▶ 0:16:33Chair Ernst: I call the committee on small business and entrepreneurship to order. Before we get started with the business before us, I would like to take a moment to present a senate 20 year service award to the committee's clerk, catherine eden. Would you come forward please?
▶ 0:16:55Chair Ernst: Catherine came to the senate in 2005 to serve as the scheduler for her home state senator and later served as the operations director for the senate committee on the environment and public works. Catherine has served as the small business committee's chief clerk for 10 years under the leadership of numerous chairman and ranking members of the committee, including senators victor, cantwell, shaheen, rubio, cardin, paul, marky, and ernst.
▶ 0:17:26Chair Ernst: As a nondesignated staffer of the committee, the chief clerk works for both the republicans and the democrats, which can be extremely challenging to navigate at times. Catherine makes being nonpartisan look easy, and we all appreciate her expertise, strong judgment, attention to detail, responsiveness, and dedication to our members, staff, and constituents.
▶ 0:17:51Chair Ernst: On behalf of all of the members of the committee and our staffs, I want to think catherine eden for her service to the senate. Congratulations, katcatherine. [applause]
▶ 0:18:04Chair Ernst: You are very welcome. And ranking member markey, do you have any comments?
▶ 0:18:12Sen. Markey: I do have a few comments.
▶ 0:18:14Chair Ernst: Wonderful.
▶ 0:18:15Sen. Markey: While you make this presentation, and that is the democrats join the republicans in thanking you for 20 years of service, your attention to detail, your tireless work ethic , your years of experience have shaped the very way this committee operates. Nothing we do here as possible without you and your team. You represent the very best of public service, committed, capable, and always professional.
▶ 0:18:45Sen. Markey: And I know I speak for all of our members when I say we are enormously grateful for your 20 years of service. It has been outstanding. We are grateful for all you have done, and we are looking forward to the years ahead.
▶ 0:18:58Chair Ernst: Ranking member, why don't you join us for a photo?
▶ 0:19:05Sen. Markey: I will get on the other side of you. Let me get on the other side of you.
▶ 0:19:10Chair Ernst: Come on, ladies.
▶ 0:19:12Sen. Markey: Here we go. >> like this. There we go. 3, 2, 1. Thank you.
▶ 0:19:26Chair Ernst: Thank you. Congratulations. Thank you for your service. Very nice. So, thank you for pausing just for a moment as we presented that award. 20 year pins are very hard to come by here. Thank you very much for your service.
▶ 0:19:56Chair Ernst: Today's hearing comes at a pivotal moment. America has consistently been at the forefront of technological innovation. Nonetheless, our adversaries, especially china, are working overtime to undermine us. Over the past 100 years, the united states of america has catalyzed the world's most consequential technology breakthroughs from putting mankind on the moon to unlocking a whole new digital frontier.
▶ 0:20:25Chair Ernst: Americans did not just invent, we built. We turned those big dreams into real-world breakthroughs, securing a long and prosperous period of economic might and global leadership. But after a century of wins, we cannot become complacent. Over the past 20 years, those in power in washington have looked the other way as china initiated a comprehensive industrial espionage strategy. They are not hiding it either.
▶ 0:20:54Chair Ernst: The chinese communist party threw its -- through it's made in china 2025 plan made it crystal clear to illuminate critical american infrastructure. We need to be more clear I. China desires nothing more than to surpass the united states technologically and militarily. They want to impose their authoritarian ideology on the world and destroy the west.
▶ 0:21:20Chair Ernst: If we want and a shot at preserving america's leadership and war fighting capabilities, we have to lock down our innovation pipeline. The truth is america has left its door wide open, effectively inviting our adversaries to take advantage. As a result of a sensitive industries have become vulnerable to exploitation, allowing countries like china to use well-known techniques including talent recruitment programs to steal our innovations.
▶ 0:21:51Chair Ernst: The ccp forces innovators across our vibrant startup economy to hand over trade secrets and intellectual property as a cost of doing business. They invest in american firms, not to help, but to scheme, snoop, and steel.
▶ 0:22:08Chair Ernst: The united states trade representative and fbi estimate intellectual property theft by china costs our economy between 225 billion dollars and $265 billion per year. Sbir and small business technology transfer, sttr, those programs are no exception.
▶ 0:22:32Chair Ernst: In 2021, the pentagon first sounded the alarm revealing the pervasive exploitation of the sbir program by foreign bad actors and recommended foreign ties -- a foreign ties due diligence review process. It is why through the sbir sttr extension act of 2022, I fought to establish a framework to identify the extent of foreign risk that each company coming through the doors and stop avoiding awards to malicious actors.
▶ 0:23:02Chair Ernst: It was a strong start, but it is not enough. Congress must take further action to secure the critical technologies being cultivated in these programs. In fact, my recent report on this subject showed that 64% of applications flagged for foreign risk were still eligible to receive taxpayer dollars. That is unacceptable. I record.
▶ 0:23:29Chair Ernst: We cannot afford to keep investing taxpayer dollars to develop and deploy our best homegrown technologies while failing to safeguard them against theft by our adversaries. This is why earlier this year I introduced the innovate act that would tighten our defenses, standardizing foreign ties, due diligence, and sbir across participating agencies, and giving agencies more muscle to clawback award dollars when our national security is threatened. It is just common sense.
▶ 0:24:00Chair Ernst: Let me be clear. This is only a first step. The disturbing reality is that china is already conducting economic warfare in our homeland by targeting our farmland and critical infrastructure. Excuse me. If we want to win the next century and beyond, we must protect our innovators, our intellectual property, and the technologies that will shape our future.
▶ 0:24:26Chair Ernst: I am looking forward to hearing from our expert witnesses today on the scale of these threats and response measures for congress to consider. I now recognize ranking member markey for his opening statement.
▶ 0:24:37Sen. Markey: Thank you, madam chair, very much. On the beginning of the industrial revolution, massachusetts has been at the epicenter of innovation for our country. Although I will say that I am only here because thomas markey left to go to dover, new hampshire, where the industrial revolution was raging, and ultimately moved to lawrence, massachusetts, were even larger plans were being built.
▶ 0:25:07Sen. Markey: And over the years, massachusetts has been powered by the world's top universities, research institutions, strong public and private investments, and the best trained and brightest individuals. That can be found in our country and around the world. The biggest threat to our innovation ecosystem both in massachusetts and across the entire country is not coming from abroad. It is coming directly from 1600 pennsylvania avenue.
▶ 0:25:37Sen. Markey: It is coming directly from the white house. We all agree on the importance of research, security, and protecting our technology from china's espionage. There is no doubt that american technology needs to be protected from foreign adversaries. Right now, it is president trump himself who is killing american innovation, and china is reaping the benefits of those decisions.
▶ 0:26:01Sen. Markey: Over the past seven months president trump has launched an all-out attack on higher education, threatening to withhold billions of dollars from universities that do not bend to the will of the administration, proposed dismantling the department of education, beginning with playing off of half of the department's workforce, gutting programs, grants, and staff research development at the U.S.
▶ 0:26:29Sen. Markey: Department of agriculture, department of energy, the environmental protection agency, slashed national institutes of health budget by 40%. That is research in all timers in alzheimer's and diabetes and parkinson's, cancer research, and laying off thousands and thousands of researchers. It has gutted the national science foundation by 57%. And nasa by 24%.
▶ 0:26:56Sen. Markey: Repealed the inflation reduction act for wind and solar, all electric vehicles, battery storage technologies. China looks at us and they are saying, why are you gifting us with the clean energy future for the world and the biotech future of the world? Those are the industries of the 21st century. Right? What did we do to deserve this gift from the trump administration?
▶ 0:27:22Sen. Markey: It has also even canceled previously awarded research grants, including one to boston children's hospital that was searching for a vaccine to fight all coronaviruses. And he is restricting foreign students from enrolling in universities and creating such a hostile environment that future innovators and researchers are choosing to take their talents elsewhere, including just staying in china.
▶ 0:27:48Sen. Markey: President trump is taking america's crown jewel and handing it to china on a silver platter. Federal government plays an outsized role in ensuring america has a competitive edge against the rest of the world, including china. Whether that be through grants, contracts, funding for universities, from immigration policies, a robust agency funding.
▶ 0:28:12Sen. Markey: In 2022, 40% of basic research in the united states was federally funded while only 35% was funded privately. Additionally, nearly a third of the research was performed at universities. These attacks and cuts to innovation will not result in a greater, stronger, wealthier america. In fact, president trump's proposed 22% cut in research and development funding could shrink the U.S. economy by almost 4%.
▶ 0:28:41Sen. Markey: Last time we saw such a setback with during the great recession with china on our heels. Instead of protecting universities, cutting science-based agencies, canceling research grants, and dissuading the best and brightest from around the world from moving here, we should be doubling down to ensure the united states can continue to lead the world in innovation, so yes, I agree with my republican colleagues that we must protect our innovation and research that is being produced here in
▶ 0:29:12Sen. Markey: America, but we also must make sure we have something to protect. And I look forward to hearing from our witnesses today about the importance of investing in and protecting american innovation. Thank you, chair ernst, for holding this hearing.
▶ 0:29:25Chair Ernst: Yes, and thank you, ranking member markey. Again, my apologies to our witnesses. They have called a second vote. Because we don't have other members present, I think we will go ahead and recess. We will come back. Have you voted, josh? You have voted. Would you rather me go ahead and do -- ok. If senator hawley -- we will hand the gavel to you so we don't have to recess, and we will have the witnesses proceed.
▶ 0:29:57Chair Ernst: If you want to go ahead and vote, I will read our introductions here so we can start with our witnesses. I apologize. We have a lot of votes lately. Again, I want to extend a warm welcome to all of our witnesses, and I will go ahead with introductions of those witnesses who are testifying here today. And I am thankful that you did take time out of your schedules to join us.
▶ 0:30:25Chair Ernst: First, miss emily de la bruyere is the senior fellow at the foundation for defense of democracies with a focus on china policy. She is a cofounder of horizon advisory, and consulting firm focused on the implications of china's competitive approach to geopolitics.
▶ 0:30:43Chair Ernst: Emily holds affiliations with think tanks focused on national security and competition with china, including as a senior visiting fellow at the -- very good, ok -- institute for tech diplomacy at purdue and as a nonresident fellow at the national bureau of asian research. Ms. de la bruyere holds a bachelors degree from princeton university and a masters degree from paris.
▶ 0:31:15Chair Ernst: Next, Dr. william hannas -- did I say that right? I want to make sure we get everyone's names right. He is lead analyst and professor at georgetown center for security and emerging technology. Previously, Dr. hannas was a member of the senior intelligence service at the central intelligence agency. He started his career in the united states navy as a crypt analyst -- say that for me.
▶ 0:31:46Chair Ernst: Crypt analyst. Thank you. I am sorry. We are having a hard time today. Later served with the joint special operations command at fort bragg. Thank you very much for your service to our country. Dr. hannas holds a bachelors degree in chinese history from temple university, a masters degree in chinese from the university of chicago, and a phd in east asian languages and linguistics from the university of pennsylvania.
▶ 0:32:14Chair Ernst: And our minority witness today is Dr. sujai shivakumar. Dr. sujai shivakumar directs the renewing innovation innovation program at the center for strategic and international studies where he also serves as a senior fellow. Previously, he directed the innovation policy forum at the national academies of sciences, engineering, and medicine. Dr.
▶ 0:32:41Chair Ernst: Shivakumar holds a bachelors degree from carleton university and a phd in economics from george mason university. And thank you very much for joining us today. So we will start with our testimonies. And in front of you, you will have a system of lights. Please press "speak" to speak. Green means you are good, but once you hit the yellow button, you have a minute left and we need to start wrapping up.
▶ 0:33:11Chair Ernst: When we hit red, your time will be expired. So, miss de la bruyere, we are going to start with you. You are recognized for five minutes.
▶ 0:33:21Ms. De La Bruyere: Thank you for the opportunity to testify today. China is winning the technological competition against the united states. China is not winning by out innovating the U.S. beijing is not besting us at the game we assume to be underfoot. Rather the chinese communist party is winning because they are not racing. The ccp weaponizes the independence of the system for low cost and low risk.
▶ 0:33:49Ms. De La Bruyere: Beijing then focuses its resources on the area where it sees actual competitive advantage. First, applying those technologies, including to scalable systems and control international supply chains. And second, placing targeted risk-adjusted bets and potentially paradigm -- in potentially paradigm shifting domains. The strategy is working. It is asymmetric. It plays perfectly to china's strengths including a scaled industrialization capacity.
▶ 0:34:19Ms. De La Bruyere: China converts core U.S. characteristics into weaknesses. Beijing is able to benefit from U.S. innovation and investment. China preys on the openness of the american system for access. The risks and the threats of this approach are particularly acute today because, and this is core to the ccp's approach, the contemporary tech revolution is transforming the global order. Modern advances in technology are creating new markets, new methods of production, and forms of control.
▶ 0:34:50Ms. De La Bruyere: If china can win the tech contest, it can capture production, markets, and control. Avoiding this requires first understanding beijing strategic orientation and fighting back. That orientation begins with access to technology from the academic and especially from the commercial sectors. To access commercial technology, beijing leverages illicit means like industrial espionage and in china localization.
▶ 0:35:17Ms. De La Bruyere: But beijing in particular takes advantage of entirely illicit means. Beijing is manipulating, not attacking, the international business environment. Government-backed and government guided chinese entities go out into the international system to obtain technology through acquisitions, joint ventures, direct and indirect investment telling programs and recruitment, and even lawsuits. Those chinese attributes benefit from chinese government support and guidance.
▶ 0:35:46Ms. De La Bruyere: Freeing them from market forces. Alongside that, beijing deploys a parallel and compounding program leveraging the appeal of the chinese market and chinese industrial base to attract foreign ip, research and development, data, personnel, even capital. This strategy and positioning puts all U.S. technology at risk. The ensure the U.S.
▶ 0:36:12Ms. De La Bruyere: Approach to tech development and leadership is not only a losing one but in fact fuels america's strategic adversary. America needs to change its game. First, the U.S. government needs to shift from protecting american technology from china to defending the U.S. market from china. Washington needs to impose real and rigorous restrictions on chinese commercial entities operating in the united states or seeking to access the U.S. market.
▶ 0:36:37Ms. De La Bruyere: Such restrictions should cover direct and indirect investment, joint ventures, and tech licensing. They should cover deployment of systems, components, and software. They should adopt denial and chinese entities that are robust enough that china cannot circumvent them through shell companies. Second, the U.S. needs to activate its private sector to stop forfeiting critical U.S.
▶ 0:37:05Ms. De La Bruyere: Resources to china and to start investing in the actual competition at hand. The private sector should have to choose between the U.S. and chinese markets. Businesses that localize data, research and development, production in china invest in chinese entities or maintain tech licensing deals with chinese entities should not be eligible for federal procurement, industrial base procurement, federal tax credits, or other incentives. Those are all sticks. At the same time, the U.S.
▶ 0:37:35Ms. De La Bruyere: Government needs to make sure companies opting for america and the american market can invest, produce, and profit from doing so. Including through expanded provision of domestic energy industry resources, a favorable regulatory environment, and a skilled workforce. We have a chance to reclaim our core strengths and we the playing field. America's market can serve america's interest if we protect it from china.
▶ 0:38:03Ms. De La Bruyere: American innovation and fuel us, not our adversaries, if we direct it at the competitive arena. Our agility as a country can throw the deliberate, slow, centralized prc system on his heels if we take the initiative. But all of that has to happen now. Thank you.
▶ 0:38:20Sen. Hawley: Thank you very much. Dr. shivakumar, you are recognized for five minutes of testimony. The floor is yours.
▶ 0:38:29Dr. Shivakumar: Thank you senator hawley and his stick with members of the committee. I wanted to share my views on this important topic concerning our nation's innovation strategy. Just a quick note that the csis is a bipartisan on is a bipartisan o organization dedicated to address the world's challenges with the core mission to define the mission of natural security -- national security.
▶ 0:38:57Dr. Shivakumar: It does not take policy positions so the views represented here are my own. As we begin our discussion today, it is important to keep in mind the global strategic environment has changed fundamentally. The world's innovation landscape today is multipolar. Others can quickly grab U.S. ideas and run with them as my colleague just pointed out competitors and rivals are also rapidly developing their own ideas, so there is an important fact that we need to pick up our own pace in this global race.
▶ 0:39:29Dr. Shivakumar: U.S. innovation leadership defense critically on our country's own ability for research to bring those to the market faster and at competitive costs. So when comparative technologies are developed and cannot reach scale, others will seize the opportunity. So this means we must reinforce key elements of our own innovation ecosystem. A key point I want to emphasize is U.S.
▶ 0:39:58Dr. Shivakumar: Innovation and by extension our competitiveness and national security depends on sustained and substantial support through federal rnd agencies and research institutions. Importantly, it also depends on our ability to convert results of this research to products to meet the needs of the american people. While the U.S. remains an innovation powerhouse, it produces more ip through our research, universities, and corporations than any other country in the world.
▶ 0:40:28Dr. Shivakumar: That edge is shrinking, not least because our competitors and adversaries are advancing. Proposed cuts to our science agencies and universities further erode that edge. There are areas where innovations could be developed and rapidly commercialized. That reality has changed.
▶ 0:40:48Dr. Shivakumar: So to maintain our competitive leadership and national security, we must search investments into our domestic r&d technology including scaled, workforce development, advanced manufacturing to ensure the results, research advantages advantages U.S. security and all americans. The sbir program is a proven national security asset, and we must continue to strategically support and expand it.
▶ 0:41:17Dr. Shivakumar: As someone who has directed multiple independent assessments of sbir at the national academies of science and engineering, I confirmed that the program is sound in concept and effective in practice. It enables startups and small businesses to bridge the valley of death, which is the gap between research or proof of concept and the commercial production. And allows agencies like dod to procure cutting-edge innovations far faster than conventional programs that the pentagon has.
▶ 0:41:45Dr. Shivakumar: Csis and sbir has characterized the colligative companies like qualcomm, which have transformed our daily commute efficient and continues to support breakthrough technologies including next-generation reconnaissance, propellants. At a time of intensifying ecological competition, sbir contributed directly to our growth, leadership, and deep abilities.
▶ 0:42:12Dr. Shivakumar: Our adversaries and competitors have recognized the value of the sbir program for its proven outcomes and the technical eligible leadership and helps secure. As chairman ernst pointed out in her remarks, the dod report concluded in 2021 documented efforts by state-sponsored chinese firms targeting dod sbir companies merits serious attention. If a competitor is stealing your playbook, is probably because your playbook works.
▶ 0:42:40Dr. Shivakumar: To be sure, steps should be taken to defend small companies against cyber attacks and foreign influence, to acquire ownership, or to steal technology. Sbir supports small businesses that lack tools to protect themselves from espionage and often without in-house counsel with threat intelligence, or cybersecurity teams. So we need to provide active support for their cybersecurity awareness and defense.
▶ 0:43:08Dr. Shivakumar: In other words, our response should not be shut down or weaken the successful program but in fact fortified it. For sbir to work, it needs to be seen as stable and sustainable but flexible. It is long period of reauthorizations. A strong program cannot thrive in a climate of physical and legislative uncertainty. Secondly, we should strive to avoid overregulation.
▶ 0:43:37Dr. Shivakumar: Microlevel legislative requirements on the program tend to be less effective than coordination encouragement at the program manager level. Third, we need to strengthen and encourage the transition to commercialization. Sbir companies help -- sbir helps companies cross the valley of death in phase one and phase two, but in many cases that bridge and halfway across the valley of death.
▶ 0:43:59Dr. Shivakumar: There are different parts to add an additional arch, including perhaps an active agency financed phase 3, particularly for agencies that do not have a procurement function. In conclusion, innovation without commercialization is in fact a lost opportunity. And in a world of accelerated competition, potential gifts to our adversaries. Sbir works, but it must be buttressed with cybersecurity support, flexible funding to commercialization, and programmatic stability.
▶ 0:44:29Dr. Shivakumar: Most importantly, it must've been embedded within a small ecosystem supported by sustained and substantial investment in our federal r&d.
▶ 0:44:41Sen. Hawley: Thank you very much. Dr. hannas, you are recognized for five minutes of your testimony. The floor is yours.
▶ 0:44:49Dr. Hannas: Distinguished members of the committee and staff, I am grateful for the opportunity to testify on this topic. I tracked technology threats posed by china. These efforts led to two books on chinese industrial espionage in 2013 and 2021 in other studies on the topic.
▶ 0:45:20Dr. Hannas: My interest in chinese foreign tech transfer begin as a graduate student preparing a thesis on chinese cultural predisposition for holistic thought, which has served china in practical terms but hinders progress and has played china -- plagued china. Foreign ideas have historical roots not easily overcome.
▶ 0:45:42Dr. Hannas: Another factor privy to the topic was the discovery china technology acquisition is an academic discipline. On par with other scientific fields replete with programs, how to manuals, academic journals, and career positions supported by legislation and 100,000 intelligence operatives. That is the term they use.
▶ 0:46:13Dr. Hannas: So the notion that china's informal transfer of formal technology is done by opportunistic individuals is pure myth. This is a state backed soup to nuts system run at the government's direction since the 1950's and is not abating even as china's indigenous accomplishments grow. It is impossible to condense volumes of research into five minutes but here are the basics. China uses three types of transfer practices, legal, illegal, and extralegal.
▶ 0:46:43Dr. Hannas: Illegal transfers run from insider operations, patent infringement, reverse engineering, to the hacking and clandestine exploits we read about in the press. These tech espionage cases are so numerous that there are two annual reports issued, one for china and one for the rest of the world. Legal transfer is done through U.S.- U.S. -- direct and indirect investments, mergers and acquisitions, and trade agreements are easy to spot but hard to encounter.
▶ 0:47:15Dr. Hannas: Oversight officials often confuse legal with U.S. interest. Finally, there are a dozen categories of extralegal venues that china uses. Overseas technical support guilds, online recruiting, and of course china's human talent recruitment programs. In 1923, a book on artificial intelligence gave examples of U.S.
▶ 0:47:43Dr. Hannas: Firms in china including microsoft, intel, and ibm working with china when ai developments accredited by the chinese alumni programs as critical to china's success. In the same book, 10 types of venues used to affect transfers from foreign academics such as school to school partnerships, coauthorship, and a practice called using foreigners to draw in foreigners. These practices threaten U.S.
▶ 0:48:11Dr. Hannas: Businesses large and small, the latter of which especially vulnerable only to a scarcity of research funds and investment capital, shrinking talent pools, pure opportunities to commercialize breakthroughs, inadequate due diligence, limited venues for redress. So what can be done? First, we must appreciate the reason this is a problem at all is because our lead has struck to the point where theft matters, whereas before we were so far ahead it did not matter. We are building U.S.
▶ 0:48:40Dr. Hannas: Research, entrepreneurship, and productive capacity independentl of whatever china is doing, is the only way out. We propose five commonsense measures. The data on china's transfer practices should be gathered and shared with U.S. firms and academic compliance offices. Two, clear guidelines on what is legally permissible should be communicated to foreign actors contemplating research in the united states and U.S. persons doing business in china.
▶ 0:49:12Dr. Hannas: Members of china's overseas support guilds, talent recruitment programs, lobbying groups, and other united front operatives should register as foreign agents. For recipients of U.S. government funding should report contact with or travel to china to minimize china's ability to benefit from U.S. federal and state level investment. Finally, there are opportunities for U.S.
▶ 0:49:37Dr. Hannas: Authorities to stand china's transfer apparatus on its head by seeding venues with persons of U.S. interests. We are past the point where this can be ignored. It is measured now in weeks which puts a premium on keeping what we invent. Thank you for this opportunity to address this issue.
▶ 0:49:59Chair Ernst: Thank you very much for your testimony. We will now go into our question and answer period. And each member will have five minutes. I now recognize myself for five minutes of questions. Miss de la bruyere, let's start with you. I was a proud leader in the creation of a new foreign ties due diligence process for sbir in 2022.
▶ 0:50:28Chair Ernst: My innovate act create a clear and consistent definition of foreign risk to improve agencies's analysis of adversarial threats. Which methods does china most commonly used to export technology of innovative startups, and how can we best restrict the flow of those taxpayer dollars to compromise entities -- compromised entities?
▶ 0:50:56Ms. De La Bruyere: Thank you for that question. I august he cannot enter without first professing china has an immense arsenal and is adaptive so when we put our protections, china tends to find or try to find ways around them. , methods include first investment, including both directly via chinese company's and funds and indirectly as limited partners in U.S. funds. Second, china uses customer and supplier relationships as well as the information sharing it creates.
▶ 0:51:22Ms. De La Bruyere: And personnel, including tele-programs, talent poaching and embedding personnel. Protecting against this requires top-down measures from washington and also expectations put on companies that are receiving federal funding. From the top down, general U.S. restrictions on chinese investment presence in the U.S. should be strengthened. It should be strengthened to respond to china's indirect investment methods as well as directed ones.
▶ 0:51:52Ms. De La Bruyere: But also, federal funding mechanisms like the program should include due diligence requirements, and those due diligence requirements have to be best in class and have to be updated for the realities of china's adaptive and indirect ways or means. It is not enough to say what is first level ownership or what are direct investments coming in. It is also not enough to say what are the first here customers. Due diligence has to look at the indirect investments.
▶ 0:52:21Ms. De La Bruyere: It has to look for instance at customer as well as tiered down suppliers. And due diligence processes have to be adaptive or proactive so they are looking at what china will be doing next, not what is already doing. These should be the case.they are largely not in the due diligence approaches that exist, so that has to change.
▶ 0:52:43Ms. De La Bruyere: And then also from the bottom up , companies that are receiving federal funding should be expected to be doing and refreshing their due diligence throughout their life spans. So that should include looking at who they are taking money for and vetting that for chinese thais, who they are supplying to, who their customers are, who their partners are.
▶ 0:53:05Ms. De La Bruyere: There should be no question whether research or a two-person garage is getting chinese entities and the penalties should include clawbacks because there has to be an actual risk in there.
▶ 0:53:18Chair Ernst: Thank you. That was very good with a lot of solutions in that one answer so I appreciate that. Dr. hannas, and your testimony, you discussed how U.S. oversight officials often confuse legal with in the U.S. interest. Can you elaborate further on how to get our federal officials to stop awarding taxpayer-funded grants and contracts to companies that have clear ties to ccp espionage?
▶ 0:53:49Dr. Hannas: Simply said, you need data and access to the data. Let me share a war story. Some years ago, I was part of a team reviewing bids of a large U.S. government contract. We had dow we had doneck down some 200 bidders. By pure chance, I realized that one of the companies, which was in the top rung, was pitching a professor at a U.S.
▶ 0:54:19Dr. Hannas: Engineering college who I remembered as a china talent program member who runs software for china's bio industry. This is not the way to operate. The event should have happened by design, not luck. It is entirely possible for the U.S. government to build detailed lists of persons and venues affiliated with china's technology transfer programs against which grant proposals can be vetted.
▶ 0:54:49Dr. Hannas: In fact, we spearheaded a pilot a few years ago that enjoyed some success, but access was restricted, was limited, which did not do corporate america much good.
▶ 0:54:58Chair Ernst: Thank you for that. It is a clear demonstration of why my innovate act strengthens the denial of authority and provides clarity to our program managers that they cannot move forward with awards if there are clear threats out there. So I really do appreciate it. We will go next to ranking member markey for his questions.
▶ 0:55:21Sen. Markey: Thank you, madam chair. Dr. shivakumar, as you know, the small business innovation research and the small business technology transfer programs will expire in just over two months. And these programs have played a central role in driving our country's innovation, resulting in at least 70,000 patents and 700 public companies.
▶ 0:55:48Sen. Markey: Since its inception in 1982, the program has resulted in more than 207,000 awards totaling more than $72 million. You are one of the few researchers who has done extensive analysis of these programs. So could you speak, doctor, to have multiple award winners are important to the growth of certain industries? And could you provide an example of a technology that would not exist without multiple award winners?
▶ 0:56:17Dr. Shivakumar: Certainly. I was just last month in colorado looking at the emergence of a quantum innovation cluster in the mountain west region. There are a number of sbir companies among those. And they are a limited number.
▶ 0:56:37Dr. Shivakumar: So if you think about the need to actually grow our quantum industry, and if you think about the particular solicitations, there will only be a limited number of companies that can respond to any particular solicitations. So the idea of those companies built by nature need to garner multiple awards in order to build scale and to grow the industry in that region.
▶ 0:57:08Dr. Shivakumar: So it is not just -- there are concerns about whether there is a problem with multiple award winners. People are gaming the system. There are cases to be made where multiple award winners are actually important to our national security. We need to build up our quantum industry, for example.
▶ 0:57:36Dr. Shivakumar: On the other hand, we have program managers at the various industries who are best positioned to actually monitor any abuse of the program by gaming the system to get multiple awards. My recommendation is not for the senate or congress to sort of manage the program from here but provide the program managers, the resources, and the confidence to actually manage their programs. If there are problems, let them document the award.
▶ 0:58:05Sen. Markey: Could you speak to the impact of the 2022 due diligence program in protecting our sbir and sttr programs?
▶ 0:58:16Dr. Shivakumar: So I think there is obviously an important aspect in protecting our ip. But there is also the consideration that it is a global race now in terms of innovation. There are multiple countries in the world including china that have strong innovation systems. And as the old football saying, you cannot bet only on defense.
▶ 0:58:42Dr. Shivakumar: We need a strong offense. We need to make sure our universities churn out new ideas by making sure programs like sbir take those ideas and bring them into businesses, build prototypes, get them ready for the market, and then to scale those technologies further up so we can be competitive internationally while also creating new opportunities for americans. Yes, we need to defend.
▶ 0:59:15Dr. Shivakumar: But I think we need to look at both sides of the equation as well. We need to have a strong offense in terms of a very vibrant innovation system.
▶ 0:59:22Sen. Markey: That strong offense would be not cutting the national institutes of health, not cutting investment in batteries of solar and wind, not cutting investment in the national science foundation, investing in our young people to compete. Here is a headline from just last week. China puts new restrictions on ev battery manufacturing technology.
▶ 0:59:44Sen. Markey: Now that they have made the breakthrough, now that their companies like build your dreams are way ahead of ford and general motors and tesla, they will put restrictions on the transfer of any of the battery technology around the world. They invited us in. But their condition was we have to share our technology with them. Now that they are sprinting ahead, they will put restrictions on.
▶ 1:00:10Sen. Markey: So it looks like they were playing us for uncle sucker the whole way and we just have to be realistic about it, but the way to respond is not to cut our research in these critical areas. It will be 20 million all electric vehicles sold around the world this year. We have not sold 17 million total electric vehicles in the united states each year.
▶ 1:00:35Sen. Markey: China is putting up the walls to protect not just against us but anyone else from being able to compete effectively in the marketplace. We just have to be ruthlessly realistic about that reality. Thank you, madam chair.
▶ 1:00:48Chair Ernst: Senator curtis, you are recognized for five minutes.
▶ 1:00:51Sen. Curtis: Thank you, madam chair. I am very proud to represent utah. Like some of my colleagues, you talk represents 99% small businesses, and this is a really important committee and topic. It is the lifeblood of our state. Utah is a major entrepreneurial hub for innovation as well. A lot of our businesses have seen intellectual property stolen. And some frequently copycat their products.
▶ 1:01:22Sen. Curtis: They see places like temu and things like that. I am convinced our small businesses have a disproportionate burden here because they don't have compliance officers. They don't have lawyers and accountants. So I guess the question for all three of you is, how vulnerable are our startups specifically to these chinese espionage? And are there specific industries that are more at risk? Please.
▶ 1:01:49Ms. De La Bruyere: The short answer is highly vulnerable. And not only because of the resource constraints that small businesses face, but also because of the dearth of resource constraints that chinese entities face.
▶ 1:02:04Ms. De La Bruyere: The way beijing positions in the international commercial ecosystem is statewide enterprise driven approach where chinese agents companies go out, they have state backing in that direction, and that means they are not bound by market forces, which lets them reap strategic advantage over entities that are bound by economic logic, especially those like small businesses that have serious resource constraints.
▶ 1:02:30Ms. De La Bruyere: And the ways beijing does this includes targeting distressed companies, companies on the verge of bankruptcy, companies that will take investment from anyone that is willing to give the money. In short, that has strategic value but not on a commercial trajectory or one that gives them the freedom to choose between long-term strategic interests for them or the country and beijing. And that is a massive difficulty.
▶ 1:02:58Ms. De La Bruyere: And you cannot thought that without having discussions on china's role in china in the U.S. system.
▶ 1:03:04Sen. Curtis: Thank you.
▶ 1:03:06Dr. Hannas: I made some notes on that. For a number of reasons. It is not available here so they look at china. Shrinking talent pools. Plenty of talent available through china's diaspora community. But less and less within the indigenous market population.
▶ 1:03:34Dr. Hannas: Fewer opportunities to commercialize breakthroughs. That is big. They have discoveries. Bringing to market is not easily done. As pointed out, the inadequate due diligence. They don't have the wherewithal to determine who are from these and who are not -- who are friendly and who are not. Finally, you are a great party to it to a degree. What will you do about it as a small business? They are very vulnerable.
▶ 1:04:05Sen. Curtis: The fbi saidsen.
▶ 1:04:06Curtis: China is the world's principal infringer of intellectual property and the use loss to put companies at a disadvantage and its own companies at an advantage. Earlier this year I introduced an act which holds china account above for stealing american ideas. This bill wanted sanctions, restrictions on chinese officials, and citizens engaged in intellectual property.
▶ 1:04:34Curtis: Can any of you walk us through how intellectual property theft transfers into long-term economic or national security losses for the united states? Go ahead.
▶ 1:04:48Ms. De La Bruyere: I think to answer that question, you fundamentally go back to what china is trying to do in intellectual property. Beijing is not just developing cutting-edge technology. Beijing is stealing cutting-edge technology and focusing on its applications, so the commercial and industrial returns that come from that. Beijing is doing that for two primary objectives, one is to control supply chains. If you control the battery market, you control on mobiles.
▶ 1:05:20Ms. De La Bruyere: Also, you make sure the U.S. depends on you, which gives you leverage in economic and geopolitical environments. And second perhaps most important link,, offensively beijing is working to build and scale the global infrastructure for a new technological environment. Information technology for instance, a unified information network that collects all data and transmits all data.
▶ 1:05:43Ms. De La Bruyere: If beijing is able to do that, it is directly applying technology to this end, beijing can control how markets work, how militaries work, how people perceive.
▶ 1:05:52Sen. Curtis: Thank you. I am sadly out of time. I appreciate your expertise. I yield back.
▶ 1:05:58Sen. Shaheen: Thank you, madam chair, and thank you to our witnesses for your testimony today. I have to say I agree with the premise that each of you have outlined about the threat that china poses to our innovation and the importance of the sbir program and reauthorizing it and ensuring we continue to innovate.
▶ 1:06:21Sen. Shaheen: I want to point out that last week, the minority on the foreign relations committee issued a report on china that talks about the threat from china and the decisions that have been made in the first six months of this administration that cede america's leadership in a whole range of issues.
▶ 1:06:44Sen. Shaheen: One of the report's findings highlighted how america's withdrawal from international organizations cedes influence to china, which is in response has increased its contributions and personnel across a whole range of international bodies. By proposing an ear zeroing out of U.S.
▶ 1:07:06Sen. Shaheen: Contributions to organizations like the world intellectual property organization, the administration risks allowing china to be the dominant voice in international discussions about the future of ip protections including patents, copyrights, and trademarks. So I would ask each of you how america's small businesses benefit from participating in international bodies.
▶ 1:07:37Sen. Shaheen: One of my favorite statistics about small business is they create 16 times more patents than large businesses. So what happens around the ip protections you all have outlined is critical. So why is it important that the united states participate in those kinds of bodies that provide those protections for our small businesses?
▶ 1:08:04Dr. Shivakumar: Chinese leader xi said the country that controls the standards and patents controls the world. We understand that very well. They have a national strategy, a 2035 strategy to be a leader in setting the standards. If you think about standards, in many respects they are like language. They set the perimeter, the vocabulary.
▶ 1:08:30Dr. Shivakumar: And the country that is in control of the language controls the dialogue, the thought, the innovation in this sphere, so is extremely important that the united states, which has long dominated the standards setting environment, the institutions to wake up and reassert itself. We have been in the lead for so long, like the story of the rabbit and the hare. We have taken a nap.
▶ 1:09:02Dr. Shivakumar: The relevant agencies need to be prodded to sort of take a leadership and make sure we ably represent the people who are in these standards setting organizations are trained and that we take a much more active, proactive role. We have a very strong still in our innovation system research ip. We are an ip machine in many ways.
▶ 1:09:30Dr. Shivakumar: But we need to also have a standards part of that equation to picture our ideas are dominant and that we have the advantage of being the standard setters.
▶ 1:09:44Sen. Shaheen: So if we do not pay our dues by the end of this year, we run the risk of not being able to participate again. What kind of a disadvantage that is that put the united states businesses in if that happens?
▶ 1:10:00Dr. Shivakumar: If somebody else is writing the blows by which you have to play, and that puts you at a disadvantage. That is not a situation you want to be.
▶ 1:10:08Sen. Shaheen: Thank you.
▶ 1:10:09Ms. De La Bruyere: If I may add, one of the underestimated risks of china's approach is beijing has co-opted international organizations, including especially standard-setting organizations, intellectual property organizations. And beijing does so with the benefits of decentralization and skill that means a U.S. approach to those systems does not have any hope china floods the itu with neighbors who are paid.
▶ 1:10:37Ms. De La Bruyere: The predecided what standards will be formed so by engaging in these organizations, the U.S. will be at a disadvantage so the hope the U.S. can claim is by extracting from china and system that has many belated and restoring integrity -- has been manipulated and restoring integrity.
▶ 1:10:54Sen. Shaheen: If we are not at the table, how will we extract china and hope to compete if we are not even there?
▶ 1:11:02Ms. De La Bruyere: We need to establish organizations that don't have china in them.
▶ 1:11:06Sen. Shaheen: But again, how do we do that if we are not there to address the rules of those organizations and to establish that ability to make sure that china does not participate?
▶ 1:11:20Ms. De La Bruyere: You don't have to be part of an organization to launch a new one.
▶ 1:11:24Sen. Shaheen: Are we in the process of doing that?
▶ 1:11:27Ms. De La Bruyere: I think the most strategically significant movement of international organizations the U.S. can make right now would be to revoke the trade status. It is a wto move, not wipo.
▶ 1:11:41Sen. Shaheen: I would not disagree with that at all. That is not a bad move if you think about that.
▶ 1:11:45Ms. De La Bruyere: There are other organizations beijing has co-opted.
▶ 1:11:48Sen. Shaheen: Thank you. That will be our next project, so thank you. I recognize senator young for five minutes. Sen. thank you, chair. As chairman of the national security council and emerging biotechnology, I have dedicated a significant amount of effort on the topic of making sure that we have a vibrant small business sector that can commercialize the many innovations we make in this country, and one of the key recommendations we have in that report is the urgent need to
▶ 1:12:21Sen. Shaheen: Mobilize the private sector by enhancing the reach and the effectiveness of the small business innovation research and small business technology transfer programs. These programs are essential for advancing early-stage innovation and scaling U.S. technologies. They are proven. They had been bipartisan. But we think they certainly can be improved. Mr. hannas, you have been closely involved with the nsceb. Thank you for your assistance.
▶ 1:12:51Sen. Shaheen: You helped us shape recommendations. From your perspective, how critical is it that we emphasize and incentivize the commercialization of emerging technologies? Just touch again on that. As importantly, what is your recommendation to make china's united front operatives register as foreign agents upping advanced the cause?
▶ 1:13:20Dr. Hannas: So the first point, yeah, this is where china excels in commercializing technology. They never set the world on fire . They come with abstract indigenous theoretical discoveries. But what they do exceptionally well is commercialize what anybody in the world finds. We seem to have exported or lost that ability to commercialize.
▶ 1:13:47Dr. Hannas: There was a time when we could get along ok with royalties from patents or inventions we created, but those days are gone. Need to commercialize. Here we might draw a lesson for once from china on something they are doing.
▶ 1:14:05Dr. Hannas: I was kind of shocked, discovered a few years ago that they have what are called commercialization centers, which are anything from a storefront with two people in it to acres wide and stories tall complexes that exist solely for the purpose of commercializing technology. Both foreign and indigenous. They don't discriminate. If it is technology, they will commercialize it, go to market, and weaponize it before anybody else does. I don't know that we have anything like that. I think we might be able to learn a lesson from that.
▶ 1:14:37Dr. Hannas: And your second question, senator? C1 if you get that tender recommendation pertaining to make china's you needed -- united front operatives register. >> it goes back to data. We need to understand what groups of people are involved.
▶ 1:15:08Dr. Hannas: We need to get this information into a database. Make it available to other people who can make these judgments. And execute these decisions that we make. Determining who are china's unpaid actors and influence operators. It is hit and miss. >> it seems to be a sports analogy is applicable here. A good defense is also a good offense.
▶ 1:15:37Dr. Hannas: In this case, if we cut down on theft of intellectual property, if we up our game with respect to commercialization to deploy it business model is appropriate to take advantage of those breakthroughs. I think those are very much linked.
▶ 1:16:09Dr. Hannas: How can we better ensure a sustained U.S. leadership in the development and employment of emerging technology through your proposal to prohibit certain businesses from eligibility for federal procurement if they run afoul of any of the suggestions that you have? How will that work?
▶ 1:16:35Ms. De La Bruyere: It starts with defense. We are trying to defend our technology. Perhaps more important than that , fundamentally, defense will only work so well against china. Moves like that send a message to the private sector. They say you have to make a choice between the U.S. market and china. You can profit on investing in america.
▶ 1:17:10Ms. De La Bruyere: The greatest strength of the U.S. is our private sector. That has to be activated. Make U.S. government support contingent on a competitive approach to china. That will send a signal to the private sector. >> thank you. I'm out of time. Good to see you. >> thank you.
▶ 1:17:41Sen. Justice: Thank you tell these wonderful witnesses. I am not going to attempt to butcher your last names. Let me just start off by the making a little bit of a statement. I have a lot of white hair. I am the new kid on the block.
▶ 1:18:12Sen. Justice: I came here for the right reasons. I don't want anything. With all that being said, I cannot for the life of me understand what all smart people around this table, why we can't just realize where we are. We have known forever and a day what china is doing.
▶ 1:18:42Sen. Justice: And we haven't done anything about it. America believes that no matter what in the world happens, and I am a believer as well, no matter what happens, it will all be great. Let me take you back in time. Jimmy carter was the president. We had given away the panama canal.
▶ 1:19:13Sen. Justice: We had interest rates and inflation rates at levels nobody could fathom. We had gasoline lines. We had 100 hostages in iran. The soviet union was so strong it was unbelievable. A lot of us were afraid. At that point in time, who could've ever dreamed that the soviet union would collapse.
▶ 1:19:45Sen. Justice: We elected ronald reagan and in a very short time he was standing in front of the berlin wall saying to tear it down. The soviet union collapsed. Why did we not believe and move with the light speed that we should be moving with that it could happen to us? It can. We are on the cusp of needing energy like you can't imagine.
▶ 1:20:16Sen. Justice: We will have to decide between homes and industry. If we don't really get moving. Why in the world do not solve the problem? We have to solve the problem.
▶ 1:20:41Sen. Justice: If people are out digging up seeds and stealing our technology of how we grow these phenomenal crops, what will they not do? What in the world will he not do? All I can say to you is to the small business folks, my question would be how do you protect them?
▶ 1:21:10Sen. Justice: They don't have a bunch of accountants or lawyers or whatever might be. How do you protect them? Literally? For all of us? We have to solve the problem. Right now. How do you protect small businesses?
▶ 1:21:41Sen. Justice: Very quickly. I have set exactly how I feel. All of us have to pull the rope together. We have everything at stake. It is not time to be democrats or republicans.
▶ 1:22:05Ms. De La Bruyere: We remove china from the market and we incentivize companies not to just develop research but to produce.
▶ 1:22:22Dr. Shivakumar: We have to accelerate technologies using our small businesses. We have to arm them with all the available resources. So they are not susceptible to this type of theft.
▶ 1:22:45Sen. Justice: 100% right. I am over my time. >> thank you. Thank you for bringing up the chinese theft of seeds in iowa. That happened in 2013, I believe. It does happen. They steal our intellectual property and reverse engineer.
▶ 1:23:16Sen. Justice: >> thank you foot the witnesses for joining us today. A complicated issue. It seems that listening to you that we have a situation where our freedom is being used against us. We allow chinese students to study at our universities. Sometimes to our detriment.
▶ 1:23:48Sen. Justice: Stealing intellectual property and ideas. Anytime a small business sells to the chinese market, they say next thing they know they are selling it.
▶ 1:24:24Sen. Justice: Some of their advances have come from stealing technologies from other nations. I know in talking to small businesses that they say I don't necessarily like them but how in the world can we stand up and protect ourselves from what is going on when I try to sell into china and with a cell in our country and other countries?
▶ 1:24:56Sen. Justice: I will ask each of you to comment on that. What recommendations would you make to the trump administration as they are looking at the issue of trade with china and how can we use our trade relationship for a bilateral conversation to address some of the issues you have addressed today?
▶ 1:25:18Dr. Hannas: I'm not good at solutions. This is not solely a U.S. problem. China does not discriminate among the countries that it exploits. Japan and korea are suffering the same problems we are.
▶ 1:25:48Dr. Hannas: One of the things we can do is come up with a common front against the problem. That would be my major recommendation.
▶ 1:25:59Sen. Husted: Thank you.
▶ 1:26:10Dr. Shivakumar: This has eroded over a number of years. We need to rebuild that.
▶ 1:26:24Sen. Husted: What do you think the barriers are to that? Why are we scaling up?
▶ 1:26:34Dr. Shivakumar: With more time I can brief you in detail. Our ecosystem is incomplete. The chinese have deep pockets. They are able to take ideas and scale of them up. We are weak in that area. We need to rebuild our munitions systems so it is the most competitive in the world.
▶ 1:27:01Sen. Husted: Very capital intensive.
▶ 1:27:04Dr. Hannas: There were a lot of coordination. It is a multifaceted innovation system. There are worker training aspects to it. Research and development aspects. All of these parts have to work together and connect with each other.
▶ 1:27:31Dr. Hannas: One of the advantages of the program is it takes ideas and creates validation of the commercial potential. It basically flags venture capital. This is an idea that we need to invest in.
▶ 1:27:56Sen. Husted: Our financial system is not speculative. It is a market like any other market.
▶ 1:28:09Ms. De La Bruyere: On the trade front, we need to stop assuming that china will play by the rules. We need to love a significantly higher tariffs on china. We should encourage our allies and partners to do the same. We should all be part of the international free trade system but not lit china abuse it.
▶ 1:28:35Ms. De La Bruyere: We should accept that all of this will come at a cost in the short term but that is far more palatable than the long term cost of not defending against chinese manipulations.
▶ 1:28:50Sen. Husted: The three things I heard from this answer were work with our partners in japan and korea and others who are caring saying this same problem. Help made in america work by reestablishing our manufacturing base in this country. And used tariffs against china as a tool to help get this accomplished. Thank you very much.
▶ 1:29:13Sen. Ernst: Thank you. I think this is been a very good hearing. A lot of good suggestions coming from our witnesses. I am grateful for the recent positive coverage that my innovate act has gotten from a number of people including from scholars including provisions to draw in new entrance and focus on funding in companies that successfully scale innovations to market.
▶ 1:29:48Sen. Ernst: I ask unanimous consent to enter into the record in article from a senior advisor with renewing american innovation. Not my favorite picture but we will have that entered into the record. Without objection, so order. Did you have closing comments.
▶ 1:30:13Sen. Markey: President trump has decimated our innovation. A professor said that the trump
▶ 1:30:43Sen. Markey: Administration cuts to federal agencies are undermining the U.S. ability to innovate. Hostile immigration policies are making it harder for U.S. firms and industries and universities to attract talent. While threats of tariffs are terrifying investors. Present trumpets.
▶ 1:31:16Sen. Markey: How will getting our innovation ecosystem bit of the china?
▶ 1:31:20Dr. Shivakumar: It will benefit china by taking us out of the race. We need to actually supercharge our innovation system by reinforcing all the things that they work and fixing the things that do not. There are a number of connection points. Our research in this is something we have been investing in for decades now.
▶ 1:31:48Dr. Shivakumar: It is a legacy system and it requires reform. That is a facet of our innovation system. It requires care and renovation and resources.
▶ 1:32:02Sen. Markey: If I go to the boston public library, it says the education of its people is the best defense of the nation. That is in agreement that democrats and republicans have had over generations. In 19 57, president eisenhower initiated the national defense education act.
▶ 1:32:31Sen. Markey: Sputnik was up in the air giving us an electronic finger. I went to college on a national defense student loan, as did millions of other kids. We had to get in the race and educate people. We had to win the space race and protect our national security.
▶ 1:32:58Sen. Markey: We had to invest in these institutions. Now president trump is doing the exact opposite. Taking a sledgehammer to our world renowned innovation system. Dismantling our education system. And underlining america's competitive edge. This will be felt for generations to come. As one researcher said, if we continue this, we will lose a generation of scholars.
▶ 1:33:28Sen. Markey: What impact will these attacks have on american innovation and national security and our ability to attract the best and brightest?
▶ 1:33:35Dr. Shivakumar: I think you have described with apex would be. I agree with you. Our innovation system is part of our research system.
▶ 1:34:02Dr. Shivakumar: This will be a long-lasting negative impact. If the proposed cuts do take place. This is what the president has proposed.
▶ 1:34:18Sen. Markey: I have been in congress for a while. I did not vote for most favored nation status for china. I was always very suspicious of them especially after he went there and I could see how they were stealing our intellectual property. There was a vote on making it permanent. There is nothing normal about trade relations with china.
▶ 1:34:50Sen. Markey: I voted no. Each time. But there was a bipartisan consensus. I was in the vast minority saying no. We will be handing over our intellectual property. But they were smart people thinking big strategic things. We did not get anything in return.
▶ 1:35:19Sen. Markey: They did not help us strategically. Now they are putting up barriers. They are now going to actually finish off this land they have to take advantage of us and then have us not be able to compete with them on all of these
▶ 1:35:51Sen. Markey: Technologies. That is why all the investments we make in innovation and research is critical. We are increasingly leaving the playing field. I'm sure china is in a state of shock that we are doing it without receiving anything in return. I thank you.
▶ 1:36:14Sen. Ernst: Thank you. And thank you to our witnesses for your insight today. This is of critical importance. For america's competitiveness in the years to come.
▶ 1:36:42Sen. Ernst: We have to ensure taxpayer dollars are invested in the best and brightest innovators. We have to eliminate loopholes. I want to be very clear, there's is a difference between companies who have some of those awards.
▶ 1:37:19Sen. Ernst: It is a positive step that we have. They have clear links to china.
▶ 1:37:50Sen. Ernst: That was after the implementation of foreign ties. Rather than focus on funding on a very select few well-connected companies, my innovate act would target funding on terms to commercialize technology for the benefit of americans.
▶ 1:38:18Sen. Ernst: I will continue to shine a light on this issue and work toward reforms. You have five minutes. I would also recommend that if anyone he wants to take a look at the information, it is on our website. You can read it for yourselves.
▶ 1:38:48Sen. Markey: I make a unanimous request that the independent government accountability office evaluation that focuses on the small business innovation program I congratulate you on that.
▶ 1:39:18Sen. Markey: That it continues to be successful in working. And it has identified the risk. And addressed it. I just want to put that in the record.
▶ 1:39:27Sen. Ernst: 's without objection. With that I want to thank our witnesses for being here with us today. I ask unanimous consent of the record of today's hearing remain open for two weeks for members to submit questions and advise on their remarks. And submit additional information to the record. We want to thank our witnesses for being here today.
▶ 1:39:55Sen. Ernst: Obviously this is an issue of great importance to all of us. Without the committee on small business on -- and entrepreneurship stands adjourned. Thank you. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap.org]