[Senate Hearing 117-317]
[From the U.S. Government Publishing Office]
S. Hrg. 117-317
NOMINATIONS OF ALAN F. ESTEVEZ, THEA D.
ROZMAN KENDLER, ALEXIA MARIE GABRIELLE
LATORTUE, AND GRAHAM S. STEELE
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
BANKING,HOUSING,AND URBAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
ON
NOMINATIONS OF:
ALAN F. ESTEVEZ, OF MARYLAND, TO BE UNDER SECRETARY OF COMMERCE FOR
INDUSTRY AND SECURITY
__________
THEA D. ROZMAN KENDLER, OF MARYLAND, TO BE ASSISTANT SECRETARY OF
COMMERCE
__________
ALEXIA MARIE GABRIELLE LATORTUE, OF THE DISTRICT OF COLUMBIA, TO BE
ASSISTANT SECRETARY OF THE TREASURY
__________
GRAHAM S. STEELE, OF CALIFORNIA, TO BE ASSISTANT SECRETARY OF THE
TREASURY
__________
SEPTEMBER 21, 2021
__________
Printed for the use of the Committee on Banking, Housing, and Urban
Affairs
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available at: https: //www.govinfo.gov /
__________
U.S. GOVERNMENT PUBLISHING OFFICE
48-130 PDF WASHINGTON : 2022
-----------------------------------------------------------------------------------
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
SHERROD BROWN, Ohio, Chairman
JACK REED, Rhode Island PATRICK J. TOOMEY, Pennsylvania
ROBERT MENENDEZ, New Jersey RICHARD C. SHELBY, Alabama
JON TESTER, Montana MIKE CRAPO, Idaho
MARK R. WARNER, Virginia TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts MIKE ROUNDS, South Dakota
CHRIS VAN HOLLEN, Maryland THOM TILLIS, North Carolina
CATHERINE CORTEZ MASTO, Nevada JOHN KENNEDY, Louisiana
TINA SMITH, Minnesota BILL HAGERTY, Tennessee
KYRSTEN SINEMA, Arizona CYNTHIA LUMMIS, Wyoming
JON OSSOFF, Georgia JERRY MORAN, Kansas
RAPHAEL WARNOCK, Georgia KEVIN CRAMER, North Dakota
STEVE DAINES, Montana
Laura Swanson, Staff Director
Brad Grantz, Republican Staff Director
Elisha Tuku, Chief Counsel
Mohammad Aslami, Counsel
Dan Sullivan, Republican Chief Counsel
John Crews, Republican Policy Director
Cameron Ricker, Chief Clerk
Shelvin Simmons, IT Director
Charles J. Moffat, Hearing Clerk
(ii)
C O N T E N T S
----------
TUESDAY, SEPTEMBER 21, 2021
Page
Opening statement of Chairman Brown.............................. 1
Prepared statement....................................... 30
Opening statements, comments, or prepared statements of:
Senator Toomey............................................... 3
Prepared statement....................................... 31
NOMINEES
Alan F. Estevez, of Maryland, to be Under Secretary of Commerce
for Industry and Security...................................... 5
Prepared statement........................................... 32
Biographical sketch of nominee............................... 34
Responses to written questions of:
Chairman Brown........................................... 82
Senator Toomey........................................... 83
Senator Menendez......................................... 91
Senator Scott............................................ 93
Thea D. Rozman Kendler, of Maryland, to be Assistant Secretary of
Commerce....................................................... 6
Prepared statement........................................... 43
Biographical sketch of nominee............................... 44
Responses to written questions of:
Chairman Brown........................................... 94
Senator Toomey........................................... 95
Senator Sinema........................................... 102
Senator Scott............................................ 103
Alexia Marie Gabrielle Latortue, of the District of Columbia, to
be Assistant Secretary of the Treasury......................... 8
Prepared statement........................................... 53
Biographical sketch of nominee............................... 54
Graham S. Steele, of California, to be Assistant Secretary of the
Treasury....................................................... 10
Prepared statement........................................... 63
Biographical sketch of nominee............................... 64
(iii)
NOMINATIONS OF ALAN F. ESTEVEZ, THEA D. ROZMAN KENDLER, ALEXIA MARIE
GABRIELLE LATORTUE, AND GRAHAM S. STEELE
----------
TUESDAY, SEPTEMBER 21, 2021
U.S. Senate,
Committee on Banking, Housing, and Urban Affairs,
Washington, DC.
The Committee met at 10:02 a.m., via Webex and in room G50,
Dirksen Senate Office Building, Hon. Sherrod Brown, Chairman of
the Committee, presiding.
OPENING STATEMENT OF CHAIRMAN SHERROD BROWN
Chairman Brown. The Senate Committee on Banking, Housing,
and Urban Affairs will come to order.
Good morning, everyone. The Committee meets today to
consider the nominations of Alan Estevez to be Under Secretary
for Industry and Security at the Department of Commerce, Thea
Kendler to be Assistant Secretary for Export Control at the
Department of Commerce, Alexia Latortue to be Assistant
Secretary for International Markets at the Department of
Treasury, Graham Steele to be Assistant Secretary for Financial
Institutions at the Department of Treasury. We welcome the
nominees and their families.
We thank you, all four of you, for your willingness to
serve our country in this crucial time in our Nation's history.
For the nominees, during your opening statement, as we
discussed earlier, please feel free to introduce your families
and those who have accompanied you here today to show support.
The nominees before us today have the experience and the
preparation they need to take on these unique and important
roles. If confirmed, each nominee would play a significant role
in protecting U.S. interests at home and abroad.
Mr. Estevez would lead the Bureau of Industry and Security
at the Commerce Department. As Under Secretary for BIS, Mr.
Estevez would play a pivotal role in helping advance our
country's national security, foreign policy, and economic
objectives by implementing an effective export control regime.
As Assistant Secretary of Commerce for Export
Administration, Ms. Kendler would be responsible for
safeguarding our national security by overseeing BIS's export
licensing system.
As the Treasury Department's Assistant Secretary for
International Markets, Ms. Latortue would be responsible for
strengthening and promoting U.S. interests in global financial
and investment markets.
And, Assistant Secretary for Financial Institutions at
Treasury, Mr. Steele would be responsible for coordinating
financial institution policy, community and economic
development, and efforts to increase the resiliency of our
financial system.
All four nominees today are very well qualified. They all
have an impressive record of public service. Let me outline
that, and then I will call on Senator Toomey, and then we will
begin the testimony.
Mr. Estevez spent 36 years at the Department of Defense in
various roles. From 2013 to '17, he served as Principal Deputy
Under Secretary of Defense for Acquisition, Technology, and
Logistics. Prior to that role, he served as Assistant Secretary
of Defense, focusing on logistics and materiel readiness.
Earlier in his career, Mr. Estevez served as a program manager
at the U.S. Army Strategic Logistics Agency.
Welcome to the Committee, Mr. Estevez, and thank you for
your many years of service to our country.
Thea Kendler currently serves as a trial attorney in the
Department of Justice's National Security Division,
Counterintelligence, and Export Control Section--at DOL--I am
sorry. At DOJ, Ms. Kendler investigates and prosecutes crimes
related to export control and economic espionage. Prior to
serving at DOJ, Ms. Kendler served as Senior Counsel in the
Commerce Department's Office of Chief Counsel for Industry and
Security, providing legal advice on export control, regulation,
and enforcement.
We are glad to have you, too, Ms. Kendler. Thank you for
your public service.
Alexia Latortue has more than 20 years of experience in
international development and development finance. She is
currently Deputy Chief Executive Officer of the Millennium
Challenge Corporation, an independent U.S. Government agency
working to eradicate global poverty. From 2013 to 2017, she
served in the Obama administration as Principal Deputy
Assistant Secretary for International Development Policy, where
she worked on inclusive growth and poverty reduction through
multilateral development banks. Ms. Latortue's experience
includes serving at international financial institutions such
as the World Bank and the European Bank for Reconstruction and
Development.
Welcome, Ms. Latortue. Thank you for your career of
service. We are glad you are here today, too.
Our final nominee is Graham Steele. Mr. Steele spent more
than 7 years in my personal Senate office and on the Banking
and Housing Committee as a senior trusted aide. From 2015 to
2017, Mr. Steele served as Minority Chief Counsel for the
Committee, where he crafted legislation and provided strategic
advice and counsel on housing, banking, and national security
issues. During that time, he worked on a broad set of issues
with Chairman Crapo's staff and Chairman Shelby's staff, as
well as the other Republicans and the Democrats on the
Committee. He also worked with a diverse set of stakeholders,
forging close relationships with civil rights groups, consumer
advocates, and organizations like the bipartisan Ohio Bankers
League, who have written in support of his nomination.
Prior to serving as Chief Counsel, he served as my Staff
Director of the Financial Institutions and Consumer Protection
Subcommittee, fighting to protect all Americans' finances. He
did especially important work during and after the financial
crisis of 2008 as we worked to stabilize our financial system.
In his work for my office, he traveled Ohio in the years that
followed, talked with Ohioans who lost their homes and saw
their communities devastated by Wall Street's Great Recession.
I know he has not forgotten those Ohioans. He understands the
far reaching effects the financial system has on workers and
their families all over the country. And I know he has worked
closely over the years with many of my colleagues and their
staff on both sides of the aisle to make our financial system
work for everyone.
Mr. Steele, thank you for your many years of service to
this Committee, the people of my State, and to our country.
Welcome back.
I look forward to the testimony of all four of you.
Ranking Member Toomey.
OPENING STATEMENT OF SENATOR PATRICK J. TOOMEY
Senator Toomey. Thank you, Mr. Chairman.
Mr. Estevez, Ms. Kendler, Ms. Latortue, and Mr. Steele,
welcome to the Committee. You have been nominated for very
important positions.
But before turning to today's nominees, I do want to
register my disappointment that our Democratic colleagues are
still trying to ram through a reckless $3.5 trillion tax-and-
spending bill despite reservations from members in their own
caucus. And given the profound impact that this bill will have
on all Americans, the Republicans on this Committee have
requested that we hold hearings and have a mark-up.
Unfortunately, it appears that our Democratic colleagues have
no such plans, and I fear that is because the bill is going to
include many very flawed policies that will harm economic
growth and jobs and invade the privacy of Americans. These
include massively expanding the welfare State in an effort to
make the middle class dependent on the Federal Government,
raising taxes on U.S. employers, diminishing investment by
increasing capital gains taxes, increasing the electric vehicle
tax credit that subsidizes the wealthy, giving the IRS, an
agency with a history of abuse, access to our personal bank
account information. Those are just some of the destructive
policies being advanced, and I wish our Democratic colleagues
would allow those items to be subject to a debate and an
amendment process here at the Committee, but it appears to me
that that is unlikely to happen.
Now turning to today's nominees, Mr. Estevez and Ms.
Kendler, you would serve in Commerce's Bureau of Industry and
Security, known as BIS, and of course, BIS determines which
U.S. goods are too sensitive to be shipped abroad. In the face
of China's drive for dominance in key tech sectors, BIS's
mission today is as important as it has ever been.
By setting U.S. export control policy on items used for
both civilian and military purposes, BIS effectively has the
power to reshape the supply chains of entire industries. That
means BIS must craft export controls in a prudent, thoughtful,
and effective manner that advances U.S. national security
interests without unduly harming American domestic industry.
This challenge is typified by BIS's efforts to impose
congressionally mandated controls on ``emerging and
foundational technologies,'' which I expect that you would
prioritize.
BIS is also responsible for Section 232 investigations,
Section 232 of our trade law, of course, and this statute is
intended to prevent the importation of goods to the U.S. that
threaten American national security. Unfortunately, it has
recently been abused to protect favored domestic industries.
Does anyone truly think a Volvo station wagon is a national
security threat, as the last Administration claimed? Tariffs on
imported goods are taxes paid by American consumers. Those
taxes weaken our economy, threaten American jobs, and erode our
credibility with other Nations. You should urge the President
of the United States to reverse the last Administration's
mistakes by removing the current 232 tariffs harming our
relationships with our allies and stopping the abuse of this
part of our trade law.
Now to the Treasury nominees, Ms. Latortue has been
nominated to serve as Assistant Secretary for International
Markets. Ms. Latortue has considerable experience in this area,
but I do have questions about the priority she has placed on
climate change at the Millennium Challenge Corporation, known
as the MCC. According to the MCC's authorizing statute, its
assistance is supposed to focus on ``achieving lasting economic
growth and poverty reduction.'' The MCC should prioritize this
mission, not other agendas. And by the way, in doing so, it
will help developing countries improve their environments. As
we all know, the most prosperous Nations in the world are also
the greenest Nations in the world.
Finally, Mr. Steele has been nominated to serve as
Assistant Secretary for Financial Institutions, and I
appreciate his past service as a Committee staffer, but I am
concerned about some of the positions that Mr. Steele has
taken. For instance, he has repeatedly advocated for using what
I consider extra-legal measures to achieve extreme policies.
Despite the absence of statutory authorization, he has proposed
having bank regulators forbid financial institutions from
making loans to perfectly legal and economically necessary
enterprises in the energy space. He has advocated for
aggressively using the FSOC to designate financial firms as
systemically important, apparently, in order to subject them to
burdensome regulations, including climate regulations, even
when it is doubtful that they present a systemic risk. He has
also proposed that Federal agencies radically reinterpret or
abuse their authorities, like withholding FDIC deposit
insurance from institutions that offer products that he deems
to be too complex, and politicizing the Fed to pursue a
progressive social agenda, and to socializing banking itself by
having the Federal Government control consumer bank accounts,
and unilaterally establishing a Government-run credit reporting
agency within the CFPB.
I am particularly troubled by some of these extreme
positions in light of Mr. Steele's statements disparaging
Republicans. He has referred to Republicans as ``callous'' and
``absolutely villainous'' and suggests that the Republicans
only use the ``full force of their investigative and procedural
power in service of the wealthy and White folks.'' These
statements raise questions about the temperament, judgment, and
willingness to work across the aisle.
So let me close by saying; I disagree with President
Biden's nominees on policy matters far more often than I agree
with them; nevertheless, I have supported many nominees. And I
will continue to do so, but there are limits to that support. I
do look forward to hearing from our nominees today.
Thank you, Mr. Chairman.
Chairman Brown. Thank you, Senator Toomey.
Would all the nominees rise? Raise your right hand. Do you
swear or affirm that the testimony that you are about to give
is the truth, the whole truth, and nothing but the truth, so
help you God? And, do you agree to appear and testify before
any duly constituted committee of the Senate?
Mr. Estevez. I do.
Ms. Kendler. I do.
Ms. Latortue. I do.
Mr. Steele. I do.
Chairman Brown. Thank you. Please be seated. Mr. Estevez,
please begin your testimony. Thank you.
STATEMENT OF ALAN F. ESTEVEZ, OF MARYLAND, NOMINATED TO BE
UNDER SECRETARY OF COMMERCE FOR INDUSTRY AND SECURITY
Mr. Estevez. Thank you, Chairman Brown. Chairman Brown,
Ranking Member Toomey, distinguished Members of the Committee,
I am honored to appear before you today as the nominee to lead
the Bureau of Industry and Security, or BIS, as the Under
Secretary of Commerce for Industry and Security.
I want to thank President Biden and Secretary Raimondo for
their confidence in nominating me to this critical national
security position.
I especially want to thank my wife, Susan Pearson, sitting
here behind me today for all her support and love and, as I
have stated in my previous confirmations, for her sage advice
and counsel in all that I do. Needless to say, I would not be
sitting before you today without her support and her sacrifice.
This is a critical time for our Nation. The COVID-19
pandemic has highlighted the fragility of our supply chain
supporting U.S. industries and ordinary Americans across the
country. Many of our foreign adversaries continue to act in an
irresponsible manner, including through the diversion of dual
use technologies to military uses, theft of intellectual
property, human rights abuses, and anticompetitive, unfair, and
coercive trade practices. These activities threaten our values
and interests as well as those of our allies and partners.
BIS has a key role in addressing these threats.
Fortunately, Congress, with bipartisan passage of the Export
Control Reform Act, or ECRA, in 2018 has given BIS important
authorities to execute that mission.
During my long career with the Department of Defense, I
operated at the nexus of national security and technology. As a
Senior Acquisition and Logistics Official, it was my job to
ensure that U.S. Armed Forces were provided with the best
weapon systems in the world to ensure their ability to defend
the United States. I view the work of BIS from a similar
perspective. Rather than providing the U.S. Military with
technological overmatch against our adversaries, the mission is
to ensure that our adversaries do not have access to the
critical U.S. technologies that can harm our national security
and foreign policy.
If confirmed, I will lead the dedicated professional staff
at BIS to ensure that our export controls prevent the transfer
of sensitive U.S. technologies. I will work to ensure that we
are appropriately using all the authorities provided under
ECRA, and I will ensure that we execute our due diligence in
identifying and imposing appropriate controls on those emerging
and foundational technologies that need protection. I will also
work with our enforcement arm to ensure that we monitor exports
and aggressively detect violations of our export controls.
I also believe that it is important to cooperate with our
allies and partners to build strong export controls, especially
in those areas where our current multilateral regimes do not
currently provide adequate protections. In addition to export
controls, I will support the Bureau's other important equities,
including its continued efforts to address risks in the
critical supply chains, reviewing transactions before the
Committee on Foreign Investment in the United States, and
enforcing our antiboycott requirements. I will work with the
BIS staff to ensure that they have the resources to accomplish
this mission.
Finally, I believe it is important for BIS to work
constructively with Congress. If confirmed, I look forward to
working with you and your staff as we meet these complex
challenges facing BIS and our Nation.
Thank you for the consideration of your nomination, and I
look forward to your questions.
Chairman Brown. Thank you, Mr. Estevez.
Ms. Kendler, you are recognized for 5 minutes. Thank you.
STATEMENT OF THEA D. ROZMAN KENDLER, OF MARYLAND, NOMINATED TO
BE ASSISTANT SECRETARY OF COMMERCE
Ms. Kendler. Thank you. Chairman Brown, Ranking Member
Toomey, Members of the Committee, I am honored to appear before
you as President Biden's nominee for the position of Assistant
Secretary of Commerce for Export Administration.
I want to thank President--the President and Secretary
Raimondo for the trust they have placed in me with this
nomination. I am delighted at the prospect of returning to
serve BIS and the Commerce Department in this critical role.
It would not be possible for me to take on the role for
which I am nominated without the love, support, and
encouragement of my family: my children, Dava and Micah; my
husband, Owen--today is our 18th wedding anniversary--and my
father, Gil Rozman, who planted the seeds of my international
public service career. My mother, Masha, is no longer with us,
but I see her legacy in my children and strive in my work to
honor her memory as a lawyer, a public servant, and a lifelong
learner.
I sit before you thanks to the good will and the generosity
of the United States. My grandfather, Max Dwosh, who, at age
99, is watching this hearing online, fled Poland on the eve of
the Nazi invasion. The family he had to leave behind was
murdered. My grandfather survived in Russia during the war,
performing manual labor. At the war's end, after my mother was
born, he and his young family left Russia and found a haven in
the American Displaced Person Camps, refugee camps in Germany,
before immigrating to the United States. My mother went on to a
long career as a deputy attorney general for the great State of
New Jersey.
My public service is inspired by my gratitude to the people
and the Government of the United States for making my family's
survival and success possible. It would be an honor to serve my
country in this new role, drawing on my passion for export
controls and my experience in national security.
I began working on export controls in September 2001, just
after September 11th, in private practice, then for 10 years in
the Chief Counsel's Office for BIS, and for the last 7 years in
the Counterintelligence and Export Control Section of the
Justice Department's National Security Division. As a national
security prosecutor, my work has focused on dismantling
procurement networks, thwarting intelligence threats, and
deterring economic espionage and other theft of trade secret
activities aimed at U.S. industry.
With respect to matters that are in the public record, I am
particularly proud of charging global telecommunications
company, Huawei, with operating as a criminal enterprise,
stealing trade secrets, and defrauding global financial
institutions; charging and obtaining the extradition of an
intelligence officer who sought to steal trade secrets from a
leading U.S. aviation technology company in Ohio; and numerous
other cases that held foreign procurement agents accountable
for their illicit activities. I am extraordinarily fortunate
for the opportunity to pursue this work and to do so with such
dedicated and professional colleagues.
I believe deeply in the mission of BIS to advance America's
national security, foreign policy, and economic objectives
through effective export controls and by maintaining and
advancing our strategic technological edge. The United States
can and should lead in export controls, drawing from the
innovative spirit of our capitalist system and the decades we
have spent forging relationships with our allies.
In my 20-year career as an export controls lawyer, BIS's
mission has never been more relevant, particularly as we
compete against autocracies for 21st century leadership. Chief
among these concerns is the need to address the challenges
posed by efforts to seek U.S. technologies, to pursue foreign
military modernization and other destabilizing activities while
also striving to manage this competition responsibly. We must
appropriately use all available tools to prevent technology
transfers to end users and end uses that enable strategies and
activities that harm our national security and foreign policy
interests.
I recognize that all of this important work is part of a
whole-of-Government effort, and I also strongly support close
collaboration with allies and partners to strengthen our export
controls, which are more effective when developed and amplified
through multilateral regimes and plurilateral agreements.
Finally, it is important for BIS to work constructively
with this Committee and the Congress as a whole. If confirmed,
I look forward to working with you and your staff as we meet
the complex challenges facing BIS.
Thank you again for this opportunity to appear before you.
I would be pleased to answer your questions.
Chairman Brown. Thank you, Ms. Kendler, and happy
anniversary.
Ms. Kendler. Thank you.
Chairman Brown. Ms. Latortue, welcome. You have five
minutes. Thank you.
STATEMENT OF ALEXIA MARIE GABRIELLE LATORTUE, OF THE DISTRICT
OF COLUMBIA, NOMINATED TO BE ASSISTANT SECRETARY OF THE
TREASURY
Ms. Latortue. Thank you. Chairman Brown, Ranking Member
Toomey, distinguished Members of this Committee, it is an honor
to appear before you today as the President's nominee to be
Assistant Secretary for International Markets at the Department
of Treasury. I am humbled and thankful for the trust President
Biden, Vice President Harris, Secretary Yellen, and Deputy
Secretary Adeyemo have placed in me.
I used to bring students to the Dirksen Senate Office
Building when I worked with the Close Up Foundation as a young
adult. We spoke about the awesome responsibility of public
service and of the work of this chamber. Many years later, I am
proud to be back, and if confirmed, I am ready to work hard and
to the best of my capabilities to advance the Treasury
Department's ambitious goals, working hand in hand with
Treasury colleagues and with all of you.
The core mission of the Office of International Affairs at
the Department of Treasury is well aligned with who I am as a
professional and as a person. Doing my part to help shape a
more safe, peaceful, and prosperous world has been a constant
in my career. Growing up in Togo and Cote d'Ivoire, I saw
poverty firsthand. It is also where I developed the conviction
that everyone deserves the opportunity to fulfill their
potential and to live a life of dignity. From a very young age,
I knew I wanted to make a difference.
Early in my career, I swapped theory for exhilarating work
with communities and Government partners on the ground. I loved
the operational work on projects funded by USAID and other
donors. This included living for 3 years in Haiti and working
across all continents. I have seen the best and the worst of
development. It cultivated my passion for evidence,
accountability, and transparency, which is integral to how I
approach all of my positions.
At the European Bank for Reconstruction and Development, I
shaped how development finance, combined with policy dialogue
and technical assistance, can support countries' transition to
well-functioning market economies. I pressed for greater
engagement on climate, economic inclusion, and digitalization.
My time in Federal service has been a highlight of my
career. For nearly 4 years, I led the Treasury Department's
international development policy work, covering infrastructure
finance, debt, financial inclusion, and food security. Working
closely with strategic allies, I negotiated financing and
policy packages with the multilateral development banks. Today,
I am with the Millennium Challenge Corporation, a gem that
punches above its weight to reduce poverty through economic
growth and well-governed, low and low middle-income countries.
I grew up imbued in the notion that public service is
noble. I was expected to think beyond my self-interest to that
of my community, country, and world. My maternal grandfather
was a public servant representing Haiti, right here in
Washington, DC, My father, Gerard Latortue, opted to leave
Haiti overnight rather than endorse the punishing economic
policies of a dictator. He ended up in Puerto Rico, where I was
born years later, making a deal at a local university to teach
economics if they taught him Spanish. I learned about
courageous leadership and integrity from him. My maternal
grandmother and mother, Marlene Latortue, lost their husband
and father shortly after his release as a political prisoner in
Haiti. From them, I learned about rebounding with grace and
quiet strength.
I would like to recognize my sister, Gaielle Latortue, and
my brother-in-law, George Kabwe, who are here today. They are
both international civil servants. My sister, Stephanie
Latortue-Driza, a teacher in the D.C. public school system, is
also here. I thank them for their love and support and for
having made me the luckiest of aunts, blessed with my clever,
kind, and open-minded nephews and niece, Lorenz, Galen, and
Graciana.
My nomination today is a testament to them and to the
United States, a country of unparalleled opportunity. We are a
country where my father's favorite saying rings full of
possibility: ``We are beholden to the impossible.''
The Department's work is important in the best of times. In
these extremely challenging times, it is vital. I have seen
firsthand how an engaged United States is able to deploy its
evidence-based approach, values, and ideas to work effectively
with allies, to tackle the most intractable issues that affect
our world. Today, these issues include the economic recovery
from the COVID-19 pandemic, rising poverty for the first time
in 20 years, infrastructure, climate change, energy, food
security, inequality, and promoting a level playing field for
American firms and workers. Urgent need is needed--urgent work
is needed to stop further reversals.
If I am privileged enough to be confirmed, I commit to
working closely with this Committee to help put the United
States and our international partners on a solid economic
footing for a future full of optimism and hope. It would be an
honor to serve with Secretary Yellen, Deputy Secretary Adeyemo,
and to once again work alongside the superb and committed
public servants at the Treasury Department. Thank you.
Chairman Brown. Thank you, Ms. Latortue.
Mr. Steele, you are recognized for 5 minutes.
STATEMENT OF GRAHAM S. STEELE, OF CALIFORNIA, NOMINATED TO BE
ASSISTANT SECRETARY OF THE TREASURY
Mr. Steele. Thank you, Chairman Brown, Ranking Member
Toomey, and distinguished Members of the Committee. Thank you
for the opportunity to appear before you today and for
considering my nomination to be Assistant Secretary of the
Treasury for Financial Institutions.
I am honored to have been nominated for this position, and
I am grateful to President Biden, Vice President Harris,
Secretary Yellen, Deputy Secretary Adeyemo, and Under Secretary
Liang for this opportunity.
If the Committee Members will allow me, I would like to
begin on a personal note by thanking the members of my family
who are here today. First, I want to thank my partner, Moira. I
would not be the person that I am today without her love,
support, and moral clarity. She has taught me that partnership
is about giving, taking, learning, teaching, growing, thriving,
and changing together.
I also want to acknowledge my mother, Debbi, who is here,
as well as my late father, Fritz, who passed away in February
of last year. They both instilled in me from a very young age a
desire to always try to do the right thing, do the best that I
possibly can, and to work for the public good.
Last, but not least, I want to thank my sister, Lauren, who
has always understood and supported me in the way that only a
lifelong sibling really can.
My career in public service began in the office of Chairman
Brown in January of 2010. That opportunity and experience
changed my life. It was an historic moment as the Banking
Committee was in the process of drafting the most sweeping
financial reforms of the last 80 years in the wake of the
global financial crisis. I was fortunate to have the
opportunity to work for Senator Brown, who, as the staff and
Members of this Committee already know, is a brilliant,
compassionate, and tireless advocate on behalf of working
people. In that role, I helped Senator Brown oversee the
passage and implementation of reforms to make our financial
system safer and improve our economy, including the Senator's
tireless effort to support Ohio families facing foreclosure and
the fight to stay in their homes, and to help communities
devastated by the housing crisis to recover.
I spent the next 4 years as the Staff Director of the
Subcommittee with jurisdiction over financial institutions and
consumer protection, including 2 years during which Senator
Toomey served as the Ranking Member. During that time, I worked
closely with consumer and community groups to ensure that all
Americans have equal access to safe and secure financial
products, including mortgages, student loans, prepaid cards,
and small dollar loans. I also collaborated with a bipartisan
group of Committee Members, industry groups, regulators, and
other stakeholders to ensure that the most systemic
institutions are well regulated, community banks and credit
unions are competing on a level playing field, and banking and
insurance rules are appropriately tailored.
When Senator Brown became the Ranking Member of the Banking
Committee in 2015, I served as Chief Counsel to the Minority
staff, a role I held until August of 2017.
More recently, as a member of the staff of the Federal
Reserve Bank of San Francisco and now in my role at Stanford
Graduate School of Business, I have experienced from a close
vantage point some of the most pressing financial challenges
facing our Nation, including housing affordability, financial
technology, and climate change.
Finance has always been a personal issue for me, having had
some of my friends, family, community, and even myself
experience financial risks and challenges: the decades-long
burden of student loans taken out to create an opportunity for
a better future; home equity lines of credit tapped in the
hopes of filling the gap between household income and expenses;
credit card bills embedded with hidden tricks, traps, and fees;
jobs lost and retirement nest eggs depleted by a crisis of
someone else's making. I am acutely aware that the millions of
people that use our financial system every day are, in the
words of Secretary Yellen, ``more than just statistics.''
I believe that this is another consequential historical
moment, and that is why I can think of no greater honor than
working with a talented, dedicated staff at the United States
Department of the Treasury.
If I am fortunate enough to be confirmed, I look forward to
working closely with all the Members of this Committee to build
a better postpandemic economy by helping to shape a stable and
inclusive financial system that works for everyone.
Thank you again for the opportunity to testify today, and I
look forward to your questions.
Chairman Brown. Thank you, Mr. Steele.
I would like to pose questions to all four of you, to each
of you, so please be as brief as you can in your answers,
starting my left to right.
Mr. Estevez, you have a distinguished record of service
working on national security and technology issues. Tell us
briefly, what are your priorities and vision for BIS?
Mr. Estevez. Thank you for that, Senator. My priorities
would be countering transfers of sensitive technologies to
China, given China's malign behavior on a number of fronts, as
well as to other adversarial Nations, continuing in
strengthening our focus on identifying and imposing appropriate
controls on emerging and foundational technologies,
strengthening the resiliency of our supply chains, particularly
in the semiconductor area, and working with our allies and
friends to strengthen controls over critical technologies. I
have a more extensive list, but in the interest of time I will
stop there, Senator.
Chairman Brown. Thank you. I appreciated our one-on-one
conversation last week.
Ms. Kendler, if confirmed, you will be charged with
administering our export controls system, as you know. How
would you use BIS authorities to address genocide and human
rights violations and oppressive surveillance in China and
elsewhere?
Ms. Kendler. Thank you, Senator. I share your deep concern
about the Uyghur people in Xinjiang. We cannot permit U.S.
technology to be used in human rights abuses. If confirmed, I
will use all of BIS's tools--the licensing process, the Entity
List, the Military End User List, and so on--to scrutinize
license applications involving the PRC. I would also work with
partners, interagency, and with the multilateral regimes to
amplify our export controls, but I would not hesitate to impose
unilateral controls if necessary to keep United States
technology out of the hands of human rights abusers. Thank you.
Chairman Brown. Thank you.
Ms. Latortue, you have an impressive record, 20 years of
international development experience. What role does U.S.
development assistance play in providing an alternative to
China's Belt and Road Initiative? How do you advance U.S.
leadership in development assistance?
Ms. Latortue. Thank you, Chairman, for your very important
question. The United States has a vital role in helping our
partner countries in their sustainable development. The
Americans have an offer of development that is qualitatively
very different from that of China. It is transparent. It has
high environmental, social, and governance standards embedded
in it. It does not coerce or try to hide conditions for the
assistance. And in addition to finance, the United States
offers vital policy and institutional reform support to make
sure that our development assistance has lasting impact in the
countries that we support.
Chairman Brown. Thank you.
Mr. Steele, you worked on the Senate response to the
financial crisis. You saw firsthand how the financial system
works for Wall Street, not often enough for Main Street, in
your work in Ohio and now your work in San Francisco. We see
many of the same problems today. Big banks give CEOs huge
bonuses, spend billions in stock buybacks instead of investing
in workers and the real economy. Millions of families, as you
know, face the threat of eviction or foreclosure, especially in
communities of color and low-income areas. During the pandemic,
as we know, it was community banks and credit unions, not mega
banks, that increased lending and stepped up to make PPP loans
to small businesses in their communities.
My request and question is this: Explain what you will do
as Assistant Secretary for Financial Institutions to make sure
the financial system serves working people who make this
country work.
Mr. Steele. Absolutely, Senator. Thank you for the
question, and as I said in my opening statement, I have always
known you to be a champion for working people. So largely, I
would follow your lead. I would also follow the lead of
President Biden, who has made clear that the lives of working
people are important to him and that is a priority for his
Administration, and Secretary Yellen has done the same.
In my specific role, I would point to a few specific areas.
One is that we know that financial crises themselves fall the
hardest on working people, low-income communities, communities
of color. Strong financial regulation can help protect those
communities from crises happening and from the fallout when
there is a crisis.
Second, I would say that workers' wages are--do them no
good if they are siphoned off by predatory financial products.
So strong consumer protection is really important to protect
workers' income and their hard-earned wages.
You mentioned community banks and their performance during
the PPP program and the importance of the role that they play.
Were I fortunate enough to be confirmed, we have the CDFI fund
that supports CDFIs and minority depository institutions.
Congress has recently appropriated a good amount of money to
that program. It is important that we invest in those community
institutions that can, in turn, invest in urban and rural
communities to make sure that the workers there are thriving.
You also mentioned housing. I will say that we know that
housing security and job security are closely related. Treasury
administers a couple of programs that protect renters and that
protect homeowners, and I would see to it that those programs
are doing the job as they are intended and as promised.
So should I be fortunate enough to be confirmed, I would
look forward to working with you and all the Members of the
Committee to ensure the financial system works well for working
people.
Chairman Brown. Thank you, Mr. Steele. Thank you to the
four of you.
Senator Toomey is recognized.
Senator Toomey. Thank you, Mr. Chairman.
Mr. Steele, the position to which you have nominated
oversees Treasury's involvement in FSOC, as you know, which the
Treasury Secretary chairs. In a 2020 article, you proposed
``Under a comprehensive macroprudential approach to climate
regulation, insurance companies and asset managers would be
subject to Federal supervision and regulation by the Federal
Reserve through designation as non-bank CIFIs by the FSOC on
the basis that their mix of activities, in this case, their
financing of climate change-driving industries, pose a threat
to the financial stability of the United States.''
As far as I can tell, even the current Administration has
not advocated for CIFI designation as a means of climate
regulation. Your position is particularly troubling because
climate policy is not within the legal authority or expertise
of the FSOC or the Fed. Moreover, climate models are ill suited
to predicting financial risk due to their inherent
uncertainties and complexities and the fact that climate models
are designed to have a time horizon of decades or longer. Given
the uncertainty of climate risks to financial institutions, it
would be completely arbitrary for FSOC to designate any
financial institution as systemically important on the basis of
perceived climate risk.
So, Mr. Steele, let me ask a question. We have extreme
weather events every year in America; we always have, probably
always will. Can you name any bank that has failed due to
extreme weather events in the last 50 years in America?
Mr. Steele. Thank you for the question, Senator. Not off
the top of my head, I cannot.
Senator Toomey. OK. So nobody has been able to name a bank
that has failed, to my knowledge, in easily the last 50 years,
probably longer than that, in the United States.
Are you aware of any major American financial institution
that is in danger of collapsing in the next 12 months or the
next 24 months as a result of climate risk?
Mr. Steele. Thank you for the question, Senator. And as you
know and as you note, climate change and the intersection with
the financial system has been a very important issue to me. And
I come at it in a similar perspective to Secretary Yellen, who
has noted that climate change is both an existential risk to
our environment but also potentially to our economic system if
it gets severe enough.
And the way I think about this is similar to what Vice
Chair Quarles at the Federal Reserve system has said, that it
is incumbent upon financial regulators to understand all the
risks presenting the institutions that they supervise and----
Senator Toomey. I understand.
Mr. Steele. OK.
Senator Toomey. I have got very limited time here. I
appreciate that, but look, here is the bottom line and the
reason I bring this up. We can absolutely have a discussion
about whether we need to take more aggressive action to deal
with climate change. Abusing the powers of our financial
regulators to do it is a bad way to do it, in my view. It
should be done in the transparent fashion of legislation and
implemented by people who have expertise in this. The financial
system is not the way to try to do this.
Mr. Estevez, Section 232 of our trade law is intended to be
used to review whether imports ``threaten to impair'' U.S.
national security. Now recently, an increasingly loose
interpretation of this has been used by the Executive branch.
For instance, as you know, the last Administration alleged the
foreign steel imports are a national security threat.
The facts tell a very different story. In 2017, the year
before the 232 tariffs were put in place, over 66 percent of
the steel we use in the United States was domestically
produced. The rest was imported specialty steels that we need
but we do not produce domestically, and the vast majority of
that came from our close allies. It is obvious to me that
importing steel that we do not make ourselves in modest
quantities from nearby allied countries is not a threat to
national security, and Defense Secretary James Mattis agreed.
So, Mr. Estevez, you have served for many years in the
Defense Department. Do you agree that products should actually
have a genuine nexus to defense preparedness and military
readiness in order for them to be eligible for a Section 232
investigation?
Mr. Estevez. Thank you for that question, Senator. Let me
start off by saying 232 is an important tool.
Senator Toomey. I have got to ask you to be as brief as
possible because I am already running out of time.
Mr. Estevez. You got it. Section 232 needs to be looked at
in a hard national security lens, Senator. It should not be
used willy nilly.
Senator Toomey. Thank you. And do you believe that it is
important that the U.S. and the E.U. meet the December 1
deadline for resolving the trade disputes that will enable us
to lift these tariffs?
Mr. Estevez. I think it is very important that we work with
our allies in doing that. I cannot speak to the deadline per
se, but it is very important that we work completely these
issues with our allies.
Senator Toomey. I think the deadline is important as well.
So thank you.
Ms. Kendler, BIS is responsible for conducting the Section
232 exclusion process for existing tariffs on steel and
aluminum. Yet, the process has been fraught with problems from
day one. Commerce's OIG investigated and found in January of
this year that ``U.S. companies were denied exclusion requests
based on incomplete and contradictory information, and the
Section 232 exclusion request to review process lacked
transparency.'' Another GAO investigation found BIS did not
decide most of the requests within its established deadlines,
leading to a backlog of 30,000 requests.
Ms. Kendler, can you commit to increasing the transparency
and improving the efficiency and timeliness of the exclusion
process?
Ms. Kendler. Yes, Senator. I believe in a fair,
transparent, and efficient exclusion process.
Senator Toomey. Thank you.
And, Mr. Chairman, if you will indulge me for just an extra
minute, I want to ask Mr. Estevez and Ms. Kendler the following
question. In 2018, Congress enacted the Export Control Reform
Act. One of its most important provisions is a mandate that BIS
identify and control the export of emerging and foundational
technologies. Will you both commit to prioritizing the
implementation of this provision and keeping this Committee
informed of your progress? Could you each answer separately?
Mr. Estevez. Absolutely, Senator.
Senator Toomey. Thank you.
Ms. Kendler. Yes, Senator.
Senator Toomey. And then, finally, my last question for Ms.
Latortue: You have said that climate change is ``the defining
issue of our time,'' and under your leadership the MCC has
significantly reduced its funding for non- climate-related
projects to less than half of MCC's grants over the last 5
years. The MCC was created, however, to promote economic growth
and to reduce poverty but not primarily to address climate
change. So let me ask, as a general matter, do you agree that
countries with higher standards of living tend to have better
environments?
Ms. Latortue. Senator, I believe that climate change,
poverty reduction, and economic growth are intimately linked,
and that is why partner countries ask for support that actually
understands the connections between all three. Protecting our
development dollars will require us to keep in mind the impacts
of climate change across every sector of the economy.
Senator Toomey. OK. I am out of time here. Let me just
point out certainly they can be linked, but it is, I think, an
objective fact that the most developed countries, the most
prosperous countries in the world have the best environments
because they can afford the luxury of maintaining a good
environment. Economic growth leads to better environment. Thank
you.
Senator Toomey. Thank you, Senator Toomey.
Senator Menendez of New Jersey is recognized.
Senator Menendez. Thank you, Mr. Chairman.
Mr. Estevez, the President as candidate promised that he
would return the jurisdiction of the export licensing of semi-
automatic weapons from the Commerce Department back to the
Department of State, from which President Trump took it. The
President can do this by simple regulation without the need for
legislative approval. But until that happens, the Department is
providing no information to Congress as to what lethal weapons,
including sniper rifles, assault rifles, and others, are being
sold to what countries or foreign persons, in what quantities,
and under what conditions. What is the status, to your
knowledge, of the implementation of the President's promise?
Mr. Estevez. Thank you for that, Senator Menendez. I cannot
speak to the President's promise. You probably have access to
the President more than I do. But I will say that it is
important to aggressively use export controls to control gun
exports, and I certainly am prepared to work with the Committee
on the oversight of that.
Senator Menendez. Well, if you take my word that that was
the President's promise during his campaign, do you support
that promise?
Mr. Estevez. I will work with the Administration on that,
Senator.
Senator Menendez. So, meaning that if they in fact are
going to----
Mr. Estevez. If that is the direction that the President
wants to go, I will certainly support that.
Senator Menendez. Until the President's promise is
implemented, will you commit to provide to the committees of
jurisdiction over arms sales specific information about what
semi-automatic weapons sales are being considered for export,
including the foreign recipients, numbers of weapons,
conditions, and end use monitoring measures, if confirmed?
Mr. Estevez. Senator, since I am not in BIS, I cannot give
you the details on what those rules exactly are. I do commit to
working with you and your staff on----
Senator Menendez. I am talking about information. I am not
talking about some classified set of circumstances. Surely, the
U.S. Government, who funds the Department that you are going to
be part of and who funds the process of exporting weapons,
should be able to know who you are exporting to.
Mr. Estevez. Senator, I am certainly prepared to provide
the Committee the information that is due this Committee
regarding exports.
Senator Menendez. Mr. Steele, our financial industry has a
diversity problem, especially at the highest levels. The
proportion of minorities in financial services drops by 75
percent from entry level to the C-suites. At the highest level,
90 percent of the C-suite is White. Women of color make up only
2 percent of executives despite being 21 percent of the entry-
level workforce.
It is not an optics problem that I am talking about. A lack
of diversity leads to real issues in our financial system. In
2019, the National Bureau of Economic Research found that Black
mortgage borrowers were charged higher interest rates than
White borrowers. That might sound familiar since between 2004
and 2009, in the run-up to the financial crisis, Black and
Latino borrowers with good credit scores were three times as
likely as similarly situated White borrowers to have higher-
rate mortgages.
So Secretary Yellen has previously testified here that if
economists are mainly of one gender or race they are likely to
miss things that matter. Do you believe the same holds true for
bank executives?
Mr. Steele. Well, absolutely, Senator, and thank you for
the question. And I know you have been a leader on this issue
on the Committee. I would say, absolutely, that lived
experience is extremely important for people, policymakers in
the public sector, for bankers in the private sector, for
anyone in a decisionmaking and policymaking position. And that
is particularly to my mind true in the financial services
sector where, as you noted--you noted some of the history
around discriminatory lending, but obviously, as you know, it
goes even further back than that in the housing market, back to
redlining and things like that.
I absolutely think that----
Senator Menendez. So does the lack of diversity at
financial institutions mean they are more likely to miss things
that matter?
Mr. Steele. I think a lack of diversity, equity, and
inclusion in any institution means that they are likely to miss
important things.
Senator Menendez. If you are confirmed then, what would you
do to help diversify financial institutions?
Mr. Steele. Well, I mean, I would say that this
Administration has put a high priority on diversity, equity,
inclusion, both within the agencies but also trying to work
with the private sector. And so I would be happy to talk with
you in your office if you have ideas about that. I am happy to
engage with the private sector to hear what they are doing and
talk with the folks at Treasury to hear----
Senator Menendez. We would welcome that, and we have
already had these discussions with Secretary Yellen and the
Under Secretary, and I hope we can do so with you as well.
Finally, in 2018, I led the effort to pass the Trafficking
Victims Protection Reauthorization Act, which passed Congress
unanimously. One section of that bill requires the Treasury
Secretary to promote antitrafficking policies at the
international financial institutions, such as integrating
antitrafficking interventions into projects requiring
Government action against trafficking as a condition, a
condition, of making loans. Ms. Latortue, will you commit to
advancing antitrafficking efforts at the multilateral
development banks and regularly brief my staff on your work
there?
Ms. Latortue. Thank you, Senator, and thank you for raising
this very important Act, which is very important to our work in
supporting the multilateral development banks. The United
States has consistently put pressure on those development banks
to comply with this Act, which of course, protects the most
vulnerable and disadvantaged people, and I would be very
pleased to continue to engage with you on their progress in
this regard, Senator.
Senator Menendez. Thank you.
And, Mr. Chairman, one last brief question. We have to
ensure that our financial regulators identify and interdict the
proceeds of trafficking and help trafficking survivors repair
their credit in cases where their identities were stolen and
abused by their traffickers.
So I want to ask you again, Ms. Latortue, and Mr. Steele in
this case as well, will you commit to using the tools of the
Treasury Department to address these issues?
Ms. Latortue. Senator, yes. The Treasury Department has a
range of tools across departments, and I look forward to
working with my colleagues across all of the Treasury
Department in this regard.
Mr. Steele. I do, Senator.
Senator Menendez. Thank you.
Thank you, Mr. Chairman.
Chairman Brown. Thank you, Senator Menendez.
Senator Tester is recognized remote from his office.
Senator Tester. I appreciate the opportunity. Thank you all
for being here today for the respective jobs that you were in
line for.
Look, I come from rural America. We have seen significant
economic barriers in recent years, including a global pandemic,
difficult growing seasons, and extreme weather events I believe
due to climate change.
And this has been asked about previously, but I want you to
elaborate a little more. Disastrous trade policies,
particularly from the previous Administration, retaliatory
tariffs impacted businesses in communities of all sizes, not
those just in rural America but everywhere, including ag
producers.
This is for Latortue, excuse me, Estevez, and Kendler. If
you are confirmed to these positions, how would you work to
move forward from Trump on trade and our international
relationships overall?
Mr. Estevez. I will start off with that, Senator. Thank you
very much for the question. On trade, of course, you know, my
position is on the export controls, on that side, other than
Section 232. As I said to Senator Toomey, Section 232 should
only be used for the strictest national security means. With
regard to--I am sorry. I lost the rest of your question,
Senator.
Senator Tester. Well, just how are you going to work to
move forward on trade? Trade is critically important to rural
America. It is critically important for this country. And how
do we reestablish those international relationships that have
been screwed up by the last Administration?
Mr. Estevez. Working with our international partners is
critically important to me. It is something I have done in the
past in my previous DoD roles, and I intend to get back to
working with our allies and partners to ensure (a) on the
export control side we are in sync and on the trade side we are
in sync, and with the rest of my colleagues in Commerce.
Senator Tester. OK. And the other two want to comment?
Kendler or Latortue?
Ms. Kendler. Thank you, Senator. I agree with Mr. Estevez.
I would note that the Bureau of Industry and Security
participates in numerous multilateral regimes and is also
working on plurilateral agreements, and if confirmed, I
anticipate supporting those activities and giving them much
priority.
I would also note that in terms of the supply chain it is
very important that we work to shore up key sectors, like
semiconductors industries and others, of course, to ensure,
excuse me, to ensure resilient, diverse, and secure supply
chains. Thank you.
Ms. Latortue. Thank you very much, Senator Tester, and very
much agree with the importance of your question. A core
principle with respect to all of the work that we do on trade
is ensuring a level playing field for all American workers and
farmers, and that would be something that, if confirmed, I
would very much prioritize as well as finding ways to expand
markets for U.S. exports as well. And I would be very happy to
continue to engage with you on these questions.
Senator Tester. Thank you. And we will once you are
confirmed.
This is a question for Mr. Steele. Mr. Steele, small
financial institutions are really the lifeblood of rural
America, and when they go away it has significant impact on our
communities. What are your views on tailoring regulation
requirements to the size and the risk of an institution?
Mr. Steele. Thank you very much for the question, Senator.
And as we have talked about earlier with the Chairman of the
Committee, we saw community institutions perform incredibly
well during the COVID-19 pandemic. So they just once again
withstood the stress tests to show the kind of value they
provide for their communities.
I think tailoring to the risk that an institution presents
is incredibly important. I think it helps small institutions
remain competitive. That is something that I worked on very
hard during my years here on Capitol Hill, working on
legislation with Senator Moran around annual privacy notices,
Senator Johanns around insurance capital standards, Senator
Portman with some issues around privately insured credit unions
having access to the Federal Home Loan Bank System. So it is
always something I have been very mindful of, that we need a
vibrant community banking and credit union industry in this
country to serve the needs of both urban and rural communities.
Senator Tester. So it would be fair to say that you think
the regulation should fit the risk?
Mr. Steele. Absolutely. That seems to make a lot of sense
to me.
Senator Tester. Thank you.
So this question is for any one of the four of you, and
since I have got limited time the first one to jump in gets to
answer it. Cybersecurity is a massive issue, and it is a
massive issue in the financial system. It is a massive issue,
militarily. It is a massive issue. OK?
We need to do more to address cybersecurity threats. So if
confirmed, how would you prioritize combating cybersecurity
threats? Who wants to answer it?
Mr. Steele. I guess I will take this one, Senator. I would
just say particularly in our financial system safeguarding both
the Government agencies that oversee the financial system from
cyber threats and overseeing critical financial infrastructure
from cyber attacks is, to my mind, one of the most important
jobs that I would have were I to be fortunate enough to be
confirmed.
And a lot of our role, I think, is sort of a public-private
partnership that involves convening, sharing best practices
with the industry, but also working with our counterparts
abroad. And I would seek to do that with all the Members of
this Committee that have prioritized that as an issue.
Senator Tester. Thank you all. And I apologize to Senator
Tillis.
Mr. Chairman, I yield.
Chairman Brown. Thank you, Senator Tester.
Senator Tillis is recognized remote from his office.
Senator Tillis. Thank you, Mr. Chairman.
Thank you all for being here. Congratulations on your
nominations.
Mr. Estevez, I was Chair of the intellectual property
subcommittee in Judiciary, now Ranking Member, and for years we
have had testimony the theft of the Chinese--led by the Chinese
Communist Party, theft of intellectual property. And we saw
them double down during the pandemic, trying to steal
information on central diagnostics, treatments, and cures for
COVID-19. Can you talk about your vision for how we can be best
positioned to combat the growing threat of the Chinese
Communist Party's coordinated efforts to steal our intellectual
property, and how can we make sure that we preserve American
innovation?
Mr. Estevez. Thank you for that, Senator, and I note that
during my time at the Department of Defense I also worked to
protect intellectual property of the defense industrial base.
China is certainly guilty of anticompetitive, coercive
practices, including intellectual property theft. And I would,
in my position, use the authorities given to the Commerce
Department under the Export Control Reform Act to ensure that
we are not providing technology to China that can be used to
steal intellectual property and using CFIUS to protect the
American businesses from Chinese intellectual property theft. I
will stop there.
Senator Tillis. Mr. Estevez, also, there was a question
earlier about export controls. The concern that I have is that
our European allies and partners do not necessarily share the
same, or have the same, posture that we do with respect to
China as an economic threat. Bilateral export controls are the
best way to go, but given that we may have lukewarm response
from some of our trading partners and allies, what is your view
of using unilateral export controls? And, cite any specific
examples if they are relevant.
Mr. Estevez. Thank you for that. As you said, Senator,
multilateral export controls are the most effective. If we do
not use multilateral export controls it is like damming up half
the river, as one of my predecessors said.
With that said, if we need to use a unilateral export
control to protect a particular technology that is American
technology from being exported, we will do that in the national
security look. We do have to balance the risks in doing that
now. And the follow-up to that would be then to work with our
allies to bring them--to show them the data around that and
hopefully bring the multilateral regimes into compliance.
Senator Tillis. Thank you.
Ms. Kendler, you are charged with two unique prerogatives,
protecting national security while also ensuring U.S.
businesses remain globally competitive. Can you talk a bit
about how you will execute on these missions and anything else
you find relevant to ensuring the dual nature of your role?
And, talk a little bit about your qualifications that put you
in a good position to execute.
Ms. Kendler. Thank you, Senator. In terms of my
qualifications, I have been a national security prosecutor, and
in that role I look at the theft of trade secrets, as you asked
Mr. Estevez about, economic espionage, export controls crimes,
many of which involve countering the threat posed by the
People's Republic of China.
In terms of national security threats, we have to also look
at the complexities of inextricable economic links. And my
priority would be working both to protect national security and
to advance our technical edge, if confirmed. I think it is very
important to aggressively use tools like export controls to
hold Governments, companies, and individuals accountable for
their attempts to access U.S. technology to conduct activities
that undermine our national security interests and those of our
allies.
I very much, if confirmed, would like to work with you and
this Committee to understand your ideas for strengthening the
export controls regime. And I think we can do both. We can
accomplish both goals at the same time; we can protect our
national security and ensure our economic competitiveness.
Thank you.
Senator Tillis. Thank you.
Mr. Steele, last month, you, I believe, posted a Tweet on
August the 20th that said it would be a huge missed opportunity
for President Biden to renominate Fed Chair Powell because he
is a White male. Do you believe it was a huge missed
opportunity for the President to nominate you as Treasury
Assistant Secretary given that you are also a White male?
Mr. Steele. Thank you for the question, Senator. And I
think it was last year, not last month.
Senator Tillis. Yes. I am sorry. You are right.
Mr. Steele. No problem. I think what I was trying to say
there was very consistent with the colloquy that I had with
Senator Menendez earlier, which is that I am trying to make the
point that representation and just inequitable representation
in policymaking positions in both the public and private
sectors is extremely important. And I was using that one
position to make that rhetorical point, and I think that that
was what I was sort of going for with that statement.
Senator Tillis. Thank you, Mr. Chairman.
Chairman Brown. Thank you, Senator Tillis.
Senator Warren from Massachusetts is recognized for 5
minutes.
Senator Warren. Thank you very much, Mr. Chairman.
And congratulations to all of you on your nominations.
The science is clear. Climate change is an existential
threat to every living thing on this Earth. The climate crisis
is bearing down on us with accelerating speed. We need bold
action now.
Mr. Steele, if confirmed, you will be in charge of the
office at Treasury that oversees policy for financial
institutions. From your standpoint, do the largest financial
institutions directly contribute to the climate crisis?
Mr. Steele. Thank you for the question, Senator, and I
share your concerns about the existential crisis that is
climate change. I would say it is difficult to know because
there is no standardized reporting right now of financed
emissions by financial institutions. And I would also say that
a lot of the largest banks have made net zero commitments or
commitments to reduce their emissions by 2030, but there is not
a lot of ``there, there,'' not a lot of details about what they
are going to do.
What we do know based upon reports by groups like
Rainforest Action Network, using publically available data, is
that the 4 largest U.S. banks provided $976 billion in
financing to the fossil fuel industry over the last 5 years. So
it seems like there is some room for improvement.
Senator Warren. In fact, let me just add to your numbers
there. During the past 5 years, following the signing of the
Paris Agreement, the world's biggest banks have put $3.8
trillion into financing fossil fuel exploration, drilling, and
trading.
Now at the same time, some of these very same banks have
been patting themselves on the back for announcing meaningless
climate pledges. For example, JPMorgan Chase relies on
accounting tricks to try to pretend that it has cut the overall
greenhouse gas emissions associated with its lending. This so-
called ``corporate greenwashing'' lets giant banks get these
great headlines without doing the serious work that we need to
protect our environment.
And in some areas of the financial system the climate
change threats are becoming even clearer. Take cryptocurrency
and Bitcoin mining. Proponents of these technologies have
praised the innovations in this sector, but one of those
innovations has been a brand new way to consume huge amounts of
energy for no productive purpose.
So, Mr. Steele, do banks' investments in fossil fuels put
consumers, our financial system, and our economy at greater
risk?
Mr. Steele. Well, again, Senator, I believe that they do.
There is one possible risk, which is physical risk, the damage
caused by increased hurricanes, flooding, wildfires out in my
home State of California, cold snaps that lead to a shutdown
and reduced economic activity. There are the potential economic
consequences of a sudden and disorderly transition in energy
sources that could devastate communities that rely on
particular industries, particularly energy-intensive
industries. Finally, I would also say that even under the
status quo there is a cost to climate-vulnerable populations
right now. We know that fenceline and frontline communities are
damaged by environmentally harmful practices.
And I would say that all of those issues, those baseline
economic issues, would be exacerbated if we also at the same
time had a financial crisis occurring at the same time that we
had an economic--a climate-induced economic crisis.
Senator Warren. Well, you know, the Earth's climate is
truly in crisis, but there is good news. We are not powerless
here. The Administration has already taken important steps with
President Biden's Executive order on climate-related financial
risks. So, Mr. Steele, let me ask you what are some of the
tools that our regulators have available right there at their
disposal to mitigate these risks and to ensure that our system
is protected from climate change?
Mr. Steele. Well, Senator, as you noted, the President has
tasked the Financial Stability Oversight Council with
coordinating its constitutive agencies to report back on the
work that they are doing through their organic laws that they
have to ensure the safety and soundness of the banking system
under the securities laws or the commodities laws. I know that
some of them have been incorporating climate risk into the
supervisory practices that they are doing.
I know you have been a leader on this issue in framing the
way that Dodd-Frank and some of the other financial reform laws
could be used to address some of these risks and also, on that
disclosure issue that I mentioned earlier, in proposing a way
to standardize the climate risks from public companies. So were
I to be confirmed, I would look forward to working with you and
the other Members of the Committee on what that could look
like, to address the risks of climate change.
Senator Warren. That sounds really good, and I really do
think you have identified several very important tools. But I
also think it is important that we not just have a piecemeal
approach here. Treasury has a major role to play in
coordinating among the financial regulators and ensuring that
we have a comprehensive approach to these risks.
The time for climate action is now, and I know from your
work that you take these issues seriously. I look forward to
working with you on these issues when you are confirmed.
Thank you, Mr. Chairman.
Chairman Brown. Thank you, Senator Warren.
Senator Hagerty from Tennessee is recognized.
Senator Hagerty. Chairman Brown, Ranking Member Toomey,
thank you very much for holding this hearing today.
And I want to thank our panel of nominees for your time and
for your testimony here today. Each of you at the Commerce
Department and Treasury Department represent very important
positions, and I appreciate your presence here today.
Mr. Estevez, I would like to start with you. You have been
nominated to lead the Bureau of Industry and Security. It is a
position that is one of the most important across the
Government for our strategic competition with the Chinese
Communist Party. The decisions that you make now can have
generational impacts, and I am very concerned about the
national security risks of doing business with CCP-controlled
entities and national champions.
And while the Trump administration imposed export controls
to prevent telecom giant Huawei and its ilk from dominating the
5G and internet of things arenas here in the U.S., they also
did it to prevent these companies from accessing sensitive U.S.
information. I am concerned that the Biden administration
appears to be moving in a direction that would reverse this
national security policy, such as his recent decision to grant
licenses for the sale of auto chips to Huawei.
So, Mr. Estevez, I would like to start with this question:
Do you feel that Huawei and other CCP-backed national champions
pose a national security threat and an economic security threat
to the United States?
Mr. Estevez. Senator, thank you for that question. In my
past role at DoD, I read about Huawei almost every day in my
morning read. And I would say that Huawei does present a
national security threat to the United States, and it is my
understanding that there has been no change in policy regarding
Huawei. They remain on the Entity List, and they remain under
scrutiny.
Senator Hagerty. I appreciate that. As U.S. Ambassador to
Japan in my previous position, I worked very hard with the
Japanese Government to get them to, likewise, agree to block
entities like Huawei from their system so that we could have a
clean internet system and ability to communicate with our
allies. Other countries like Australia, New Zealand have
followed suit. I am hopeful that the U.K. will do the same.
Mr. Estevez, will you commit to keeping Huawei on the
Entity List under your tenure?
Mr. Estevez. I see no reason that Huawei would come off the
Entity List unless things change, Senator.
Senator Hagerty. Mr. Estevez, there is a disturbing trend
that is underway that I have been watching for those companies
that are on the Entity List making an attempt to restructure
themselves, to make themselves smaller in a way, to get
themselves in a position that they could somehow circumvent the
Entity List itself and get beyond what the designation
originally intended. Are you aware of this sort of activity?
Mr. Estevez. Again, Senator, you know, during my time at
the Department of Defense, I represented the Department on
CFIUS, and I watched lots of maneuvers by Chinese companies or
shell companies or split-off companies to try to get around
U.S. regulatory strictures. And if I am confirmed, I intend to
keep a close eye on doing that, and we will review repeatedly
to ensure that we are doing the right things to protect
national security with regard to the PRC.
Senator Hagerty. I am pleased to hear you say that. Again,
I have seen these types of attempts as well. But the effort to
restructure and ``structure around'' our designations I think
is something that should be a top priority and a top concern
should you be confirmed, and I appreciate that.
I also would like to ask you if you could commit to taking
a very close look at Huawei's recently spun-off smartphone
brand called Honor. Based on open-source reporting, do you have
any opinion on whether Huawei is using this spun-off brand to
minimize or circumvent Huawei's own designation on the Entity
List?
Mr. Estevez. You know, as I just said, I have seen previous
maneuvers by the Chinese. I, too, read the Washington Post
article yesterday on Honor, and it is something I will have to
look at when I get to the Department should I be confirmed. I
do not have the information in front of me that would give me
the full picture on that, if you understand.
Senator Hagerty. I think you share the same concern that I
do. I hope that you do. And I appreciate your taking a very
hard look at that.
And I would also just ask you in closing to commit to being
as transparent as possible with this oversight committee as you
progress in your role should you be confirmed, in terms of
providing regular briefings to us as to how you are evaluating
those companies that are on the Entity List and how you are
protecting the United States from CCP-backed companies and
entities that could threaten our national and economic
security.
Mr. Estevez. Senator, as I did in my past positions, I
certainly believe in the oversight of Congress, and I am happy
to work with committees to provide transparency to what we are
doing.
Senator Hagerty. Thank you, Mr. Estevez.
Thank you, Mr. Chairman.
Chairman Brown. Thank you, Senator Hagerty.
Senator Van Hollen of Maryland is recognized.
Senator Van Hollen. Thank you, Mr. Chairman, Ranking Member
Toomey.
Congratulations to all of you on your nominations. You
cover a set of very important responsibilities and portfolios.
And I am not going to have time to address all the issues I
would like to raise, so I am likely to submit some questions
for the record.
In the spirit of bipartisanship, I want to both associate
myself with the question Senator Warren raised about climate
risk and the one Senator Hagerty raised with respect to Huawei,
an issue that we have had bipartisan cooperation and support on
for some time.
Ms. Latortue, congratulations on your nomination. In
addition to serving on this Committee, I serve as the Chairman
of the Africa Subcommittee of the Senate Foreign Relations
Committee, and the first hearing we had in July focused on U.S.
trade and investment in Africa and the immense opportunities
for economic development and growth there, both for the people
of Africa and also export opportunities for American workers
and businesses.
As you know, in the next 30 years, the population of the
continent is expected to double, and one quarter of the world
is projected to live in Africa by the year 2050. It is also the
youngest continent in the world, with 60 percent of Africans
under the age of 25.
I know you have deep experience in the areas of
international development and finance given your current role
on the Millennium Challenge Corporation, where about two-thirds
of your portfolio involved projects in Africa. So if you could
just speak for a moment to lessons you have learned there and
how they can translate into your current position because I
would like to see us move from simply talking about greater
investment opportunities in Africa to actually seeing them
expand.
Ms. Latortue. Thank you so much, Senator Van Hollen. I
think you have made the case for shared prosperity very well
and why the prosperity of the United States is so linked to the
prosperity of our partners abroad.
I have learned a lot of lessons at the Millennium Challenge
Corporation. I will just cite perhaps three today, Senator. The
first one is the importance of working hand in hand with our
partners to identify priority needs and priority investments so
that we can be ensure that they go forward well. So that
partnership with the countries is really critical.
The second lesson is that even in the development
assistance space it is critical to have an eye to what the
private sector can do. And so working to create the conditions,
the enabling conditions for private sector investment, which is
much more plentiful than international assistance will ever be,
to come in, is a vital role.
The third lesson I have learned at the MCC and throughout
my career, frankly, is the importance of accountability and
rigor. In the very important work of international development,
it is very important to be clear about the purpose of what we
are trying to do and to have clear measurements to understand
whether or not we are achieving our goals and, if not, to
course-correct as soon as possible. Thank you.
Senator Van Hollen. Thank you. And I have some follow-up
questions for the record, but since I have limited time I want
to turn to Mr. Steele.
And congratulations to you as well. I also chair the
Subcommittee on Financial Services and General Government on
the Appropriations Committee, and part of that portfolio
includes CDFIs, which in my view are a very important
instrument of empowering local communities, providing lending
where others will not lend.
And as you know, as part of the December legislation we
passed here, a bipartisan bill, we authorized $9 billion for
the Emergency Capital Investment Program--that was part of the
appropriations bill back then--which I hope will provide some
long-term, patient capital that CDFIs desperately need to serve
communities.
With respect to programs like the Small Dollar Loan Program
and the Capital Magnet Fund, what more do you think that we can
do to make sure that CDFIs are truly the engine of opportunity
that they can be? I mean, we are on the way, but there is still
a lot of potential, I think.
Mr. Steele. Absolutely, Senator. Thank you very much for
the question. I could not agree with you more, that these
institutions that serve low-income communities, both urban and
rural, are essential to having a financial system that works
for and serves everyone. And I think the pandemic only
reinforced that point, that we need to be able to get capital
and access out to everyone, from the top to the bottom. And
those investments that Congress appropriated to the CDFI fund I
think were absolutely critical and essential.
And that access is not just investments in the institution.
It is also access to safe, fair, and affordable products. And
so I look forward to working with you to--if I am fortunate
enough to be confirmed, to getting inside the Treasury building
and talk to the great folks at the CDFI fund and in community
development about what more we might do on that front around
small dollar products and making the products themselves more
affordable for working people.
Senator Van Hollen. Thank you. Yes, we are following very
closely the sort of disbursement and use of the emergency funds
that were provided. I look forward to working with you on that.
Thank you, Mr. Chairman.
Chairman Brown. Thank you, Senator Van Hollen.
My understanding is that Senator Cortez Masto from Nevada
is remote from her office.
Senator Cortez Masto. And here.
Chairman Brown. Welcome.
Senator Cortez Masto. Can you hear me OK, Mr. Chairman?
Chairman Brown. Yes, we can. Thank you, Senator Cortez
Masto.
Senator Cortez Masto. Thank you. Let me just say
congratulations to all of the nominees. Welcome. Welcome to
your families who are joining us either virtually or in person.
Mr. Steele, let me start with you and Ms. Latortue. It is a
privilege that the U.S. dollar is the world's reserve currency.
And if confirmed to your positions, how will you ensure that
the full faith and credit of the United States is protected?
And, Mr. Steele, let me start with you.
Mr. Steele. Absolutely, Senator. Thank you very much for
the question. I think the stability of the financial system and
the U.S.'s place internationally relies upon our ability to
meet our commitments and the understanding of the entire world
that we will make good on those commitments. And so I think it
is essential that we raise the debt ceiling and ensure that the
markets are well regulated, safe, and stable so that the world
really does view us as a safe haven, views the Treasury markets
as the safest, deepest, most liquid markets in the world, and
the financial institutions that support them as well.
Senator Cortez Masto. Thank you.
Ms. Latortue.
Ms. Latortue. Thank you very much, Senator, and I would
very much agree with the importance of your question and also
with the answer of my fellow nominee. The U.S. dollar is the
most trusted currency, and it is a matter of U.S. national
security, U.S. national foreign policy, and our reputation that
the U.S. always maintains and honors its commitments, and so
like all the distinguished Members of this Committee, very much
also following the conversation around the debt ceiling.
Senator Cortez Masto. Thank you. Ms. Latortue, let me
continue with you. You have written about the gender gap in
access to financial services, and in 2016, you noted a
persistent 7 percent gap between men and women who have a
financial account despite an increase in first-time account
holders. Can you discuss with the Committee why addressing
financial inclusion is crucial to supporting U.S. economic
prosperity and the prosperity of its trading partners around
the globe?
Ms. Latortue. Access to financial services, Senator, for
both--to both individuals and firms is really critical to the
economic prosperity, both here in the U.S. and abroad. As over
half of the world's population, ensuring that women also have
access to a range of financial services, savings very
importantly, but of course, also credit, insurance, and other
financial services is critical to their ability to create
livelihoods for themselves, to be able to have the means to
send their children to school, and to fully unlock the economic
potential of half of the world's population and therefore the
economies of the world.
Senator Cortez Masto. Thank you.
And then, Mr. Steele, back to you regarding the child tax
credit. In Nevada, we have made progress, really helping
Nevadans be able to access banking services. In 2015, 8.9
percent of Nevadans' households were unbanked. The latest pre-
COVID data find that 6.3 percent of Nevada's households are
unbanked. And we are hoping that the expanded child tax credit
and relief funds help more people get access to affordable
banking service.
But, Mr. Steele, my question is to you: How can we connect
families receiving the child tax credit to banking services?
Mr. Steele. Well, thank you very much for the question,
Senator, and I think it ties back into some of the issues that
I talked about with Senator Van Hollen, which is I think that
the pandemic really showed the ways in which having a financial
system to which everyone does not have equal access and is not
equally included can hamper some of those recovery efforts and
some other things like the expanded child tax credit. If you
cannot get the money to people because they do not have an
account in which you can put the money, then really it hampers
the effectiveness of that program.
And so, you know, we have--within Financial Institutions at
the Treasury, there are a number of programs, including the
investments in CDFIs and MDIs that Senator Van Hollen
mentioned. But I would really be interested to get in--were I
fortunate enough to be confirmed, to get inside the building,
talk to the folks both in tax policy and within financial
institutions about what they have seen, what their experiences
are, what might be improved, but also to work with you and the
other Members of the Committee on whatever--what other we could
have learned from the pandemic.
Senator Cortez Masto. Thank you. I look forward to that.
Count us in, my team, in collaboration on that issue.
Ms. Kendler, I want to talk a little bit about tourism
around exports. In 2019, international visitors spent over $200
million in the United States. This figure accounts for nearly
10 percent of all U.S. exports. I think it is vital to
recognize that tourism and travel is a key U.S. export industry
and that the COVID-19 pandemic continues to have severe impacts
on travel, both domestically and internationally. And we have
seen that clearly in the State of Nevada. So if confirmed, how
will your office work to support travel and tourism as one of
America's key export industries?
Ms. Kendler. Thank you, Senator. I agree with your opinion
about the travel and tourism industry. I am not sure that there
is a role for the Bureau of Industry and Security to play
there, but certainly I would like to learn more about this
issue and consider your ideas to connect it to export controls,
if confirmed. Thank you.
Senator Cortez Masto. Thank you very much.
And I notice my time is up. Thank you, everyone. Again,
congratulations on your nominations.
Chairman Brown. Thank you, Senator Cortez Masto.
My understanding is Senator Daines is close to returning.
He would be recognized next. And Senator Ossoff from Georgia I
believe might be on the line, remote from his office.
[No audible response.]
Chairman Brown. I think that I was mistaken.
Thank you to the nominees today. Thank you for the vigorous
participation of the Members of this Committee, for the good
questions, for the answers. It was a useful discussion. I hope
we can work together as a Committee to move forward quickly on
the nomination of these four very qualified Americans to serve.
For Senators who wish to submit questions for the hearing
record, those questions are due at the close of business on
Friday, September 24th. And the nominees, we would like to have
your responses by noon on Tuesday, September 28th. Thank you
again for your testimonies.
With that, the hearing is adjourned.
[Whereupon, at 11:28 a.m., the hearing was adjourned.]
[Prepared statements, biographical sketches of nominees,
and responses to written questions supplied for the record
follow:]
PREPARED STATEMENT OF CHAIRMAN SHERROD BROWN
The Committee meets today to consider the nominations of: Alan
Estevez to be Under Secretary for Industry and Secretary at the
Department of Commerce; Thea Kendler to be Assistant Secretary for
Export Control at the Department of Commerce; Alexia Latortue to be
Assistant Secretary for International Markets at the Department of
Treasury; and Graham Steele to be Assistant Secretary for Financial
Institutions at the Department of Treasury.
We welcome the nominees and their families. We thank you for your
willingness to serve during this critical time in our Nation's history.
To the nominees, during your opening statement, please feel free to
introduce your families and those who have accompanied you here today
to show support.
The nominees before us today have the experience and preparation
they need to take on these unique, important roles.
If confirmed, each nominee would play a significant role in
protecting U.S. interests at home and abroad.
Mr. Estevez would lead the Bureau of Industry and Security at the
Commerce Department. As Under Secretary for BIS, Mr. Estevez would play
a pivotal role in helping advance our country's national security,
foreign policy, and economic objectives by implementing an effective
export control regime.
As Assistant Secretary of Commerce for Export Administration, Ms.
Kendler would be responsible for safeguarding our national security by
overseeing BIS's export licensing system.
As the Treasury Department's Assistant Secretary for International
Markets, Ms. Latortue would be responsible for strengthening and
promoting U.S. interests in global financial and investment markets.
And, as Assistant Secretary for Financial Institutions at the
Treasury Department, Mr. Steele would be responsible for coordinating
financial institution policy, community and economic development, and
efforts to increase the resiliency of our financial system.
All four nominees today have an impressive record of public
service.
Mr. Estevez spent 36 years at the Department of Defense in various
roles. From 2013 to 2017, he served as Principal Deputy Under Secretary
of Defense for Acquisition, Technology, and Logistics. Prior to that
role, Mr. Estevez served as Assistant Secretary of Defense, focusing on
logistics and material readiness.
Earlier in his career, Mr. Estevez served as a Program Manager at
the U.S. Army Strategic Logistics Agency.
Welcome to the Committee, Mr. Estevez, and thank you for your many
years of service to our country.
Thea Kendler currently serves as a trial attorney in the Department
of Justice's National Security Division, Counterintelligence and Export
Control Section. At DOJ, Ms. Kendler investigates and prosecutes crimes
related to export control and economic espionage.
Prior to serving at the DOJ, Ms. Kendler served as Senior Counsel
in the Commerce Department's Office of Chief Counsel for Industry and
Security, providing legal advice on export controls regulations and
enforcement.
We are glad to have you here today, Ms. Kendler, and thank you for
your public service.
Alexia Latortue has more than 20 years of experience in
international development and development finance. She is currently
Deputy Chief Executive Officer of the Millennium Challenge
Corporation--an independent U.S. Government agency working to eradicate
global poverty.
From 2013 to 2017, she served in the Obama administration as
Principal Deputy Assistant Secretary for International Development
Policy, where she worked on inclusive growth and poverty reduction
through multilateral development banks.
Ms. Latortue's experience includes serving at international
financial institutions such as the World Bank and the European Bank for
Reconstruction and Development.
Welcome, Ms. Latortue, and thank you for your career of service.
Glad to have you here today.
Our final nominee today is Graham Steele.
Mr. Steele spent more than 7 years in my personal Senate office and
on the Banking and Housing Committee as a senior, trusted aide. From
2015 to 2017, Mr. Steele served as Minority Chief Counsel for the
Committee, where he crafted legislation and provided strategic advice
and counsel on banking, housing, and national security issues.
During that time, he worked on a broad set of issues with Chairman
Crapo and Shelby's staff, as well as the other Republicans and
Democrats on the Committee. He also worked with a diverse set of
stakeholders, forging close relationships with civil rights groups,
consumer advocates, and organizations like the bipartisan Ohio Bankers
League--who have written in support of his nomination.
Prior to serving as Chief Counsel, he served as my Staff Director
of the Financial Institutions and Consumer Protection Subcommittee
fighting to protect all Americans' finances.
And he did vital work during and after the Financial Crisis of
2008, as we worked to stabilize our financial system. In his work for
my office, he traveled around Ohio in the years that followed, and
talked with Ohioans who lost their homes and saw their communities
devastated by Wall Street's great recession. I know he hasn't forgotten
those Ohioans, and understands the far-reaching effects the financial
system has on workers and their families all over the country.
And I know he has worked closely over the years with many of my
colleagues and their staff, on both sides of the aisle, to make our
financial system work for everyone.
Thank you, Mr. Steele, for your many years of service to this
Committee, to the people of Ohio, and to our country--welcome back.
We are grateful to the nominees for appearing here today.
I look forward to your testimonies.
______
PREPARED STATEMENT OF SENATOR PATRICK J. TOOMEY
Mr. Chairman, thank you. Mr. Estevez, Ms. Kendler, Ms. Latortue,
and Mr. Steele, welcome. You've been nominated for important positions.
Before turning to today's nominees, I'd like to register my
disappointment that Democrats are still trying to ram through a
reckless $3.5 trillion tax-and-spending bill, despite reservations from
members of their own caucus. Given the profound impact of this bill,
the Republicans on this Committee have requested that we hold hearings
and a markup. Unfortunately, Senate Democrats have no plans to do that.
I fear that's because the bill is going to include many flawed
policies that will harm economic growth and jobs while invading the
privacy of Americans. These include massively expanding the welfare
State in an effort to make the middle class dependent on the Federal
Government, raising taxes on U.S. employers, diminishing investment by
increasing the capital gains tax rate, increasing the electric vehicle
tax credit that benefits the wealthy and making this tax giveaway even
bigger for union-made cars, and giving the IRS, an agency with a
history of abuse, access to our bank account information.
Those are just some of the destructive policies being advanced and
I wish Democrats would allow them to get a full debate here at the
Committee.
Now, turning to today's nominees. Mr. Estevez and Ms. Kendler, you
would serve in Commerce's Bureau of Industry and Security, known as
BIS. BIS determines which U.S. goods are too sensitive to be shipped
abroad.
In the face of China's drive for dominance in key tech sectors,
BIS's mission today is as important as ever. By setting U.S. export
control policy on items used for both civilian and military purposes,
BIS effectively has the power to reshape the supply chains of entire
industries.
That means BIS must craft export controls in a prudent, thoughtful,
and effective manner that advances U.S. national security interests
without unduly harming American domestic industry. This challenge is
typified by
BIS's efforts to impose congressionally mandated controls on
``emerging and foundational technologies,'' which I would expect you to
prioritize.
BIS is also responsible for Section 232 investigations. This
statute is intended to prevent the importation of goods to the U.S.
that threaten national security. Unfortunately, it has recently been
abused to protect favored domestic industries.
Does anyone truly think a Volvo station wagon is a national
security threat, as the last Administration claimed? Tariffs on
imported goods are taxes paid by American consumers. These taxes weaken
our economy, threaten American jobs, and erode our credibility with
other Nations.
You should urge the president to reverse the last Administration's
mistakes by removing the current Section 232 tariffs harming our
relationships with our allies, and stopping the abuse of Section 232.
Now to the Treasury nominees. Ms. Latortue has been nominated to
serve as Assistant Secretary for International Markets. This position's
responsibilities include helping oversee U.S. assistance for developing
countries.
Ms. Latortue has considerable experience in this area. But I have
questions about the priority she's placed on climate change at the
Millennium Challenge Corporation, known as the MCC.
According to the MCC's authorizing statute, its assistance is
supposed to focus on ``achieving lasting economic growth and poverty
reduction.'' The MCC should prioritize this mission, not other agendas.
By doing so, it will help developing countries improve their
environments, as the most prosperous Nations in the world are also the
``greenest'' ones.
Finally, Mr. Steele has been nominated to serve as Assistant
Secretary for Financial Institutions. I appreciate his past service as
a Committee staffer. But I'm troubled that his nomination is another
example of President Biden campaigning as a centrist, but governing
from the far Left.
Mr. Steele has repeatedly advocated for using extra-legal measures
to achieve extreme policies. Despite the absence of statutory
authorization, he has proposed having bank regulators forbid financial
institutions from making loans to perfectly legal, and economically
necessary, enterprises in the energy space.
He's advocated for an aggressively using the Financial Stability
Oversight Council to designate financial firms as systemically
important apparently in order to subject them to burdensome
regulations--including climate regulations--even when it's doubtful
that they present a systemic risk.
He's also proposed that Federal agencies radically reinterpret or
abuse their authorities to withhold FDIC deposit insurance from
institutions offering products he deems too complex, politicize the Fed
to pursue a progressive social agenda and to socialize banking by
having the Federal Government control consumer bank accounts, and
unilaterally establish a Government-run credit reporting agency within
the CFPB.
I'm particularly troubled by these extreme positions, in light of
Mr. Steele's statements disparaging Republicans. He has referred to
Republicans as ``callous'' and ``absolutely villainous,'' and suggested
Republicans only use the ``full force of their investigative and
procedural power in service of the wealthy and White folks.'' These
statements raise questions about his temperament, judgment, and
willingness to work across the aisle.
Let me close by saying: I disagree with President Biden's nominees
on policy matters far more often than I agree with them. Nonetheless,
I've supported multiple nominees and will continue to do so. But there
are limits to that support.
I look forward to hearing from today's nominees.
______
PREPARED STATEMENT OF ALAN F. ESTEVEZ
To Be Under Secretary of Commerce for Industry and Security
September 21, 2021
Chairman Brown, Ranking Member Toomey, and distinguished Members of
the Committee, I am honored to appear before you as the nominee to lead
the Bureau of Industry and Security (BIS) as the Under Secretary of
Commerce for Industry and Security at the Department of Commerce.
I want to thank President Biden and Secretary Raimondo for their
confidence in nominating me to this critical national security
position. I also want to thank my wife, Susan Pearson, who is with me
here to today, for all her support and love, and as I have stated in my
previous confirmations, for her sage advice and counsel, in all that I
do. Needless to say, I would not be sitting here before you without her
support--and sacrifice.
This is a critical time for our Nation. The COVID-19 pandemic has
highlighted the fragility of numerous supply chains supporting U.S.
industries and ordinary Americans across the country. Many of our
foreign adversaries continue to act in an irresponsible manner,
including through the diversion of dual use technologies to military
uses; theft of intellectual property; human rights abuses; and
anticompetitive, unfair and coercive trade practices. All of these
activities threaten our values and interests, as well as those of our
allies and partners.
BIS has a key role, within the context of a whole-of-Government
approach, in addressing these threats. Fortunately, Congress, with the
bipartisan passage of the Export Control Reform Act, or ECRA, in 2018,
has given BIS important authorities to execute that mission.
During my long career with the Department of Defense (DoD), I
operated at the nexus of national security and technology, to include
overseeing the Defense Advanced Research Projects Agency and DoD's
laboratory infrastructure. I also represented the DoD on the Committee
for Foreign Investment in the United States (CFIUS), where I advocated
for and helped produce robust responses to attempts to access critical
technologies.
As a senior acquisition and logistics official, it was my job to
ensure that the U.S. Armed Forces were provided with the best weapon
systems in the world to ensure their ability to defend the United
States and deter and defeat our adversaries when needed. I view the
work of BIS from a similar perspective, though rather than providing
the U.S. military with technological overmatch against our adversaries,
the mission is to ensure that they do not have access to critical U.S.
technologies that can harm our national security and foreign policy
interests.
If confirmed, I will lead the dedicated professional staff at BIS
to ensure that our export controls prevent the transfer of sensitive
U.S. technologies. To do that, I will work to ensure that we are
appropriately using all the authorities provided under ECRA. As part of
that process, I will ensure that we execute our due diligence in
identifying and imposing appropriate controls on those emerging and
foundational technologies that need protection.
I also believe it is important to cooperate with our allies and
partners to build strong export controls, especially in those areas
where our current multilateral regimes do not currently provide
adequate protections. If confirmed, I will work with our enforcement
arm, leveraging all-source intelligence, to ensure that we monitor
exports and aggressively detect violations of our export controls and
impose penalties where appropriate. In addition to export controls, I
will support the Bureau's other important equities, including continued
efforts to address risks in critical supply chains, reviewing
transactions before CFIUS, and enforcing our antiboycott requirements.
Furthermore, I will work with the BIS staff to ensure they have the
resources to accomplish their mission.
Finally, I believe it is important for BIS to work constructively
with Congress. If confirmed, I look forward to working with you and
your staff as we meet the complex challenges facing BIS and our Nation.
Thank you for your consideration of my nomination, and I look forward
to your questions.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
PREPARED STATEMENT OF THEA D. ROZMAN KENDLER
To Be Assistant Secretary of Commerce
September 21, 2021
Chairman Brown, Ranking Member Toomey, Members of the Committee, I
am honored to appear before you as President Biden's nominee for the
position of Assistant Secretary of Commerce for Export Administration.
I want to thank the President and Secretary Raimondo for the trust they
have placed in me with this nomination. I am delighted at the prospect
of returning to serve the Bureau of Industry and Security (BIS) and the
Commerce Department in this critical role.
It would not be possible for me to take on the role for which I am
nominated without the love, support, and encouragement of my family: my
children Dava and Micah; my husband, Owen; and my father, Gil Rozman,
who planted the seeds of my international public service career. My
mother Masha is no longer with us, but I see her legacy in my children,
and strive in my work to honor her memory as a lawyer, a public
servant, and a lifelong learner.
I sit here before you thanks to the good will and the generosity of
the United States. My grandfather Max Dwosh, who at age 99 is watching
this hearing online, fled Poland on the eve of the Nazi invasion. The
family he had to leave behind was murdered. My grandfather survived in
Russia during the war, performing manual labor. At the war's end, after
my mother was born, he and his young family left Russia and found a
haven in the American Displaced Person Camps in Germany before
immigrating to the United States. My mother went on to a long career as
a Deputy Attorney General for the great State of New Jersey. My public
service is inspired by my gratitude to the people and the Government of
the United States for making my family's survival and success possible.
It would be an honor to serve my country in this new role, drawing
on my passion for export controls and experience in national security.
I began working on export controls in September 2001 in private
practice, then for 10 years in the Chief Counsel's Office for BIS, and
for the last 7 years, in the Counterintelligence and Export Control
Section of the Justice Department's National Security Division.
As a national security prosecutor, my work has focused on
dismantling procurement networks, thwarting intelligence threats, and
deterring economic espionage and other theft of trade secret activities
aimed at U.S. industry. With respect to matters that are in the public
record, I am particularly proud of: charging global telecommunications
company Huawei with operating as a criminal enterprise, stealing trade
secrets, and defrauding global financial institutions; charging and
obtaining the extradition of an intelligence officer who sought to
steal trade secrets from a leading U.S. aviation technology company in
Ohio; and numerous other cases that held foreign procurement agents
accountable for their illicit activities. I am extraordinarily
fortunate for the opportunity to pursue this work, and to do so with
such dedicated and professional colleagues.
I believe deeply in the mission of BIS to advance America's
national security, foreign policy, and economic objectives through
effective export controls and by maintaining and advancing our
strategic technological edge. The United States can and should lead in
export controls, drawing from innovative spirit of our capitalist
system and the decades we have spent forging relationships with our
allies. In my 20-year career as an export controls lawyer, BIS's
mission has never been more relevant, particularly as we compete
against autocracies for 21st century leadership.
Chief among these concerns is the need to address the challenges
posed by efforts to seek U.S. technologies to pursue foreign military
modernization and other destabilizing activities, while also striving
to manage this competition responsibly. We must appropriately use all
available tools to prevent technology transfers to end users and end
uses that enable strategies and activities that harm our national
security and foreign policy interests.
I recognize that all of this important work is part of a whole-of-
Government effort, and I also strongly support close collaboration with
allies and partners to strengthen our export controls, which are more
effective when developed and amplified through multilateral regimes and
plurilateral agreements.
Finally, I believe it is important for BIS to work constructively
with this Committee and the Congress as a whole to protect our national
security and foreign policy interests. If confirmed, I look forward to
working with you and your staff as we meet the complex challenges
facing BIS.
Thank you again for this opportunity to appear before you. I would
be pleased to answer your questions.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
PREPARED STATEMENT OF ALEXIA MARIE GABRIELLE LATORTUE
To Be Assistant Secretary of the Treasury
September 21, 2021
Chairman Brown, Ranking Member Toomey, distinguished Members of the
Committee, it is an honor to appear before you today as the President's
nominee to be Assistant Secretary for International Markets at the
Department of the Treasury. I am humbled and thankful for the trust
President Biden, Vice President Harris, Secretary Yellen, and Deputy
Secretary Adeyemo have placed in me.
I used to bring students to the Dirksen Senate Office Building when
I worked with the Close Up Foundation as a young adult. We spoke about
the awesome responsibility of public service and of the work of this
Chamber. Many years later, I am proud to be back and if confirmed, I am
ready to work hard to the best of my capabilities to advance the
Treasury Department's ambitious goals, working hand in hand with
Treasury colleagues and all of you.
The core mission of the Office of International Affairs at the
Treasury Department is well aligned with who I am as a professional and
as a person. Doing my part to help shape a more safe, peaceful, and
prosperous world has been a constant in my career. Growing up in Togo
and Cote d'Ivoire, I saw poverty first-hand. It is also where I
developed the conviction that everyone deserves the opportunity to
fulfill their potential and to live a life of dignity. From a very
young age, I knew I wanted to make a difference.
Early in my career, I swapped theory for exhilarating work with
communities and Government partners on the ground. I loved the
operational work on projects funded by USAID and other donors. This
included living for 3 years in Haiti and working across all continents.
I have seen the best and the worst of development. It cultivated my
passion for evidence, accountability and transparency which is integral
to how I approach all my positions. At the European Bank for
Reconstruction and Development, I shaped how development finance,
combined with policy dialogue and technical assistance, can support
countries' transition to well-functioning market economies. I pressed
for greater engagement on climate, economic inclusion, and
digitalization.
My time in Federal service has been a highlight of my career. For
nearly 4 years, I led the Treasury Department's international
development policy work, covering infrastructure finance, debt,
financial inclusion, and food security. Working closely with strategic
allies, I negotiated financing and policy packages for the multilateral
development banks. Today, I am with the Millennium Challenge
Corporation--a gem that punches above its weight to reduce poverty
through economic growth in well-governed, low and low middle-income
countries.
I grew up imbued in the notion that public service is noble. I was
expected to think beyond my self-interest to that of my community,
country, and world. My maternal grandfather was a public servant,
representing Haiti, including right here in Washington, DC. My father,
Gerard Latortue, opted to leave Haiti overnight rather than endorse the
punishing economic policies of a dictator. He ended up in Puerto Rico--
where I was born years later--making a deal at a local university to
teach economics if they taught him Spanish. I learned about courageous
leadership and integrity from him. My maternal grandmother and mother,
Marlene Latortue, lost their husband and father shortly after his
release as a political prisoner in Haiti. From them, I learned about
rebounding with grace and quiet strength.
I would like to recognize my sister, Gaielle Latortue and my
brother-in-law, George Kabwe, who are here today. They are both
international civil servants. My sister, Stephanie Latortue-Driza, a
teacher in the D.C. public school system, is also here. I thank them
for their love and support and for having made me the luckiest of
aunts, blessed with my clever, kind, and open-minded nephews and niece,
Lorenz, Galen, and Graciana. My nomination today is a testament to them
and to the United States, a country of unparalleled opportunity. We are
a country where my father's favorite saying rings full of possibility:
``we are beholden to the impossible.''
The Department's work is important in the best of times. In these
extremely challenging times, it is vital. I have seen first-hand how an
engaged United States is able to deploy its evidence-based approach,
values, and ideas, to work effectively with allies to tackle the most
intractable issues that affect our world. Today, these issues include
the economic recovery from the COVID-19 pandemic, rising poverty for
the first time in 20 years, infrastructure, climate change, energy,
food security, inequality and promoting a level playing field for
American firms and workers. Urgent work is needed to stop further
reversals.
If I am privileged enough to be confirmed, I commit to working
closely with this Committee to help put the United States and our
international partners on a solid economic footing for a future full of
optimism and hope. It would be an honor to serve with Secretary Yellen,
Deputy Secretary Adeyemo, and to, once again, work alongside the superb
and committed public servants at the Treasury Department.
Thank you again for the opportunity to appear before you today. I
look forward to answering your questions.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
PREPARED STATEMENT OF GRAHAM S. STEELE
To Be Assistant Secretary of the Treasury
September 21, 2021
Chairman Brown, Ranking Member Toomey, and distinguished Members of
the Committee, thank you for the opportunity to appear before you today
and for considering my nomination to be Assistant Secretary of the
Treasury for Financial Institutions. I am honored to have been
nominated for this position and I am grateful to President Biden, Vice
President Harris, Secretary Yellen, Deputy Secretary Adeyemo, and Under
Secretary Liang for this opportunity.
If the Committee Members will allow me, I would like to begin on a
personal note by thanking the members of my family who are here today.
First, I want to thank my partner, Moira. I would not be the person
that I am today without her love, support, and moral clarity. She has
taught me that partnership is about giving, taking, learning, teaching,
growing, thriving, and changing together. I also want to acknowledge my
mother, Debbie, who is here, as well my late father, Fritz, who passed
away in February of last year. They both instilled in me from a very
young age a desire to always try to do the right thing, do the best
that I possibly can, and to work for the public good. Last, but not
least, I want to thank my sister, Lauren, who has always understood and
supported me in the way that only a lifelong sibling can.
My career in public service began in the office of Chairman Brown
in January of 2010. That opportunity and experience changed my life. It
was an historic moment, as the Banking Committee was in the process of
drafting the most sweeping financial reforms of the last 80 years in
the wake of the Global Financial Crisis. I was fortunate to have the
opportunity to work for Senator Brown who, as the Members and staff of
this Committee already know, is a brilliant, compassionate, and
tireless advocate on behalf of working people. In that role, I helped
Senator Brown oversee the passage and implementation of reforms to make
our financial system safer and improve our economy, including the
Senator's tireless effort to support Ohio families facing foreclosure
in their fight to stay in their homes and to help communities
devastated by the housing crisis recover.
I spent the next 4 years as the Staff Director of the Subcommittee
with jurisdiction over financial institutions and consumer protection,
including 2 years during which Senator Toomey served as the Ranking
Member. During that time, I worked closely with consumer and community
groups to ensure that all Americans have equal access to safe and
secure financial products, including mortgages, student loans, prepaid
cards, and small-dollar loans. I also collaborated with a bipartisan
group of Committee Members, industry groups, regulators, and other
stakeholders to ensure that the most systemic institutions are well
regulated, community banks and credit unions are competing on a level
playing field, and banking and insurance rules are appropriately
tailored.
When Senator Brown became the Ranking Member of the Banking
Committee in 2015, I served as Chief Counsel to the Minority staff, a
role I held until August of 2017. More recently, as a member of the
staff of the Federal Reserve Bank of San Francisco and now in my role
at Stanford Graduate School of Business, I have experienced from a
close vantage point some of the most pressing financial challenges
facing our Nation, including housing affordability, financial
technology, and climate change.
Finance has always been a personal issue for me, having had some of
my friends, family, community, and even myself experienced financial
risks and challenges. The decades-long burden of student loans taken
out to create an opportunity for a better future. Home equity lines of
credit tapped in the hopes of filling the gap between household income
and expenses. Credit card bills embedded with hidden tricks, traps, and
fees. Jobs lost and retirement nest eggs depleted by a crisis of
someone else's making. I am acutely aware that the millions of people
that use our financial system every day are, in the words of Secretary
Yellen, ``more than just statistics.''
I believe that this is another consequential historical moment and
that is why I can think of no greater honor than working with the
talented, dedicated staff at the United States Department of the
Treasury. If I am fortunate enough to be confirmed, I would look
forward to working closely with all the Members of this Committee to
build a better postpandemic economy, by helping to shape a stable and
inclusive financial system that works for everyone.
Thank you again for the opportunity to testify today and I look
forward to your questions.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
RESPONSES TO WRITTEN QUESTIONS OF CHAIRMAN BROWN
FROM ALAN F. ESTEVEZ
Q.1. Where have you excelled in past positions in attracting,
hiring, and promoting people of color in positions in your
organization/s? Where might there be room for improvement?
What specific measures will you use to evaluate the success
of the U.S. Department of Commerce in understanding and
addressing the needs of Black, Indigenous, and people of color
(BIPOC)? And, will you work with the Secretary and senior
officials to keep Congress apprised, as appropriate, on the
progress being made on these measures?
What is your plan for creating an inclusive working
environment for employees within your office?
A.1. I joined Deloitte Consulting as a national security
strategy and logistics executive in June 2017 after completing
a 36-year career with the Department of Defense. I served as
the Principal Deputy Under Secretary of Defense (Acquisition,
Technology & Logistics) from 2013 to 2017, and prior to my last
appointment, I held several key positions within the Office of
the Secretary of Defense.
Throughout my career, I have committed myself to diversity,
equity, and inclusion in the workplace. I support President
Biden's ``Executive Order on Diversity, Equity, Inclusion, and
Accessibility in the Federal Workforce'' and ``National
Security Memorandum on Revitalizing America's Foreign Policy
and National Security Workforce, Institutions, and
Partnerships'', and I share President Biden's and Secretary
Raimondo's commitment to the values of equal opportunity,
diversity, equity, and inclusion. If confirmed, I will work
with our leadership team to actively advance equity, civil
rights, racial justice, and equal opportunity for all employees
and applicants, by implementing measures to root out systemic
racism and strengthen civil rights programs while building
trust within and outside of BIS.
Q.2. Since taking office, the Biden-Harris administration has
demonstrated a keen awareness of the semiconductor shortage and
willingness to use its authorities to address this problem,
including through the 100 Day Supply Chain Report and summits
at the White House. Ohio workers and companies have been
particularly hard hit by this shortage. What steps will you
take to address this problem? Are there any additional
authorities Congress could provide to assist the
Administration's ongoing efforts?
A.2. I believe it is critical for the United States to have
diverse, resilient and secure supply chains in critical areas
like semiconductors, and that a vibrant domestic semiconductor
manufacturing capability is an important component of overall
U.S. competitiveness.
If confirmed, I will support the Commerce Department's work
on the President's Supply Chain Disruptions Task Force to
tackle near-term bottlenecks in the semiconductor industry and
to strengthen U.S. leadership in semiconductor manufacturing.
In addition, I understand that, on September 24, 2021, a
Bureau of Industry and Security (BIS) ``Notice of Request for
Public Comments on Risks in the Semiconductor Supply Chain''
was published in the Federal Register. According to the Notice,
``[w]ith the goal of accelerating information flow across the
various segments of the supply chain, identifying data gaps and
bottlenecks in the supply chain, and potential inconsistent
demand signals, the Department is seeking responses from
interested parties (including domestic and foreign
semiconductor design firms, semiconductor manufacturers,
materials and equipment suppliers, as well as semiconductor
intermediate and end-users) to the questions set forth in this
notice.'' If confirmed, I look forward to supporting any
appropriate efforts that may follow from this Notice.
Q.3. As you work to address the immediate supply and demand
issues related to semiconductors, can you provide a status
update on the report required under Section 9004 of the FY21
NDAA?
A.3. I take seriously the requirements of the FY21 National
Defense Authorization Act (NDAA) and believe in implementing
the laws passed by Congress. If confirmed, I commit to
consulting with the staff at BIS and the interagency to
ascertain the status of the report required under Section 9004
of the FY21 NDAA.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR TOOMEY
FROM ALAN F. ESTEVEZ
Q.1. Congressional Oversight--Please provide your philosophy on
how the Bureau of Industry and Security (BIS) at the Department
of Commerce (Commerce) will approach and respond to
Congressional information requests (both for documentary
information and oral testimony), if you are confirmed.
A.1. I deeply respect the oversight role of the Senate Banking,
Housing, and Urban Affairs Committee and the Congress as a
whole and take the statutory requirements of the Export Control
Reform Act (ECRA) of 2018 seriously. My understanding is that
information submitted or obtained in connection with export
license applications is subject to Section 1761(h) of ECRA, and
that requests for information protected from disclosure by
1761(h) of ECRA are honored when appropriately submitted by
either the Chair or Ranking Member of a committee or
subcommittee of appropriate jurisdiction. If confirmed, I will
work diligently to comply, consistent with the constitutional
and statutory obligations of the Executive branch, with
appropriately submitted requests by Members of Congress for
information that is protected from disclosure under Section
1761(h) of ECRA.
Q.2. If confirmed, do you intend to respond to information
requests differently depending on who is making the
Congressional information request (whether it's the chair of
the Congressional committee, the Ranking Member, or another
member of Congress)? Please answer ``yes'' or ``no.'' If your
answer is ``yes,'' please explain.
A.2. I deeply respect the oversight role of the Senate Banking,
Housing, and Urban Affairs Committee and the Congress as a
whole and will respond to requests for information, consistent
with the constitutional and statutory obligations of the
Executive branch. It is my understanding that information
submitted or obtained in connection with export license
applications is subject to Section 1761(h) of ECRA, and that
requests for information protected from disclosure by 1761(h)
of ECRA are honored when appropriately submitted by the Chair
or Ranking Member of a committee or subcommittee of appropriate
jurisdiction.
Q.3. Will you commit that, if confirmed, you will respond in a
timely manner and fully comply with all information requests
from me? Please answer ``yes'' or ``no.'' If your answer is
``no,'' please explain.
A.3. If confirmed, I will work diligently to respond,
consistent with the constitutional and statutory obligations of
the Executive branch, with requests for information from
Congress.
Q.4. Will you commit that, if confirmed, you will make yourself
and any other BIS employee expeditiously available to provide
oral testimony (including but not limited to briefings,
hearings, and transcribed interviews) to the Committee on any
matter within its jurisdiction, upon the request of either the
Chairman or Ranking Member? Please answer ``yes'' or ``no.'' If
your answer is ``no,'' please explain why.
A.4. If confirmed, I will work diligently to respond,
consistent with the constitutional and statutory obligations of
the Executive branch, with requests for information from
Congress.
Q.5. Commerce Acting Under Secretary for Industry and Secretary
Jeremy Pelter said in a recent hearing before the U.S.-China
Economic Security Review Commission that Congress can request
access to certain BIS information about export license
applications and rejections. Will you commit to timely and
comprehensive responses to Congressional requests for this
information? \1\
---------------------------------------------------------------------------
\1\ The U.S.-China Economic and Security Review Commission,
Hearing on ``U.S.-China Relations in 2021: Emerging Risks'', September
8, 2021, https://www.uscc.gov/hearings/us-china-relations-2021-
emerging-risks.
A.5. I deeply respect the oversight role of the Senate Banking,
Housing, and Urban Affairs Committee and the Congress as a
whole and will respond to requests for information, consistent
with the constitutional and statutory obligations of the
Executive branch. It is my understanding that information
submitted or obtained in connection with export license
applications is subject to Section 1761(h) of ECRA, and that
requests for information protected from disclosure by 1761(h)
of ECRA are honored when appropriately submitted by the Chair
or Ranking Member of a committee or subcommittee of appropriate
---------------------------------------------------------------------------
jurisdiction.
Q.6. China--In shaping export control policy, BIS's mission is
central to the United States' high-tech rivalry with China. Do
you agree that China's technological, military, and economic
rise poses one of the greatest current challenges to the safety
and well-being of the United States?
A.6. Yes. The Government of the People's Republic of China
(PRC) poses one of our most difficult challenges related to
U.S. national security and foreign policy objectives, including
our ability to maintain U.S. technological leadership in
critical areas.
Q.7. Please detail your understanding of the national security
threat posed by the Chinese Communist Party (CCP), including
your assessment of the CCP's military modernization ambitions,
intellectual property theft campaign, and coercion targeting
United States allies and partners.
A.7. Many of our foreign adversaries, such as the People's
Republic of China (PRC) Government, continue to act in an
irresponsible manner, including through the diversion of dual
use technologies to military uses; theft of intellectual
property; human rights abuses; and anticompetitive, unfair and
coercive trade practices. All of these activities threaten our
values and interests, as well as those of our allies and
partners.
Q.8. At your September 21, 2021, nomination hearing, you said:
``I see no reason that Huawei would come off the Entity List,
unless things change.'' Please clarify what conditions you
believe would need to change for BIS to consider removing
Huawei from the Entity List?
A.8. I believe that Huawei poses a national security threat to
the United States. Huawei's involvement in alleged sanctions
violations, ties to China's military, human rights abuses, and
theft of intellectual property are deeply concerning. Based on
publicly available information that I know today, I do not see
a reason to remove Huawei from the Entity List. Furthermore, I
understand based on public information that the Biden
administration has not changed its policy regarding
restrictions on exports to Huawei and that Huawei continues to
be on the Entity List. If confirmed, I will ensure that BIS
adheres to the regulatory requirements for removing any party
from the Entity List, as well as the FY20 National Defense
Authorization Act (NDAA) that contains additional conditions on
the removal of Huawei from the Entity List.
Q.9. If a company requests a license or a waiver to export an
item to Huawei:
What factors would you weigh in considering such a request?
What would make you more likely to grant the request?
What would make you less likely to grant that request?
A.9. My understanding is that the Bureau of Industry and
Security (BIS) works with its interagency partners to
consistently apply the licensing policies articulated in the
Export Administration Regulations (EAR) to restrict Huawei's
access to technology or software for activities that could harm
U.S. national security and foreign policy interests. All export
license applications to Huawei are reviewed by the Departments
of Commerce, Defense, State, and Energy. It is my understanding
that the licensing policy for exports to Huawei and its listed
affiliates for items capable of supporting systems, equipment
or devices at only below the 5G level (e.g., 4G, 3G) are
reviewed on a case by case basis. All others are reviewed under
a presumption of denial.
Q.10. A BIS interim final rule, entitled ``Release of
`Technology' to Certain Entities on the Entity List in the
Context of Standards Organizations'', issued last year
authorizes the release of certain technology to Huawei and its
affiliates on the Entity List without a license if such release
is made for the purpose of contributing to the revision or
development of a ``standard'' in a ``standards organization.''
\2\ According to reports, Nokia recently opted to suspend its
activity with the O-Ran Alliance standards organization out of
concern that some participants were added to the Entity List.
\3\ This example highlights the lingering confusion over
whether U.S. companies' participation in technical standards
development activity is being chilled and, because of that,
whether U.S. and multinational companies are at risk of losing
ground in setting global standards to Chinese companies and
other competitors. If confirmed, how will you address this
ambiguity and facilitate clarification of navigating
participation in international standards organizations that
include entities on the Entity List?
---------------------------------------------------------------------------
\2\ Federal Register, ``Release of `Technology' to Certain
Entities on the Entity List in the Context of Standards
Organizations'', June 18, 2020, https://www.federalregister.gov/
documents/2020/06/18/2020-13093/release-of-technology-to-certain-
entities-on-the-entity-list-in-the-context-of-standards.
\3\ Matt Kapko, ``Nokia Freezes O-RAN Alliance Work Over Chinese
Meddling Worries'', SDX Central, Aug. 30, 2021, https://
www.sdxcentral.com/articles/news/nokia-freezes-o-ran-alliance-work-
over-chinese-meddling-worries/2021/08/.
A.10. I believe it is important to our national security that
U.S. companies (and those located in allied countries)
participate in standards organizations to help develop the
standards that guide the interoperability and functionality of
many types of technologies, including those related to the open
radio access network technologies represented by the O-RAN
Alliance. The Department of Commerce continually evaluates its
export controls to protect U.S. national security and foreign
policy interests, including technology leadership in
international standards development. For example, the
Department previously exempted releases to Huawei of technology
subject to EAR99 or controlled on the Commerce Control List
only for antiterrorism reasons through standards organization
and if released for the purpose of contributing to the revision
or development of a standard. As noted in the Office of
Management and Budget (OMB)'s Unified Regulatory Agenda, the
Commerce Department is preparing a revision to the Export
Administration Regulations (EAR) to clarify the applicability
of the EAR to releases of technology for standards setting or
development in standards organizations. Finally, it is my
understanding based on public information that no penalties
have been imposed upon parties in connection with standards
---------------------------------------------------------------------------
development.
Q.11. Emerging and Foundational Technologies--The Export
Control Reform Act of 2018 (ECRA) mandates BIS to identify and
control emerging and foundational technologies. Please describe
how you will go about implementing this provision. Will you
commit to prioritizing the expeditious implementation of this
provision?
A.11. If confirmed, I will prioritize identifying and
implementing appropriate controls on exports of emerging and
foundational technologies, consistent with the Export Control
Reform Act (ECRA) of 2018. In addition, I will work to identify
such technologies based on the criteria provided in Section
1758(a)(2)(B) of ECRA, which requires that the interagency
effort take into account: (i) the development of emerging and
foundational technologies in foreign countries, (ii) the effect
export controls imposed on emerging and foundational
technologies may have on the development of such technologies
in the United States, and (iii) the effectiveness of export
controls on limiting the proliferation of emerging and
foundational technologies to foreign countries.
Q.12. In your preparation for this nomination, have you found
an explanation for why, in the 3 years since ECRA was passed,
the only action taken regarding foundational technologies is a
request for public comment released on August 27, 2020? \4\
---------------------------------------------------------------------------
\4\ Federal Register, ``Identification and Review of Controls for
Certain Foundational Technologies'', August 27, 2020, https://
www.federalregister.gov/documents/2020/08/27/2020-18910/identification-
and-review-of-controls-for-certain-foundational-technologies.
A.12. If confirmed, I will prioritize identifying and
implementing appropriate controls on exports of emerging and
foundational technologies, consistent with the Export Control
Reform Act (ECRA) of 2018. I have not been serving in the
Bureau of Industry and Security (BIS) since the enactment of
ECRA and therefore do not have all the information necessary to
make the most accurate and complete judgment about BIS's
---------------------------------------------------------------------------
progress to date in this area.
Q.13. What steps would you take to ensure the process to
identify and control emerging and foundational technologies is
as efficient and timely as possible?
A.13. If confirmed, I will prioritize identifying and
implementing appropriate controls on exports of emerging and
foundational technologies, consistent with the Export Control
Reform Act (ECRA) of 2018. I will work to identify such
technologies based on the criteria provided in Section
1758(a)(2)(B) of ECRA, which requires that the interagency
effort take into account: (i) the development of emerging and
foundational technologies in foreign countries, (ii) the effect
export controls imposed on emerging and foundational
technologies may have on the development of such technologies
in the United States, and (iii) the effectiveness of export
controls on limiting the proliferation of emerging and
foundational technologies to foreign countries. I will make
every effort to implement this mandate from ECRA appropriately
and in a timely manner.
Q.14. Please list what factors you will take into consideration
when considering applying controls on foundational technologies
for which the United States is not the only potential source.
A.14. The issue of foreign availability is one example of an
important consideration in the process for identifying and
implementing appropriate controls on foundational technologies.
Because such technologies are already in production, there are
often developers and producers of such technologies in foreign
countries, thereby making new unilateral controls less
effective. Additionally, foundational technology candidates can
be former multilaterally controlled items that have been
decontrolled, many times because of widespread foreign
availability outside of regime members. As a result, changes in
controls for foundational technologies should be carefully
calibrated.
Q.15. Will you commit to submitting to Congress, in a
classified environment, quarterly summaries of technology
control decisions and the process behind them? If not, by what
metric, in your view, should Congress assess BIS' progress in
implementing ECRA going forward?
A.15. If confirmed, I will work diligently to respond,
consistent with the constitutional and statutory obligations of
the Executive branch, to requests for information and briefings
from Congress.
Q.16. Developing export controls on foundational and emerging
technologies requires significant subject matter expertise in
order to craft appropriate and impactful regulations.
Based on your understanding, does BIS have the necessary
technical expertise to carry out this function?
If it does not, how would you address this issue?
A.16. At this time and based on my understanding from publicly
available information, I currently have no reason to doubt that
BIS has the necessary technical expertise to identify and
implement appropriate controls on emerging and foundational
technologies. However, I think it is also important that BIS
identify any other experts in the U.S. Government focused on
certain technologies to contribute to this important review. If
confirmed, I will rely upon BIS's expert staff and those in
other agencies to enhance my technical knowledge and support my
decision making with regard to identifying and implementing
appropriate controls on emerging and foundational technologies.
Q.17. Section 232 Investigations--The previous administration
failed to publicly release several of their Section 232
investigation reports, despite being statutorily mandated to do
so. The Biden administration agreed to comply with the law and
release the overdue reports in Spring-Summer 2021. Do you agree
that, in a Section 232 investigation, the Executive branch
should be obligated to publicly release its Congressionally
mandated 232 report prior to the imposition of remedies?
A.17. If confirmed, I will comply with the requirements of
Section 232 of the Trade Expansion Act of 1962, as amended,
regarding the public release of Section 232 investigation
reports.
Q.18. Do you believe carbon emissions are a threat to national
security?
A.18. The Defense Department has identified climate change as a
critical national security threat. Carbon emissions, being one
of the leading causes of climate change, are therefore an
ongoing threat to our national security.
Q.19. Section 232 tariffs on imported goods are taxes paid by
American consumers. These taxes weaken our economy, threaten
American jobs, and erode our credibility with other Nations.
The previous administration's Section 232 tariffs on steel and
aluminum, which were imposed under the false pretense of
national security, have directly and negatively impacted my
constituents. They have greatly increased costs for American
importers and consumers. Do you agree that the U.S. should
remove our existing Section 232 tariffs on steel and aluminum?
A.19. Section 232 investigations are initiated to determine the
effects of imports of any articles on U.S. national security.
Like any tool, Section 232 should be used carefully and based
on the criteria in the statute. My understanding based on
publicly available information is that the Biden administration
is currently reviewing Section 232 measures and product and
country exclusions and is working with the European Union (EU)
to cooperatively address global excess capacity in steel and
aluminum and to hold countries, such as China, accountable for
their trade-distorting policies.
Q.20. Export Controls--Export controls are generally most
effective when implemented in a multilateral fashion with a
small group of allied Nations, thereby preventing the very
technology being controlled by the United States from being
available from foreign sources.
Will you commit to working with our allies, particularly
Governments with semiconductor suppliers, and proceeding in a
multilateral manner, to the extent possible, as an important
way to advance U.S. foreign policy and national security goals?
In particular, will you commit to working with U.S. allies
to convince them to agree to impose similar controls on
specific end users and end uses so that such controls are
imposed not only by the United States on U.S. exporters?
A.20. I agree with the Export Control Reform Act (ECRA) of 2018
Statement of Policy, Section 1752(5), which states that
``[e]xport controls should be coordinated with the multilateral
export control regimes. Export controls that are multilateral
are most effective, and should be tailored to focus on those
core technologies and other items that are capable of being
used to pose a serious national security threat to the United
States and its allies.'' Furthermore, when the multilateral
regimes cannot achieve U.S. export control objectives, BIS
should work on a plurilateral basis with likeminded countries.
I also support the working group on export controls that is
part of the U.S.-EU Trade and Technology Council (TTC). In
addition, BIS should continue bilateral discussions with allied
countries, especially those supplier countries of certain
technologies of concern, to coordinate on common controls and
policies.
If confirmed, I will work to share information and reach an
understanding with our allies on coordinating license review
policy for various types of technologies and seek to have them
take into account BIS's restricted party lists when evaluating
whether to approve a license. I believe that engagement with
allies is critical to the long-term success of our efforts to
address national security and foreign policy concerns related
to adversaries like the People's Republic of China (PRC).
Q.21. Tight unilateral controls on items for which the United
States may be the only source, have the strong potential of
driving research and development (R&D), and ultimately
production, offshore. In the past, very restrictive U.S.
controls contributed to robust foreign competition in sectors
like machine tools, commercial use of space, and commercial
thermal imaging. Under what circumstances would you consider
applying a unilateral control on a good or technology? Please
describe the criteria you would use in your analysis when
considering the application of a unilateral control.
A.21. I agree with Section 1752(6) of the Export Control Reform
Act (ECRA) of 2018, which states that ``[e]xport controls
applied unilaterally to items widely available from foreign
sources generally are less effective in preventing end-users
from acquiring those items. Application of unilateral export
controls should be limited for purposes of protecting specific
United States national security and foreign policy interests.''
Unilateral controls should be directly tied to important
national security or foreign policy concerns and used when
effective multilateral or plurilateral controls cannot be
achieved.
Q.22. By setting U.S. export control policy on items used for
both civilian and military purposes, BIS effectively has the
power to reshape the supply chains of entire industries and, in
some circumstances, impose significant burdens on the economy.
Not only is industry significantly impacted by export controls,
it is often at the forefront of cutting edge research and
technologies. Will you commit to consulting industry
stakeholders and maintaining an open channel of dialogue with
the business community?
A.22. Yes.
Q.23. Will you commit to a process that, except in
extraordinary circumstances, provides industry and other
stakeholders with reasonable opportunities to comment, and
provides stakeholders with adequate notice and time to comply?
A.23. Yes.
Q.24. U.S. goods have been exported through third countries for
eventual use in embargoed States like Iran. Iran has long
sought to acquire sensitive military hardware from the United
States through the use of front companies and other schemes
meant to avoid detection. If confirmed, what steps will you
undertake to stop the flow of unauthorized U.S. goods to Iran
and other terror-supporting countries such as North Korea and
Syria?
A.24. If confirmed, I will use all the tools available at BIS
to prevent the transfer of sensitive U.S. technologies to State
Sponsors of Terrorism and other countries and entities of
concern that threaten U.S. national security and foreign policy
interests, and to leverage all-source intelligence and
collaboration with other relevant agencies to detect and deter
efforts to circumvent export control restrictions.
Q.25. Semiconductors--If Creating Helpful Incentives to Produce
Semiconductors for America Act (CHIPS Act) funds are
appropriated during this Congress, what role should BIS play in
the administration of this new $52 billion intended to ensure
the resilience of the U.S. supply chain of semiconductors?
A.25. I believe it is critical for the United States to have
diverse, resilient and secure supply chains in critical areas
like semiconductors, and that a vibrant domestic semiconductor
manufacturing capability is an important component of overall
U.S. competitiveness. If confirmed, I will appropriately use
the tools and authorities available at BIS to assist in the
review of risks in the U.S. semiconductor supply chain to help
protect U.S. resilience in this critical industry. Furthermore,
I will work as appropriate with BIS staff and across the
Commerce Department to help implement any investments
authorized by Congress to shore up our domestic supply chain.
Q.26. Anti-Boycott Compliance--Through the Office of Anti-
Boycott Compliance, BIS leads the enforcement of antiboycott
laws to counter malign foreign boycott campaigns. If confirmed,
do you commit to fully enforcing U.S. antiboycott laws and to
discouraging foreign counterparts from participating in the
boycott of Israel?
A.26. The antiboycott provisions of the Export Administration
Regulations (EAR), 15 CFR Part 760 (2021), prohibit, among
other activities, a United States person, acting in the
interstate or foreign commerce of the United States and with
intent to further or support an unsanctioned foreign boycott,
from refusing to do business with or in a boycotted country or
with a resident or national of a boycotted country pursuant to
a request or requirement of a boycotting country. See Section
760.2(a) of the EAR.
My understanding is that the Bureau of Industry and
Security (BIS) Office of Antiboycott Compliance (OAC) is
committed to vigorous investigation and robust enforcement of
the antiboycott provisions of the EAR. To that end, OAC
analyzes any activities, including alleged refusals to do
business, that might implicate these provisions. If confirmed,
I will ensure that OAC closely monitors for any report of
potential or actual boycott activity that might constitute a
violation of the antiboycott provisions of the EAR and, when
the facts and circumstances warrant, initiates appropriate
action to hold violators accountable.
Q.27. Answering Questions for the Record--Please describe with
particularity the process by which you answered these questions
for the record, including identifying who assisted you in
answering these questions along with a brief description of
their assistance.
A.27. I was an active participant in drafting the responses to
these questions, with assistance from staff of the Commerce
Department and the interagency as appropriate.
------
RESPONSES TO WRITTEN QUESTIONS OF
SENATOR MENENDEZ FROM ALAN F. ESTEVEZ
Q.1. Mr. Estevez, the President, as a candidate, promised that
he would return the jurisdiction of the export licensing of
semiautomatic weapons from the Commerce Department back to the
Department of State, from which the Trump administration took
it. This the President can do by simple regulation, without the
need for legislative approval. Until that happens, however, the
Department is providing no information to the Congress as to
what lethal weapons, including sniper rifles and assault
rifles, are being sold to what countries, foreign person, in
what quantities and under what conditions, if any.
Do you agree that the President made a campaign promise as
a candidate to return the export control jurisdiction over
semiautomatic weapons, including assault rifles and sniper
rifles, to the Department of State?
Has a decision been made by the President, personally,
regarding the fulfillment of his campaign promise? If not, will
the final decision be put to the President to decide? If not,
why not, and who made the decision to not put the issue before
the President?
Why has the Department of Commerce not alerted the
Congress, and the SFRC specifically, to pending exports of
semiautomatic weapons, including assault rifles and sniper
rifles? Will the Department of Commerce do so? And when?
How many semiautomatic weapons, including assault rifles
and sniper rifles, has the Department of Commerce authorized
for export, to what countries, in what amounts, since the
export jurisdiction of such weapons was transferred from the
Department of State?
A.1. On January 23, 2020, the Department of Commerce published
a final rule (in conjunction with a Department of State final
rule) to revise Categories I (firearms, close assault weapons
and combat shotguns), II (guns and armaments), and III
(ammunition/ordnance) of the U.S. Munitions List (USML) and to
transfer items that no longer warrant control on the USML to
the Commerce Control List (CCL). Those changes went into effect
on March 9, 2020, with the exception of moving jurisdiction
from State to Commerce over certain software and technology
related to 3D-printed gun files. At the conclusion of
litigation, as of late May of this year, the Commerce
Department now has regulatory jurisdiction over that type of
technology or software, which is subject to export license
requirements even if it is made publicly available on the
Internet.
I understand that in this transfer of jurisdiction, no
firearms were decontrolled. Under the January 2020 Commerce
rule which is in effect, Commerce's regulations generally
require an export license for the firearms over which export
jurisdiction was transferred, as well as technology for the
development, production, operation, installation, maintenance,
repair, or overhaul of those firearms. The Departments of
Defense and State review license applications to export these
firearms and related technology and software. They and Commerce
carefully consider the national security, regional security,
and foreign policy, including human rights, implications of all
proposed exports subject to the Export Administration
Regulations (EAR). Furthermore, Commerce regulations would
specifically require a license for the internet posting of
software or technology ready for insertion into additive
manufacturing equipment or other tools to produce a complete
firearm or firearm frame or receiver.
In addition to these frontend restrictions, Commerce's 125
Export Enforcement agents are Federal law enforcement officers
whose sole mission is to ensure that U.S.-origin technology is
not diverted to activities that would be contrary to U.S. law,
or to national security or foreign policy interests.
My understanding is that this transfer of jurisdiction
began under the Obama administration with the dual goals of
allowing the State Department to focus its resources on the
export of defense articles that provide a significant critical
military or intelligence advantage gathering benefit and to
provide regulatory relief for certain low level items that do
not warrant State Department control. Those firearms with a
with a critical military or intelligence advantage or, in the
case of weapons, have an inherently military function
significant military applicability remained under State
Department licensing jurisdiction. The second goal of this
process was to provide regulatory relief to industry and ease
the ability to service existing defense products that were
previously exported.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCOTT
FROM ALAN F. ESTEVEZ
Q.1. In 2018, Congress included in the FY19 NDAA an update to
our export control laws giving the Department of Commerce the
ability to facilitate trade and commerce, while also
prioritizing national security oversight.
Our world is changing. And some of our global competitors
have begun imposing their presence on the world stage and
finding ways around U.S. sanctions.
The last Administration understood that fact, which is why
they imposed controls on companies like Huawei, including using
the Foreign Direct Rule.
Do you agree that using the Foreign Direct Product Rule on
Huawei was effective in stemming its access to critical
technology and preventing the spread of its 5G equipment in
partner countries?
Understanding the vital need to facilitate trade that
benefits the entire U.S. economy, what quantitative and
qualitative benchmarks will you set within BIS to address the
total breakdown between China's private sector and the Chinese
Communist Party and its military through Military-Civil Fusion?
If confirmed, will you commit to voluntarily and regularly
providing this Committee with data and information pertaining
to the successes and challenges--including through licensing
decisions, emerging and foundational technology controls, and
Entity List designations--of maintaining such a vital balance
in implementing BIS statutory export control functions?
A.1. My understanding is that the Bureau of Industry and
Security (BIS) works with its interagency partners to
consistently apply the licensing policies articulated in the
Export Administration Regulations (EAR) to restrict Huawei's
access to technology or software for activities that could harm
U.S. national security and foreign policy interests. All export
license applications to Huawei are reviewed by the Departments
of Commerce, Defense, State, and Energy. The licensing policy
for exports to Huawei and its listed affiliates for items
capable of supporting systems, equipment or devices at only
below the 5G level (e.g., 4G, 3G) are reviewed on a case by
case basis. All others are reviewed under a presumption of
denial.
It is also my understanding that in August of 2020, BIS
extended the scope of the Foreign Direct Product Rule with
respect to Huawei entities to require a license for reexports
and transfers of foreign-produced items that are either (i) the
direct product of certain U.S. or foreign software or
technology subject to BIS jurisdiction or (ii) produced from
equipment that itself is the direct product of certain U.S.-
origin technology or software. In effect, this has imposed a
license requirement for many foreign-made items for
transactions involving Huawei. I believe the FDPR is an
important tool in protecting our national security and foreign
policy interests. If confirmed, I will work diligently to
ensure that companies fully comply with the FDPR and all other
obligations under the EAR.
I am deeply concerned about the People's Republic of
China's (PRC) efforts to seek U.S. technologies to further its
military modernization, such as through diverting items from
civilian to military applications (i.e., its military-civil
fusion strategy), creating illicit procurement networks, and
stealing intellectual property, among other destabilizing
activities. If confirmed, I appropriately use the authorities
of BIS under the Export Control Reform Act (ECRA) of 2018 to
protect our national security and foreign policy interests
while strengthening our technological innovation and
leadership.
Lastly, I deeply respect the oversight role of the Senate
Banking, Housing, and Urban Affairs Committee and the Congress
as a whole and will respond to requests for information,
consistent with the constitutional and statutory obligations of
the Executive branch. It is my understanding that information
submitted or obtained in connection with export license
applications is subject to Section 1761(h) of ECRA, and that
requests for information protected from disclosure by 1761(h)
of ECRA are honored when appropriately submitted by the Chair
or Ranking Member of a committee or subcommittee of appropriate
jurisdiction.
------
RESPONSES TO WRITTEN QUESTIONS OF CHAIRMAN BROWN
FROM THEA D. ROZMAN KENDLER
Q.1. Where have you excelled in past positions in attracting,
hiring, and promoting people of color in positions in your
organization/s? Where might there be room for improvement?
What specific measures will you use to evaluate the success
of the U.S. Department of Commerce in understanding and
addressing the needs of Black, Indigenous, and people of color
(BIPOC)? And, will you work with the Secretary and senior
officials to keep Congress apprised, as appropriate, on the
progress being made on these measures?
What is your plan for creating an inclusive working
environment for employees within your office?
A.1. I began working on export controls in September 2001 in
private legal practice, then for 10 years in the Chief
Counsel's Office for the Bureau of Industry and Security (BIS),
and for the last 7 years, in the Counterintelligence and Export
Control Section of the Justice Department's National Security
Division. Throughout my career, I have committed myself to
diversity, equity, and inclusion in the workplace.
I support President Biden's ``Executive Order on Diversity,
Equity, Inclusion, and Accessibility in the Federal Workforce''
and ``National Security Memorandum on Revitalizing America's
Foreign Policy and National Security Workforce, Institutions,
and Partnerships'', and I share President Biden's and Secretary
Raimondo's commitment to the values of equal opportunity,
diversity, equity, and inclusion. If confirmed, I will work
with our leadership team to actively advance equity, civil
rights, racial justice, and equal opportunity for all employees
and applicants, by implementing measures to root out systemic
racism and strengthen civil rights programs while building
trust within and outside of BIS.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR TOOMEY
FROM THEA D. ROZMAN KENDLER
Q.1. Congressional Oversight--Please provide your philosophy on
how the Office of the Assistant Secretary for Export
Administration at the Department of Commerce (Commerce) will
approach and respond to Congressional information requests
(both for documentary information and oral testimony), if you
are confirmed.
A.1. I respect the oversight role of the Senate Banking,
Housing, and Urban Affairs Committee and the Congress as a
whole, and take the statutory requirements of the Export
Control Reform Act of 2018 (ECRA) seriously. My understanding
is that information submitted or obtained in connection with
export license applications is subject to Section 1761(h) of
ECRA, and that requests for information protected from
disclosure by 1761(h) of ECRA are honored when appropriately
submitted by either the Chair or Ranking Member of a committee
or subcommittee of appropriate jurisdiction. If confirmed, I
will work diligently to expeditiously comply with appropriately
submitted requests by Members of Congress consistent with the
constitutional and statutory obligations of the Executive
branch.
Q.2. If confirmed, do you intend to respond to information
requests differently depending on who is making the
Congressional information request (whether it's the chair of
the Congressional committee, the Ranking Member, or another
member of Congress)? Please answer ``yes'' or ``no.'' If your
answer is ``yes,'' please explain.
.A.2. I deeply respect the oversight role of the Senate
Banking, Housing, and Urban Affairs Committee and the Congress
as a whole and will respond to requests for information,
consistent with the constitutional and statutory obligations of
the Executive branch. It is my understanding that information
submitted or obtained in connection with export license
applications is subject to Section 1761(h) of Export Control
Reform Act of 2018 (ECRA), and that requests for information
protected from disclosure by 1761(h) of ECRA are honored when
appropriately submitted by the Chair or Ranking Member of a
committee or subcommittee of appropriate jurisdiction.
Q.3. Will you commit that, if confirmed, you will respond in a
timely manner and fully comply with all information requests
from me? Please answer ``yes'' or ``no.'' If your answer is
``no,'' please explain.
A.3. If confirmed, I will work diligently to respond,
consistent with the constitutional and statutory obligations of
the Executive branch, to requests for information from
Congress.
Q.4. Will you commit that, if confirmed, you will make yourself
and any other Office of the Assistant Secretary for Export
Administration employee expeditiously available to provide oral
testimony (including but not limited to briefings, hearings,
and transcribed interviews) to the Committee on any matter
within its jurisdiction, upon the request of either the
Chairman or Ranking Member? Please answer ``yes'' or ``no.'' If
your answer is ``no,'' please explain why.
A.4. If confirmed, I will work diligently to respond,
consistent with the constitutional and statutory obligations of
the Executive branch, to requests for information from Congress
Q.5. Commerce Acting Under Secretary for Industry and Secretary
Jeremy Pelter said in a recent hearing before the U.S.-China
Economic Security Review Commission that Congress can request
access to certain BIS information about export license
applications and rejections. Will you commit to timely and
comprehensive responses to Congressional requests for this
information? \1\
---------------------------------------------------------------------------
\1\ The U.S.-China Economic and Security Review Commission,
Hearing on ``U.S.-China Relations in 2021: Emerging Risks'', September
8, 2021, https://www.uscc.gov/hearings/us-china-relations-2021-
emerging-risks.
A.5. I respect the oversight role of the Senate Banking,
Housing, and Urban Affairs Committee and the Congress as a
whole and will respond to requests for information, consistent
with the constitutional and statutory obligations of the
Executive branch. It is my understanding that information
submitted or obtained in connection with export license
applications is subject to Section 1761(h) of the Export
Control Reform Act of 2018 (ECRA), and that requests for
information protected from disclosure by 1761(h) of ECRA are
honored when appropriately submitted by the Chair or Ranking
Member of a committee or subcommittee of appropriate
---------------------------------------------------------------------------
jurisdiction.
Q.6. China--In shaping export control policy, BIS's mission is
central to the United States' high-tech rivalry with China. Do
you agree that China's technological, military, and economic
rise poses one of the greatest current challenges to the safety
and well-being of the United States?
A.6. Yes. The Government of the People's Republic of China
(PRC) poses one of the most difficult challenges for U.S.
national security and foreign policy objectives, including our
ability to maintain U.S. technological leadership in critical
areas.
Q.7. Please detail your understanding of the national security
threat posed by the Chinese Communist Party (CCP), including
your assessment of the CCP's military modernization ambitions,
intellectual property theft campaign, and coercion targeting
United States allies and partners.
A.7. Many of our foreign adversaries, such as the Government of
the People's Republic of China (PRC), act in an irresponsible
manner, including through: diversion of dual use technologies
to military uses; theft of intellectual property; human rights
abuses; and anticompetitive, unfair and coercive trade
practices. These activities threaten our national security,
foreign policy, and economic security, as well as that of our
allies and partners.
Q.8. If a company requests a license or a waiver to export an
item to Huawei:
What factors would you weigh in considering such a request?
What would make you more likely to grant the request?
What would make you less likely to grant that request?
A.8. My understanding is that the Bureau of Industry and
Security (BIS) works with its interagency partners to
consistently apply the licensing policies articulated in the
Export Administration Regulations (EAR) to restrict Huawei's
access to technology or software for activities that could harm
U.S. national security and foreign policy interests. All export
license applications for exports to Huawei are reviewed by the
Departments of Commerce, Defense, State, and Energy. Based on
publicly available information, It is my understand that the
policy for license applications involving exports to Huawei and
its listed affiliates for items capable of supporting systems,
equipment, or devices below the 5G level (e.g., 4G and 3G) are
reviewed by the interagency on a case by case basis. All other
license applications are reviewed under a presumption of
denial.
Q.9. A BIS interim final rule, entitled ``Release of
`Technology' to Certain Entities on the Entity List in the
Context of Standards Organizations'', issued last year
authorizes the release of certain technology to Huawei and its
affiliates on the Entity List without a license if such release
is made for the purpose of contributing to the revision or
development of a ``standard'' in a ``standards organization.''
\2\ According to reports, Nokia recently opted to suspend its
activity with the O-Ran Alliance standards organization out of
concern that some participants were added to the Entity List.
\3\ This example highlights the lingering confusion over
whether U.S. companies' participation in technical standards
development activity is being chilled and, because of that,
whether U.S. and multinational companies are at risk of losing
ground in setting global standards to Chinese companies and
other competitors. If confirmed, how will you address this
ambiguity and facilitate clarification of navigating
participation in international standards organizations that
include entities on the Entity List?
---------------------------------------------------------------------------
\2\ Federal Register, ``Release of `Technology' to Certain
Entities on the Entity List in the Context of Standards
Organizations'', June 18, 2020, https://www.federalregister.gov/
documents/2020/06/18/2020-13093/release-of-technology-to-certain-
entities-on-the-entity-list-in-the-context-of-standards.
\3\ Matt Kapko, ``Nokia Freezes O-RAN Alliance Work Over Chinese
Meddling Worries'', SDX Central, Aug. 30, 2021, https://
www.sdxcentral.com/articles/news/nokia-freezes-o-ran-alliance-work-
over-chinese-meddling-worries/2021/08/.
A.9. I believe it is important to our national security that
U.S. companies (and those in allied countries) participate in
standards organizations to help develop the standards that
guide the interoperability and functionality of many types of
technologies, including those related to the open radio access
network technologies represented by the O-RAN Alliance. The
Department of Commerce continually evaluates its export
controls to protect U.S. national security and foreign policy
interests, including technology leadership in international
standards development. For example, I understand the Department
previously exempted releases--through standards organizations
and for the purpose of contributing to the revision or
development of a standard--to Huawei of low-level of technology
designated as to EAR99 or listed on the Commerce Control List
for Anti-Terrorism (AT) reasons only. As noted in the Office of
Management and Budget's (OMB)'s public Unified Regulatory
Agenda, the Commerce Department is preparing a revision to the
Export Administration Regulations (EAR) to clarify the
applicability of the EAR to releases of technology for
standards-setting or development in standards organizations. It
is my understanding based on public information that no export
enforcement penalties have been imposed upon parties in
---------------------------------------------------------------------------
connection with standards development.
Q.10. Emerging and Foundational Technologies--The Export
Control Reform Act of 2018 (ECRA) mandates BIS to identify and
control emerging and foundational technologies. Please describe
how you will go about implementing this provision. Will you
commit to prioritizing the expeditious implementation of this
provision?
A.10. If confirmed, I will prioritize identifying and
implementing appropriate controls on exports of emerging and
foundational technologies, consistent with the Export Control
Reform Act of 2018 (ECRA). In addition, I will work to identify
such technologies based on the criteria provided in Section
1758(a)(2)(B) of ECRA, which requires that the interagency
effort take into account: (i) the development of emerging and
foundational technologies in foreign countries, (ii) the effect
export controls imposed on emerging and foundational
technologies may have on the development of such technologies
in the United States, and (iii) the effectiveness of export
controls on limiting the proliferation of emerging and
foundational technologies to foreign countries.
Q.11. In your preparation for this nomination, have you found
an explanation for why, in the 3 years since ECRA was passed,
the only action taken regarding foundational technologies is a
request for public comment released on August 27, 2020? \4\
---------------------------------------------------------------------------
\4\ Federal Register, ``Identification and Review of Controls for
Certain Foundational Technologies'', August 27, 2020, https://
www.federalregister.gov/documents/2020/08/27/2020-18910/identification-
and-review-of-controls-for-certain-foundational-technologies.
A.11. If confirmed, I will prioritize identifying and
implementing appropriate controls on exports of emerging and
foundational technologies, consistent with the Export Control
Reform Act of 2018 (ECRA). As I have not been served in the
Bureau of Industry and Security (BIS) since the enactment of
ECRA, I do not have all the information necessary to make an
accurate and complete judgment about BIS's progress to date in
---------------------------------------------------------------------------
this area.
Q.12. What steps would you take to ensure the process to
identify and control emerging and foundational technologies is
as efficient and timely as possible?
A.12. If confirmed, I will prioritize identifying and
implementing appropriate controls on exports of emerging and
foundational technologies, consistent with the Export Control
Reform Act of 2018 (ECRA). I will work to identify such
technologies based on the criteria provided in Section
1758(a)(2)(B) of ECRA, which requires that the interagency
effort take into account: (i) the development of emerging and
foundational technologies in foreign countries, (ii) the effect
export controls imposed on emerging and foundational
technologies may have on the development of such technologies
in the United States, and (iii) the effectiveness of export
controls on limiting the proliferation of emerging and
foundational technologies to foreign countries. I will make
every effort to implement this mandate from ECRA appropriately
and in a timely manner.
Q.13. Please list what factors you will take into consideration
when considering applying controls on foundational technologies
for which the United States is not the only potential source.
A.13. Foreign availability is one example of an important
consideration in the process of identifying and implementing
appropriate controls on foundational technologies. Because such
technologies are already in production, there are often
developers and producers of such technologies in foreign
countries. Accordingly, new unilateral controls would be less
effective. Candidates for identification as foundational
technology may be technologies subject to multilateral controls
that since have been decontrolled, often because of widespread
foreign availability from nonregime members. As a result, I
believe changes in controls for foundational technologies
should be carefully calibrated.
Q.14. Will you commit to submitting to Congress, in a
classified environment, quarterly summaries of technology
control decisions and the process behind them? If not, by what
metric, in your view, should Congress assess BIS' progress in
implementing ECRA going forward?
A.14. If confirmed, I will work diligently to respond,
consistent with the constitutional and statutory obligations of
the Executive branch, to requests for information and briefings
from Congress.
Q.15. Developing export controls on foundational and emerging
technologies requires significant subject matter expertise in
order to craft appropriate and impactful regulations.
Based on your understanding, does BIS have the necessary
technical expertise to carry out this function?
If it does not, how would you address this issue?
A.15. At this time and based on my understanding from publicly
available information, I have no reason to doubt that BIS has
the necessary technical expertise to identify and implement
appropriate controls on emerging and foundational technologies.
I think it is also important, however, that BIS identify other
experts in the U.S. Government who have expertise of relevance
to emerging and foundational technologies who may be able to
contribute to this important review. If confirmed, I will rely
upon BIS's expert staff and those in other agencies to enhance
my technical knowledge and support my decision-making with
regard to identifying and implementing appropriate controls on
emerging and foundational technologies.
Q.16. Section 232 Investigations--The previous administration
interpreted the term ``national security'' in the Section 232
statute very broadly, understanding this guidance to explicitly
include goods ``beyond those necessary to satisfy national
defense requirements'' in its scope. As the Assistant Secretary
for Export Administration, would you recommend adopting an
expansive definition of ``national security'' under Section
232, or do you think that Section 232 investigations should be
limited to investigating goods with clear applications in
military equipment, energy resources, and/or critical
infrastructure?
A.16. Section 232 investigations are initiated to determine the
effects of imports of any articles on U.S. national security.
Like any tool, Section 232 should be used carefully and based
on the criteria in the statute.
Q.17. Do you believe carbon emissions are a threat to national
security?
A.17. The Defense Department has identified climate change as a
critical national security threat. Carbon emissions, being one
of the leading causes of climate change, are therefore an
ongoing threat to our national security.
Q.18. Section 232 tariffs on imported goods are taxes paid by
American consumers. These taxes weaken our economy, threaten
American jobs, and erode our credibility with other Nations.
The previous administration's Section 232 tariffs on steel and
aluminum, which were imposed under the false pretense of
national security, have directly and negatively impacted my
constituents. They have greatly increased costs for American
importers and consumers. Do you agree that the U.S. should
remove our existing Section 232 tariffs on steel and aluminum?
A.18. Section 232 investigations are initiated to determine the
effects of imports of any articles on U.S. national security.
Like any tool, Section 232 should be used carefully. My
understanding based on publicly available information is that
the Biden administration is currently reviewing Section 232
measures and product and country exclusions. In addition, I
understand the Administration is working with the European
Union (EU) to cooperatively address global excess capacity in
steel and aluminum and to hold countries, such as the People's
Republic of China (PRC), accountable for their trade-distorting
policies.
Q.19. Export Controls--You have prosecuted a number of cases
involving Iran sanctions violations, including the case of
Huawei.
Do you believe U.S. sanctions are strong enough to dissuade
individuals and companies, like Huawei, from engaging in export
violations to sanctioned countries?
Does the United States need stronger enforcement tools or
penalties?
A.19. I understand that BIS continually assesses technologies,
end uses, and end users to identify items that may be misused
to engage in activities contrary to U.S. national security and
foreign policy interests. I believe BIS and its interagency
partners strive to enhance the effectiveness of U.S. export
controls and sanctions regimes by conducting extensive outreach
with industry, academia, and other partners to raise awareness
of export control requirements and best practices for
compliance. In my opinion, I believe an informed exporting
community is critical to the effectiveness of our export
controls. We must work with them to identify potential risks.
Moreover, I believe it is critical to work with our allies to
amplify our export controls and sanctions regime efforts.
Q.20. Export controls are generally most effective when
implemented in a multilateral fashion with a small group of
allied Nations, thereby preventing the very technology being
controlled by the United States from being available from
foreign sources.
Will you commit to working with our allies, particularly
Governments with semiconductor suppliers, and proceeding in a
multilateral manner, to the extent possible, as an important
way to advance U.S. foreign policy and national security goals?
In particular, will you commit to working with U.S. allies
to convince them to agree to impose similar controls on
specific end users and end uses so that such controls are
imposed not only by the United States on U.S. exporters?
A.20. I agree with the Export Control Reform Act of 2018 (ECRA)
Statement of Policy, set forth in Section 1752(5), which
states:
Export controls should be coordinated with the multilateral
export control regimes. Export controls that are multilateral
are most effective, and should be tailored to focus on those
core technologies and other items that are capable of being
used to pose a serious national security threat to the United
States and its allies.
Furthermore, when multilateral regimes cannot achieve U.S.
export control objectives, BIS should work on a plurilateral
basis with likeminded countries. I also support the working
group on export controls that is part of the U.S.-EU Trade and
Technology Council (TTC). In addition, BIS should continue
bilateral discussions with allied countries, especially those
supplier countries of certain technologies of concern, to
coordinate on common controls and policies.
If confirmed, I will work to share information and reach an
understanding with our allies on coordinating license review
policy for various types of technologies, and will seek to have
them take into account BIS's lists of parties of concern when
evaluating whether to approve a license. I believe that
engagement with allies is critical to the long-term success of
our efforts to address national security and foreign policy
concerns related to adversaries like the People's Republic of
China (PRC).
Q.21. Tight unilateral controls on items for which the United
States may be the only source, have the strong potential of
driving research and development (R&D), and ultimately
production, offshore. In the past, very restrictive U.S.
controls contributed to robust foreign competition in sectors
like machine tools, commercial use of space, and commercial
thermal imaging. Under what circumstances would you consider
applying a unilateral control on a good or technology? Please
describe the criteria you would use in your analysis when
considering the application of a unilateral control.
A.21. I agree with Section 1752(6) of the Export Control Reform
Act of 2018(ECRA), which states:
Export controls applied unilaterally to items widely
available from foreign sources generally are less effective in
preventing end-users from acquiring those items. Application of
unilateral export controls should be limited for purposes of
protecting specific United States national security and foreign
policy interests.
Unilateral controls should be directly tied to important
national security or foreign policy concerns and used when
effective multilateral or plurilateral controls cannot be
achieved.
Q.22. By setting U.S. export control policy on items used for
both civilian and military purposes, BIS effectively has the
power to reshape the supply chains of entire industries and, in
some circumstances, impose significant burdens on the economy.
Not only is industry significantly impacted by export controls,
it is often at the forefront of cutting edge research and
technologies. Will you commit to consulting industry
stakeholders and maintaining an open channel of dialogue with
the business community?
A.22. Yes.
Q.23. Will you commit to a process that, except in
extraordinary circumstances, provides industry and other
stakeholders with reasonable opportunities to comment, and
provides stakeholders with adequate notice and time to comply?
A.23. Yes.
Q.24. U.S. goods have been exported through third countries for
eventual use in embargoed States like Iran. Iran has long
sought to acquire sensitive military hardware from the United
States through the use of front companies and other schemes
meant to avoid detection. If confirmed, what steps will you
undertake to stop the flow of unauthorized U.S. goods to Iran
and other terror-supporting countries such as North Korea and
Syria?
A.24. If confirmed, I will use all the tools available to BIS
to prevent the transfer of sensitive U.S. technologies to State
Sponsors of Terrorism and other countries and entities of
concern that threaten U.S. national security and foreign policy
interests. I will also leverage all sources of intelligence and
collaboration within BIS and with interagency partners to
detect and deter efforts to circumvent export control
restrictions.
Q.25. Semiconductors--If Creating Helpful Incentives to Produce
Semiconductors for America Act (CHIPS Act) funds are
appropriated during this Congress, what role should BIS play in
the administration of this new $52 billion intended to ensure
the resilience of the U.S. supply chain of semiconductors?
A.25. I believe it is critical for the United States to have
diverse, resilient and secure supply chains in critical areas
like semiconductors and that a vibrant domestic semiconductor
manufacturing capability is an important component of overall
U.S. competitiveness. If confirmed, I will appropriately use
the tools and authorities available at BIS to assist in the
review of risks in the U.S. semiconductor supply chain to help
protect U.S. resilience in this critical industry. Furthermore,
I will work as appropriate with BIS staff and across the
Commerce Department to help implement any investments
authorized by Congress to shore up our domestic supply chain.
Q.26. Answering Questions for the Record--Please describe with
particularity the process by which you answered these questions
for the record, including identifying who assisted you in
answering these questions along with a brief description of
their assistance.
A.26. I actively participated in drafting the responses to
these questions, with assistance from Commerce Department staff
and the interagency as appropriate.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SINEMA
FROM THEA D. ROZMAN KENDLER
Q.1. I am working hard to increase domestic semiconductor
manufacturing in Arizona, both to create jobs and to address
global supply shortages that continue to make it difficult to
get products to consumers in a timely fashion. If confirmed,
what role do you envision export control policy will play in
resolving lingering supply chain disruptions for semiconductor
manufacturing?
How can export control policy support domestic
manufacturing of semiconductors and address supply chain
disruptions, all while resolving outstanding national security
concerns?
A.1. I believe it is critical for the United States to have
diverse, resilient and secure supply chains in critical areas
like semiconductors and that a vibrant domestic semiconductor
manufacturing capability is an important component of overall
U.S. competitiveness. If confirmed, I will appropriately use
the tools and authorities available at BIS to protect our
cutting-edge semiconductor technology, which is crucial to U.S.
national and economic security.
Additionally, if confirmed, I will support the Commerce
Department's work on the President's Supply Chain Disruptions
Task Force to tackle near-term bottlenecks in the semiconductor
industry and to strengthen U.S. leadership in semiconductor
manufacturing.
I understand that, on September 24, 2021, a Bureau of
Industry and Security (BIS) ``Notice of Request for Public
Comments on Risks in the Semiconductor Supply Chain'' was
published in the Federal Register. According to the Notice:
With the goal of accelerating information flow across the
various segments of the supply chain, identifying data gaps and
bottlenecks in the supply chain, and potential inconsistent
demand signals, the Department is seeking responses from
interested parties (including domestic and foreign
semiconductor design firms, semiconductor manufacturers,
materials and equipment suppliers, as well as semiconductor
intermediate and end-users) to the questions set forth in this
notice.
If confirmed, I look forward to reviewing public responses
to this Notice and supporting any appropriate efforts that may
follow.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCOTT
FROM THEA D. ROZMAN KENDLER
Q.1. In 2018, Congress included in the FY19 NDAA an update to
our export control laws giving the Department of Commerce the
ability to facilitate trade and commerce, while also
prioritizing national security oversight.
Our world is changing. And some of our global competitors
have begun imposing their presence on the world stage and
finding ways around U.S. sanctions.
The last Administration understood that fact, which is why
they imposed controls on companies like Huawei, including using
the Foreign Direct Rule.
Do you agree that using the Foreign Direct Product Rule on
Huawei was effective in stemming its access to critical
technology and preventing the spread of its 5G equipment in
partner countries?
Understanding the vital need to facilitate trade that
benefits the entire U.S. economy, what quantitative and
qualitative benchmarks will you set within BIS to address the
total breakdown between China's private sector and the Chinese
Communist Party and its military through Military-Civil Fusion?
If confirmed, will you commit to voluntarily and regularly
providing this Committee with data and information pertaining
to the successes and challenges--including through licensing
decisions, emerging and foundational technology controls, and
Entity List designations--of maintaining such a vital balance
in implementing BIS statutory export control functions?
A.1. My understanding is that the Bureau of Industry and
Security (BIS) works with its interagency partners to
consistently apply the licensing policies articulated in the
Export Administration Regulations (EAR) to restrict Huawei's
access to technology or software for activities that could harm
U.S. national security and foreign policy interests. All export
license applications to Huawei are reviewed by the Departments
of Commerce, Defense, State, and Energy. I understand the
policy for license applications involving exports to Huawei and
its listed affiliates for items capable of supporting systems,
equipment or devices below the 5G level (e.g., 4G and 3G) are
reviewed on a case-by-case basis. All others are reviewed under
a presumption of denial.
It is also my understanding that in August 2020, BIS
extended the scope of the Foreign Direct Product Rule (FDPR)
with respect to Huawei affiliates to require a license for
reexports and transfers of foreign-produced items that are
either (i) the direct product of certain U.S. or foreign
software or technology subject to BIS jurisdiction or (ii)
produced from equipment that itself is the direct product of
certain U.S.-origin technology or software. In effect, this has
imposed a license requirement for many foreign-made items for
transactions involving Huawei. Based on publicly available
information, I believe the FDPR is an important tool in
protecting our national security and foreign policy interests.
If confirmed, I will work diligently to ensure that companies
fully comply with all other obligations under the EAR,
including the FDPR.
I am deeply concerned about the People's Republic of
China's (PRC) Government's efforts to seek U.S. technologies to
further its military modernization, such as through diverting
items from civilian to military applications (i.e., its
military-civil fusion strategy), creating illicit procurement
networks, and stealing intellectual property, among other
destabilizing activities. If confirmed, I will appropriately
use the authorities of BIS under the Export Control Reform Act
of 2018 (ECRA) to protect our national security and foreign
policy interests while strengthening our technological
innovation and leadership.
I respect the oversight role of the Senate Banking,
Housing, and Urban Affairs Committee and the Congress as a
whole, and will respond to requests for information, consistent
with the constitutional and statutory obligations of the
Executive branch. It is my understanding that information
submitted or obtained in connection with export license
applications is subject to Section 1761(h) of ECRA and that
requests for information protected from disclosure by 1761(h)
of ECRA are honored when appropriately submitted by the Chair
or Ranking Member of a committee or subcommittee of appropriate
jurisdiction.
[all]