastate a small company that doesn't have the resources that you do. How much time and money has your company invested in filing these multiple anti-dumping suits at the ITC?
▶ 1:43:19Well, I mentioned previously in my testimony, it's almost $7 million of our own money.
▶ 1:43:24Um, and and another way to answer your question, I was hired by Charlotte Piping Foundry 23 years ago to run the marketing department to be the vice president of marketing, which I did for a number of years, but in 2006, I took on a government affairs role and kind of wore two hats at Charlotte Pipe. In the last five years, I've been working exclusively on government affairs.
▶ 1:43:48Uh so my time and salary has been dedicated to trying to work through these issues both at the state level and at the federal level. Uh and and it continues to occupy I I joke that I shed half my job and I'm twice as busy. So
▶ 1:44:05and small businesses simply couldn't afford to have that kind of advocacy.
▶ 1:44:09No. And in fact, you know, I I also have represented the American Foundry Society. Uh they um they have a thousand corporate members, foundaries throughout the United States, steel, aluminum, and cast iron. 80% of those foundaries are small businesses, 100 people or less. They don't have the resources to fight like we do. And many of them are going out of business. Uh 20 years ago, there were 2,000 foundaries in America, and we're down to about 1,700.
▶ 1:44:38And these are vital for national security. You can't make tanks or planes or ships without
▶ 1:44:45Also, those small businesses by In 2017, Charlotte Pipe discovered that a Chinese manufacturer had stolen your name, trademark, and logo and was using it to sell unaffiliated products in East Asia. Since then, you filed trademark infringement claims in both China and Singapore. Can you tell us the status of those claims?
▶ 1:45:09Yes, thank you for that question. Um, I did testify on the Senate side before Senator Tillis in his intellectual property subcommittee on this topic. Uh, we only discovered by accident that China had stolen our brand identity and was going to market in Southeast Asia as Charlotte Pip and Foundry. There's a building in Shanghai with our logo on the side. uh and a gentleman was passing out Charlotte Pipe business cards at a trade show in Singapore. That's how we discovered the theft.
▶ 1:45:40We had uh we filed to get our IP back in Singapore. We lost but then won on appeal. We also had to hire a Chinese law firm uh at great expense to uh fight for our IP to get it back in China and that is stalled in the courts of Beijing. uh no decision has been made, but the case has basically gone cold.
▶ 1:46:04Uh we can't get any information from the Chinese government, from our uh Chinese law firm as to the status of that case. And so we're and we know they're still going to market uh on Chinese uh websites, you can still see that they're uh going to market as Charlotte Pipe.
▶ 1:46:22Yeah. And just to um not to be too repetitive, but when I went to this North Carolina Chamber event, they brought in two small businesses that have experienced similar um kinds of appropriation of their intellectual property. And those small businesses simply do not have anybody who can stand up for them. So they either have to move on or they have to, you know, find some other way.
▶ 1:46:47And so I want to thank you for suggesting some very concrete bipartisan steps we can take to help write these wrongs. Thank you for your testimony. I yield back.
▶ 1:46:57I thank the gentle lady. We now go to the gentleman from California, Mr. Kylie, for his questions.
▶ 1:47:02Uh thank you, Mr. Chair, and uh thank you to our witnesses for this important discussion, which I think really covers uh two main areas. Uh one being uh the CCP's evasion of uh policy and uh and law uh and and international rules. uh in order to uh press its own advantage. Uh and the second being its manipulation of our legal system in conjunction with its political control over its own uh to like why it has benefited itself at the expense of the United States.
▶ 1:47:29Um I wanted to ask first of all Miss uh Miss Dea Brier um did I get it right? Close. All right. Um if uh you could uh you know comment on how uh this discussion relates to what's uh probably the most important uh issue when it comes to our competition uh with China and that is uh the CCP's efforts to evade expert controls when it comes to leading edge uh semiconductors uh slash you know how they're trying to steal technology
▶ 1:47:59in order to advance their own foundry.
▶ 1:48:04Absolutely. And generally this falls within the category this first category I think you listed of China abusing the US legal system in order to evade and to neuter our defenses. There are offensive things though China also does to this end including for instance using litigation to um obtain tech through discovery.
▶ 1:48:24But the other important thing is that as the US has become increasingly serious about imposing restrictions on China from tech to trade, Beijing has also become increasingly serious and adept at first at the point of framing making sure that there are loopholes um or weaknesses within those restrictions and then at the point of enforcement evading them.
▶ 1:48:45So ba across export controls and other means to restrict tech access, Beijing consistently lobbies and influences in order to make sure that it will continue to maintain tech access. And then of course um there's the network of shell companies of localization efforts of backdoor activity that China engages in in order to directly evade US restrictions that have already been
▶ 1:49:11Uh thank you. you and professor uh coup there's this issue we've also discussed uh where uh you know the US court system recognizes judgments in Chinese courts but uh the opposite is not uh always true uh even though judgments in our courts follow from a legal system that's developed over centuries to assure fairness through things like due process and discovery access to council uh whereas that's uh far from the case uh in the Chinese legal system so why is it that we continue to uh allow that lack of reciprocity
▶ 1:49:42And how might we go about changing it?
▶ 1:49:44Well, this is a big issue. Uh the United States courts have always been more differential to foreign courts than foreign courts have been to the United States court judgments. And uh so it's not just Chinese courts. I think that the United States courts tend to enforce foreign judgments of we just generally US courts generally do this. The other complication is that it's often left to state law. So different states might enforce some slightly different standards and it often is in state courts, not federal courts.
▶ 1:50:12And so state court judges might not be as attuned or worried about or concerned about the issues that we're discussing here, which I think might have happened in the case I mentioned in Long Island. Um so I do think that's part of the problem. I think the uh but there have been efforts and the American law institute years ago did propose that fed Congress adopt federal legislation to require reciprocity for US courts before we enforce foreign court judgments and that would apply to China as well. China itself does have a reciprocity requirement before they will enforce a US court judgment.
▶ 1:50:42So there are propos there have been proposals but it's been complicated. it creates a lot of effort and so but I think that would be the way that I think Congress could get involved here to to create a fairer system for um especially now that I think we see Chinese companies taking advantage of the way US courts give deference to Chinese courts.
▶ 1:50:59How do you think uh China would respond if we passed a law along those lines? I
▶ 1:51:04mean I don't I don't know that this is the top of their agenda for the I think they'd actually wouldn't worry too much about because we would adopt essentially their role reciprocity, right? So I don't think there would have any basis to object to that.
▶ 1:51:16Thanks very much. I yield back.
▶ 1:51:18Would the gentleman yield?
▶ 1:51:19Happy to.
▶ 1:51:20So what what you're saying is they might not be too concerned if we actually had our reciprocity ma match their reciprocity or they would be outraged as they often are.
▶ 1:51:29No. Well, I mean never they could be outraged but they wouldn't have any ba reasonable basis to be outraged. I think the role would be not just the United States but other not just China most countries in the world have a reciprocity requirement.
▶ 1:51:41Yeah. uh we we we use uh rule 26 uh for disclosure by the defendants uh of their third party funding if you will of their defense andor payment. Uh in China, do they have a similar rule and does it require the plaintiff to also
▶ 1:52:01Um I'm not familiar with that specific rule in China. I do know that there have been disputes and it's uncertain the court judgments have uh some Chinese courts have disallowed third party litigation uh funding uh for that agreements that have been disclosed but I'm not sure that disclosures required under Chinese uh court system but I know I do know that Chinese courts some Chinese courts have refused to allow people to proceed if they had a third party litigation agreement.
▶ 1:52:26Okay. So they just outright prohibit it. Well, they not there's no general rule, but I know courts have in China have ruled that it is inappropriate or or not allowed or or prohibited in this case.
▶ 1:52:38Thank you. And seeing no one else on your side for now, we now go to the gentleman from South Carolina. Hopefully, you'll deal with your North Carolina friend as well as everyone else has. It's been pretty good so far.
▶ 1:52:50Mr. Chairman, I couldn't agree more. He's outside the district, but we uh we're in the footprint of Charlotte. I think most of the United States is actually in the footprint of Charlotte.
▶ 1:52:58the gentleman's recognized then.
▶ 1:53:00Thank you, Mr. Chairman. Um, Professor, you you were talking earlier with Mr. Kylie about uh enforcement of judgments, and I'm just curious uh what how would uh what would be the the prudent way in which Congress or the courts could review these judgments in foreign countries uh to ensure that substantive and procedural due process were honored? So I think um the as as professor jello mentioned there are there already standards.
▶ 1:53:30So courts are already empowered to review. The problem is that the the standard I think is too differential. And so I think we the courts should be given a different standard where the presumption is reversed. It could be with respect to certain countries that congress identifies like foreign adversaries like we have congress has identified foreign adversaries. Okay, these standards should not be given for for courts in these countries. That might be one way to do it, right? Um, which I think would be kind of a scalpel, right?
▶ 1:53:59It would it would focus without sort of creating problems with other countries.
▶ 1:54:03So, if you took countries of concern,
▶ 1:54:05Countries of concern
▶ 1:54:06these countries and and you would it be like a denovo or almost denovo review of their procedural and substantive processes to make sure that the the hearing was fair in the in the foreign
▶ 1:54:17Right. I mean, we do have a standard where they do have to meet a standard of fundamental fairness. I think what I'm worried about is a lot of courts just don't do that. And so maybe the way to give litigants even more is a presumption that the uh the party seeking to enforce the foreign judgment was dem has the burden to prove that the the prior judgment was adopted fairly. One of the problems I'll just mention is that it's hard to get access to information on the original court judgment. In China, for instance, it' be hard to travel there. As Mr.
▶ 1:54:45MA discovered he can't travel there because he's worried about being arrested. So creating a presumption of putting the burden on the party seeking to enforce the foreign court judgment or the Chinese court judgment would I think solve a lot of these problems.
▶ 1:54:57In your experience, professor, do you believe that when uh domestic courts are enforcing foreign judgments that it's almost a rubber stamp exercise?
▶ 1:55:07I wouldn't go so far as call rubber stamp, but it isn't as uh I'll just put this way. It's it's not as rigorous as other countries. Now, other countries are much more skeptical of foreign court judgments than on average US courts are. Uh especially I'll include state courts and part of it is there's no federal
▶ 1:55:22Thank you for that. And and to briefly shift a little bit, what do you suggest just overall that Congress, the executive branch or or even domestic companies can do uh to stop China from evading trade controls as an example?
▶ 1:55:36Yeah, I mean this is a this is a real problem. I think the first problem is identifying admitting that the problem exists. Um, and I think like in in educating folks to realize that the that the party state as I call it is intertwined with Chinese businesses. And so even if Chinese businesses don't really want to, they are essentially manipulated often or forced to be participate in a Chinese strategic plan which can be nefarious. And I think that is the first step in sort of getting everyone to be aware of what you can do.
▶ 1:56:06And then we have tools which we can do to harden our system. What I I like to use the term hardwick. We just have to we we shouldn't change our system but we need to make it tougher for manip for foreign make it harder to manipulate by bad foreign actors. I think disclosure education awareness will be go a long way to solving some of our problems.
▶ 1:56:26where the transition shipment problem I think might be the solution might be empowering the people who know best the parties that are being injured by the bad actors to go to court bring their evidence to court because I think we just don't have necessarily enough enforcement resources in the United
▶ 1:56:41right so in the in the instance of the of the piping company that they're much more equipped to to recognize the problems in the industry as it pertains to uh these shipments into the United
▶ 1:56:51right we've adopted this in other mechanisms as a way false claims act and other ways to enforce so giving private actors in who already have the incentives might be a good way to do that uh to make it tougher for trans shshipment and other types of evasion.
▶ 1:57:06Um Miss uh Dela Briier, what um what should US companies and law firms with a presence or operational nexus with China be doing to insulate themselves from uh risks associated with engaging in this um in this space? First of all, I think that they should limit their engagement with China to the greatest extent possible and there should and that's a role Washington can play too.
▶ 1:57:36Um, if the US government imposes costs and in the same way that China does to its entities, calls for a choice to be made between the US and the Chinese markets, that will create an incentive both for US companies um to invest at home and to protect themselves from the risks of exposure to the Chinese market because China is adept at leveraging short-term incentives um to which our market entities are very vulnerable in exchange for long-term strategic advantage that will destroy by our market
▶ 1:58:06entities um and our system. So I think there is a role for Washington simply to restrict that exposure or to put costs in it and at the same time to create greater incentives for investment at home
▶ 1:58:19um so that it's not just surrendering things for US entities, it's also gaining a new opportunity.
▶ 1:58:24Thank you for that. Mr. Chairman, I see my time has expired and I yield back.
▶ 1:58:27I think the gentleman would now recognize the ranking member for unanimous consent.
▶ 1:58:31Uh yes, two articles uh Mr. Chairman I'd like to offer for the record. uh one Bloomberg law uh that is entitled litigation finance doesn't pose a security risk and uh the second one is uh a law 360 uh article uh entitled a boogeyman national security threat and litigation funding. Thank you.
▶ 1:58:57And I will now without objection so ordered and I now will offer unanimous consent that a a statement by the American Property and Casualty Insurance Association uh concerning met this same litigation or legislation be placed in the record.
▶ 1:59:14And uh another one uh oh okay from the Alliance of American Manufacturing a statement submitted for this hearing in support of the hearing without without objection all these will be placed in the record. I'll now recognize myself for some closing questions. Um this has been a very good hearing and I appreciate all of your your your input.
▶ 1:59:42Um there were a couple of things that came out during this that I'd like to touch on. Um first of all uh it's a it's a broad question. Um the u rule 11 sanctions which sanction parties basically for wrongful actions. Uh that's currently a may at the discretion of the judge and it is uh it has no requirement that it equal the damages. It can be $10,000 even if it cost you 50,000 just to file the motion.
▶ 2:00:12Do you believe Congress has a role and should continue consider legislation that would effectively strengthen the uh the the may and make it much more of a shall uh requirement when there has been the findings normally found in rule 11 sanctions.
▶ 2:00:30Just briefly, does anyone disagree with that as an area that would help stop uh wrongful uh leg legislation when it is ownorous and deliberately Good. My next one is rule 26, which was alluded to.
▶ 2:00:48Under rule 26, uh, defense has a requirement to, uh, uh, to make a available, including documentation under rule 34, that you have to produce any insurance or other third-party uh, defense funding that could uh, that pays for the defense and or could pay all or part of the settlement. If that is the case, my question to each of you and I'll start with from left to right with the professor here.
▶ 2:01:17Has that requirement in some way diminished the ability of defendants to m to protect themselves uh or to or to be able to get that protection such as uh insurance for defense. Has has the requirement to disclose it ever reduced the That's beyond my scope of expertise about what's happened to uh parties in US courts that have had to disclose
▶ 2:01:45Well, wait a second. Wait a second. You came here as an expert. I I I want to hold you a little accountable. You you basically and from the deis it's been said that if we have to disclose what the plaintiff's funding that it's going to uh somehow diminish their ability to have access to the court. Do have you do you have any knowledge and you should have knowledge I would think of whether there's been a some sort of an adverse effect because of rule 26.
▶ 2:02:15As I said I'm not an expert on what happened with rule 26 with US insurance claims. My concern about the issue of foreign disclosure particularly is the the what I take to be the proposal to require disclosure of of foreign uh government or party link funding perhaps targeting China perhaps more generally is that's much messier than asking someone to disclose an insurance policy. I it does it would
▶ 2:02:38Okay. Well, I think I've got your opinion now solidly on one side but not the other. Let me go Well, uh Mr. Müller, when when you've been uh involved in in in your litigation, would it have would would if you brought in a partner to help in that litigation to share in the losses, the profits, the payments, uh would that discourage you if you had to disclose it?
▶ 2:03:04No. In fact, uh through our trade association, we partnered with our competitor McQueen out of Birmingham, uh in in our trade cases.
▶ 2:03:14So, it's an open disclosure. Professor Coup, uh you're right, you're and both of of the next two witnesses are
▶ 2:03:22when it's been disclosed either that you're insured, has that somehow made it unavailable or hindered? uh even though it it's often uh something the plainif is prepared to settle for if they want uh damages. They look at how much you have and that affects it. But even with that, has it actually has it done any harm? Because one of the things we're hearing is that somehow if you disclose, you by definition will take away someone's ability to get that.
▶ 2:03:52And uh so your opinions on that based on the history of the of those Right. I'll be a little professor and say I haven't studied it very carefully, but I don't think that it would there's I've not aware of any studies that show that it does discourage plaintiffs or disincentivize these lawsuits.
▶ 2:04:12And of course, we're talking the defendant that's currently the only one having to
▶ 2:04:16of course well defendants as well, right? That they're unwilling to go to court to defend themselves. Similarly, I haven't
▶ 2:04:23know of any cases where that has um disincentivized participation.
▶ 2:04:29Okay. Now, I I I just want to try to understand if uh if there were three parties and and they're suing or Mr. Muller, I'm going to go back to you uh since you do seem to be one that doesn't have to study. You've lived it. Uh if if when you go and you partner with somebody, you don't have a problem disclosing because those are those are co-plaintiffs or even if they're hidden plaintiffs, you don't have a problem disclosing them.
▶ 2:04:58No. No. And we have no hidden plaintiffs in our trade cases.
▶ 2:05:02And in that case, they also are subject to being subpoenaed and deposed. Right.
▶ 2:05:08Certainly they would. Yeah.
▶ 2:05:09Okay. So what I'm trying to understand here in closing is this whole question of the goose or the gander. If it's fair for the defendant to have their finances known to have their source of funding uh for uh possible payment if they lose or their defense and it doesn't have a chilling effect and it's been in place for years even though rule 26 doesn't work both ways.
▶ 2:05:38The question is why would it why would it be bad at all if there had to be an open recognition and and professor I'm going to go back to you briefly I asked you if you knew and you said you hadn't studied okay but but I'm going to take you at one thing that you said earlier uh and I don't want to be personal but you are at Penn correct
▶ 2:06:02and your university took 105 million between 2018 and 2022 from the Chinese uh government related business entities alone. Um you know you you opined considerably on political and the influence and the difference and you were unwilling to differentiate between Chinese communist judges who serve at the pleasure of the Chinese government uh and lifetime appointment federal judges.
▶ 2:06:31Uh and then you even talked about uh the you know the the universities in China. Isn't there and hasn't there been a concerted effort by the Chinese communist uh government through their proxies to in fact influence universities in America through very generous gifts. The tip of the iceberg being the 105 million to pen.
▶ 2:06:59So, I don't think I was unwilling to distinguish between Chinese judges and US judges. Um, but
▶ 2:07:04you said they were they were more similar than not. And
▶ 2:07:06I I'm not sure that I said that either. What I said is I don't think either side is at at the polar end of the spectrum. There is uh many times fair justice, fair judges, and good lawyering in China. And I have the concerns I expressed about trends in the United States. There still is a very significant gap. I don't want to be misunderstood as suggesting that there is not. Would that gap be considered pretty much night and day? Not absolute, but considerably uh different. So much so that the level of justice is inherently different
▶ 2:07:34at this point. Yes. Although I'd say there are worrisome signs uh about the direction in both places. As to your question of of uh of funding, I mean, universities and others receive funding from a great many sources. Um the degree to which those come with influence and strings attached varies hugely.
▶ 2:07:51uh the amount you refer to is obviously a drop in the bucket of a of an institution the size of Penn much smaller than the cuts Penn has suffered from US sources for instance uh I have never uh knowingly had any contact with Chinese uh money uh coming into Penn I know there is a a weariness of accepting it uh and I think uh in some cases for good reason
▶ 2:08:13thank you I'd like to allow the ranking member to have some of these minutes I've taken gentleman's yield recognized
▶ 2:08:20well I I I think um so long as we can adhere to our rule uh as much as possible that each uh of us gets five minutes of uh questions. I think I'm happy with uh whatever the content of uh uh any um questions might be from from the chair.
▶ 2:08:44Um however I would just take the opportunity to point out professor Dil that uh you are uh the Steven A. Kosen professor of law and professor of political science and the director of the center for study of contemporary China. Uh correct?
▶ 2:09:06Yes sir.
▶ 2:09:07And you uh are not the president of the
▶ 2:09:11Fortunately not. And you're not deciding campuswide policies on admission, school finances, uh, or speech, correct?
▶ 2:09:21I am not. I try to shake some money loose from the central administration, but that's a rather different
▶ 2:09:26All right. Uh, so with that, I will, uh, yield back and I thank the chair for the, uh, time for rebuttal.
▶ 2:09:34Thank you. U, clarification is is always, uh, what we, we seek, and I want to make sure this committee always stands for that. I want to thank our witnesses. Today's hearing is expansive but not complete. For that reason, I would ask that uh would you all be willing to uh supplement uh answers to questions that are given to you in writing in the next few days. Thank you. And with that, this concludes today's hearing.
▶ 2:10:01I want to again thank our witnesses and uh without objection uh this committee stand adjourn.