U.S. Economic Security and Investment Abroad: Assessing Economic Security Zones

Is that this hearing on letters?

Subcommittee on Oversight and Intelligence will come to order. The purpose of this hearing is to examine the development of economic security zones as an economic security architecture. Specifically, we will explore the related issues of governance, critical minerals and infrastructure within the economic architecture. Additionally, we will explore policy options to provide a durable foundation for American economic state craft and ensure the United States possesses the instruments necessary to compete effectively in an era of strategic economic competition. I now recognize myself for an opening statement. Good afternoon. And welcome to today's hearing titled " US Economic Security and Investment Abroad: Assessing Economic Security Zones". On behalf of the House Committee on Foreign Affairs and the Subcommittee of Oversight and Intelligence, I welcome our witnesses, and I look forward to your testimonies. We are grateful for having you here today, and thank you for your time. Today we know that national security and economic prosperity go hand in hand. Economic security is national security, particularly when it comes to emerging technologies, such as AI and the raw material and critical minerals that support them. The nation that controls advanced manufacturing, critical minerals, semiconductors, artificial intelligence, and resilient supply chains will shape the global economy and the balance of power for decades to come. While the People's Republic of China hopes to dominate critical industries and make countries around the world economically dependent upon Beijing, it is the Trump administration that is working with trusted allies and partners to build s- uh secure supply chains strengthen private sector investment, and create an economic architecture that advances both American prosperity and American security. At the heart of this effort is the Trump administration's PAC-SILICA initiative, a new vision for American economic leadership based on a simple but powerful principle, economic security is national security. PAC-SILICA seeks to build a trusted network of allies and partners that work together to secure the industries and supply chains essential to development of artificial intelligence, critical minerals, energy, to semiconductors, advanced manufacturing, logistics, and digital infrastructure. Economic security zones are an important part of that strategy. Economic security zones represent an effort to build a trusted network of industrial hubs among America's allies. Places where investment, manufacturing, logistics, and innovation operate under transparent rules, reliable contract enforcement, and high regulatory standards. Together, these zones can help secure the industries and technologies that America cannot afford to lose. The announcement earlier this year of the first security economic zone in the Philippines marks an important step towards turning that vision into a reality. It demonstrates how the United States can partner with allies to strengthen supply chains while reducing dependence on authoritarian regimes, that use economic coercion as a geopolitical weapon. PAC-silica recognizes that peace and prosperity in the twenty-first century will increasingly depend on technological leadership, secure digital infrastructure, resilient manufacturing, and trusted economic partnerships. Economic achievement should not be measured by how much money Washington spends overseas but whether the investment strengthens our national security, American businesses, and American innovation. As the United States considers this emerging framework, we also have a responsibility to ensure that economic security zones operate with a strong transparency, accountability, and under the rule of law. We must encourage private investment, protect intellectual property, prevent illicit trade, and ensure that partnerships reflect the high standards expected by the United States and our partners including, both nation-state and private investors. Ultimately, private, p- President Trump's economic agenda has made clear that America will no longer accept dependence on our adversaries for critical supply chains. Instead, we will lead by building stronger alliances securing critical industries, and ensuring that the next generation of global economic growth is anchored by freedom security and American leadership. I look forward to hearing from our witnesses about the successes of the economic security zones and the broader PAC silica, and how we and President Trump's administration can help advance American economic security. That is why we are having this important conversation today. With that, I will yield to the ranking member for his opening statement.

Uh, thank you, Mr. Chairman. Uh, and thank you to our witnesses uh, for joining us today. I look forward to your opening testimony. Uh, and thank you to uh, the members who decided to be with us. Appreciate it. Uh, economic security uh, has become one of the defining challenges uh, facing our country, whether we're talking about critical minerals, manufacturing, infrastructure, or investment. The goal should be simple, make our supply chains more resilient, and make life more affordable for American families. Unfortunately, most of us look around and see that we're actually moving in the opposite direction. The President promised lower costs, instead families are facing higher prices, businesses are dealing with greater uncertainty, and markets are reacting to an economic strategy that too often puts politics ahead of sound policy. Economic security isn't just about where our products are coming from, it's about whether working families can afford groceries, gas, housing, and the basic necessities of everyday life. Uh, that is why today's discussion about economic security zones is very important. Uh, I agree with the Chairman. Uh, if Congress is going to consider new tools to strengthen our economy, we need to understand whether they will actually improve America's competitiveness or if they're just a band-aid for other policies that are making our economy less competitive in the first place. One of the biggest headwinds facing American manufacturers and consumers today is the Am- is the administration's tariff policies. Now, I'm not an economic policy expert, but I do know one thing, tariffs are taxes. They're not absorbed by foreign governments, paid by the American businesses that import goods, and then passed on to American consumers who ultimately pay higher prices. Uh, and while tariffs can play a targeted role in addressing unfair trade practices, or protecting truly strategic industries, broad-based tariffs have imposed significant costs on American manufacturing, farmers and families, while doing little to meaningfully reduce our trade imbalance. Well, we've also seen the consequences in our manufacturing sector. According to analysis released by the Joint Economic Committee, uh, Democrats earlier this year, the United States lost roughly a hundred and eight thousand manufacturing jobs in twenty twenty five. An analysis done by the Automotive News also shows that section two thirty-two tariffs on automobiles and auto parts have impor imposed more than thirty five billion in additional cost through March twenty twenty six. And if tariff revenues remain unchanged, it's estimated by the Joint Economic Committee that American families would pay more than three hundred and thirty billion in tariff costs in twenty, twenty six. Uh, and that's three hundred and thirty billion, uh, with a B. Uh, and these costs ripple through the economy, making it more expensive to build, manufacture, invest here at home. Um, economic security also depends on global stability. I- Mister Chairman, you talked about critical minerals, and we've, we've talked about that at, uh, a number of our hearings and in the main committee, uh, is that, uh, you know, we so far have been losing on the battle of critical minerals. I know this administration is doing what they can to try to turn the tides. But, you know, American the American peo we've not educated the American people uh enough on why that's so important, what it would mean. Um, and there is bi- dramatic bipartisan support, which is very hard to find these days up here, on dealing with China, dealing with critical minerals. And another thing dealing with China is China's manipulation of the information Americans are absorbing every day, the propaganda that the Chinese are feeding the American people in order to win the AI race, uh in order to win uh the next generation of technology, and critical minerals are a huge part of that. I in addition when it comes to supply chain, you know I w I was in charge of the entire COVID response for the state of Florida, as you know. Um and I can tell you the supply chain issues we had during COVID, that I had buying stuff from all over the country, a lot of it from China, having to fly it in on different planes, uh we a lot of that has not still been fixed. after trillions of dollars were spent at the end of the Biden administration, and the beginning of the first Trump administration, and all these packages, a lot of the supply chain issues that still existed uh have not been fixed. And so we have to figure out how we are gonna onshore uh more of that manufacturing back to the United States. That doesn't mean we can't live in a global economy, but we we can't depend on foreign nations, specifically nations that are looking to take advantage of us, like China, uh on things like critical minerals and critical supplies that are needed uh in the event the United States faces you know another uh c- uh cataclysmic disaster. Uh, economic security begins with lowering costs, strengthening resilience here at home. It means building stronger supply chains, expanding domestic production, uh investing in infrastructure, and creating an environment where businesses have the confidence to invest in America. New economic security zones are being proposed as a way to encourage investment, accelerate permitting, uh reduce unnecessary barri barriers, and concentrate development. in strategically important industries, and that effort raises uh serious questions. You know, will these uh zones intend to strengthen American supply chains by partnering with trusted allies or will they be a workaround for domestic policies that are making it harder to invest here at home? Will they generally reduce dependence on adversarial supply change, which I clearly support, or will they simply shift production from one foreign location uh to another? Uh if the administration is going to promote economic security zones abroad, Congress should understand how these initiatives fit into the broader strategy for American competitiveness. And we should be asking whether these zones will complement domestic investment, reinforce our allies, and deliver real benefits to American workers and consumers, or whether they risk exporting even more opportunity, uh, while costs continue, uh, to rise at home. Uh, and so, you know, with that, Mr. Chairman, I look forward, uh, to hearing from our witnesses about what works, what doesn't work, how Congress can promote policies that generally will strengthen our economy, our national security and more importantly, uh, lower cost for the American people, and with that I yield back. Thank you.

I'd like to thank the ranking member for his remarks and also just as he, um, did make commentary towards what I wanna respond in some ways, I mean, this is why when you talk about Chinese misinformation, I proposed a bill which was called the SPIN Act, which would undo the Obama's, uh, re- I guess modernization act of two thousand and twelve on the Smith-Munt act of nineteen fifty-seven. that would prevent propagandized media being not just utilized internationally, but domestically. With regards to rare earth and critical minerals, I think that you and I have had so many discussions about the significant importance of this. And I think that we have to start exploring well beyond what China's goal was, which is just to take the fifteen of sixteen rare earth mineral mines in Africa, and try and utilize economic coercion and exploitation, and really start looking at things like the nineteen eighty-five law of the sea, where we can do deep seabed harvesting of minerals two hundred and fifty miles off of and also look at our bilateral, trilateral agreements to be able to try and go ahead and utilize AI semi-autonomous quantum entanglement drone capabilities to do this, and allow us to advance beyond our competitors. But, as you said, that is why we have this type of a debate and a discussion, and I look forward to hearing from our witnesses. Other members of the committee are reminding that opening statements may be submitted for the record this committee recognize the importance of the issues before us. Our witnesses today include Mr. Eric Bremen, the Chief Executive Officer of Prospera International, Mr. Michael Holliman the second, the Chief Commercial Officer of US Strategic Metals, Mr. Paul Sullivan, the President of International Business, Acro Acro Bridge, Acro?

Acro.

Acro Bridge, and which is an amazing business that helps support our veterans and US Steel. And Mr. Clark Packard, Research Fellow at the Herbert A. Steiffel uh, Center for Trade and Policy Studies at the Cato Institute. Mister Eric Bremen, the CEO of Prosper International, spent nearly a decade building and operating a prototype economic security zone in Honduras. Mister Bremen brings extensive knowledge of economic security zones and where improvements can be made. Mister Michael Holliman, the second, the Chief Commercial Officer of US Strategic Metals, has over twenty-five years of experience in global metals markets and is now assisting the efforts to build cobalt and nickel processing capabilities in Missouri. Mister Holliman can discuss the incentives and risks of private investment in critical mineral projects. Mister Paul Sullivan, President of International Business at Acro Bridge, leads the company's international business operations for a New Jersey based bridge manufacturing whose one hundred percent US steel bridges stand in more than a hundred and fifty countries. Mister Clark Packard, a research fellow at the Herberte Steifel Center and Cato Institute, Prior to joining the Cato Institute, Mister Packard was a resident fellow at the R Street Institute and the National Taxpayers Union, where I was just awarded the award from the NCU, focusing on international trade policy. He proves he worked at the National Taxpayers Union doing the same thing. This committee recognizes the importance of the issues before us and is grateful to have you here to speak with us today. Your full statements will be made as part of the record, and I'll ask each of you to keep your opening remarks to five minutes, in order to allow time for member questions. I now recognize Mister Bremen for this opening statement.

Chairman Mills.

There we go. Chairman Mills, Ranking Member Moskowitz, and members of the subcommittee. Thank you for the invitation. I would like to share a bit about my background, so you understand my perspective. And, five critical considerations for this committee, as you make policy to support economic security and investment abroad. When I was born in Venezuela, it was the richest country in Latin America. And by any measure, people should be amongst the wealthiest in the world today. Instead, I have seen it turn into a place from which people flee and in which poverty abounds. Since my childhood, I felt the need to understand why. And what created the opposite outcome? Why was it that in some places around the world, people thrive and prosper? while in others they starve and poverty abounds. In two thousand and fifteen, I became a US citizen by choice, and I am a proud proud patriot. My wife and I, Colleen, have raised three kids to be patriots as well. And the answer has been on display for over two hundred and fifty years right here in the US. What has made America great and the greatest engine of human prosperity is our system of market economy and individual liberty, underpinned by rule of law to protect private property. The benefits are not just humanitarian. Economic prosperity is at the heart of national security and strength. The best of the re-emergent doctrine of American economic statecraft is that it recognizes that the best way to advance US interests at home and abroad is by stimulating greater trade, and US strategic investments. Indeed, doing so stimulates productivity and wealth creation domestically and abroad, and it deepens our ties with allies. However, none of it is possible without the system that underpins a market economy, rule of law, legal stability, and private property rights. In fact, where there is an absence of these conditions, bad actors thrive, the corrupt, the unscrupulous, and indeed foreign adversaries control the environment and win. In my personal recent experience in Latam, I have seen a country fall to the influence of the PRC, turning from a long-lasting and flourishing relationship with Taipei, towards Beijing, and a series of other foreign adversaries who quickly gained influence and control. These types of regimes, predictably, have also gone against many US investors, including my company. So, how can the US best advance economics How does the US best support its companies to succeed in foreign markets, especially those of strategic importance to the national interest? Naturally, it's important to understand what stands in the way right now. Why is it that the PRC, through SEOs and other mechanisms, have been able to gain footholds throughout the world, and even become the main trading partner to a majority of nations? Is it because Chinese companies are better? Is it because they offer cheaper goods alone? No. Of course not. It's a game of conditions. And the main culprit against greater success is political risk. Under the right conditions, no one can out-compete the American entrepreneur and enterprise. But creating these conditions for market economies to thrive abroad is hard, and nearly impossible to sustain through political cycles. Especially when adversaries tip the scale of national politics. Trust me, I know far too well, given my personal experience. My company has built an enhanced form of special economic zone in Honduras. This next generation of special economic zone focuses on rule of law, property rights protection, and on improving the lives of the local population. As a result, US investment has flowed. We represented over thirty percent of the foreign direct investment into Honduras in twenty one, twenty two, were the greatest source of local jobs that pay higher than average wages, have brought new industries, and represent a platform of opportunity for strategic US investments in the region. This is why I support the administration's vision to capitalize economic security zones.

Mm-hmm.

This next generation of special economic zones focus on creating the right conditions, can attract US investment and advance interest abroad. In this context, I respectfully wanna point out to five considerations when making policy. One, political risk is the one risk that private capital cannot solve for itself. Number two, American capital flows where operating environment is stable and business-friendly and the political risk is neutralized. This next generation of special economic zones can solve the issue of corruption and bad governance problems better than any other tool that we currently have. To succeed, these zones must include and support the improvements of the lives of the local citizens. But, critically, for the zones to succeed, Congress must provide the framework and tools that make them durable, across long-time horizons and changes of government, in the host capital and in Washington DC. Thank you very much.

Thank you. Mister Holliman, I now recognize uh or sorry, thank you Mister Rubin, I now recognize Mister Holliman for an opening statement.

Thank you uh Chairman Mills, uh thank you for your service, sir, uh thank you Ranking Member Moskowitz, wish you were here, uh and members of the subcommittee, thank you for the opportunity to testify today. My name is Mike Holliman, I'm Chief Commercial Officer of US Strategic I've spent my career around the world working for large commodities trading companies. Um, time in Russia, time in China, time in Africa, Indonesia, Latin America. I've been around the world. I've watched this cold minerals war simmer without our participation. I've watched the Chinese beat us everywhere we've been, not because we couldn't do anything about it, because we didn't participate in the war that was ongoing. I'm not gonna tell you anything here that you don't know, but I just would like to reiterate. Um, we at US Strategic Metals are building a processing facility on a Superfund site to process multi-metallic metals. We're starting with the metals we have in the ground. It's an old mine site, former lead mine that served the military during World War Two heavily. Now, we've remediated the site, and we're making nickel, cobalt, copper. We have it in the ground, But we're importing through our trading relationships and our technical relationships, we're building processing so that we can bring feed from everywhere. We have more feed around the world than we need. We do need to mine, baby, mine, we need to drill, baby, drill, but do not forget the choke point is process, baby, process, and I think you know that. Uh, I wanna open with an uncomfortable truth. The US cannot build a fighter jet, a data center, an EV battery, or a smartphone today. Without materials that flow either directly or indirectly through the PRC. This is unacceptable. This is also not a matter of preven preference, it is a matter of dependency. One that has hardened into a strategic vulnerability that grows worse every year we fail to act. Just for some context, cobalt. Roughly seventy-five percent of the world's cobalt is mined in the Democratic Republic of Congo, seventy-five percent. A higher percentage of that cobalt is processed in China. So, the Chinese own the mines, and they own the processing, and they own the battery manufacturing, and the alloy manufacturing. So, one decision, the US remains one decision away from a Kinshasa or Beijing cutting us off from the ability to have cobalt, for super alloys, for our jet engines, or for our batteries. Uh, similar scenarios exist for copper, lithium, nickel, other metals that I I have in my testimony. I know I've gotta get through this. There's so much to say on this, but as you know um, Chairman Mills, rare earth, rare earth elements, something we're working on. We're gonna be the first recycler of rare earth minerals in the United States. Every advanced fighter, EV motor, precision guided munition that we build, passenger cars, common technologies, your iPhone has eighteen N D FEB magnets in it. We get them all, all that material is refined and magnetized in China. It is unacceptable. So when you take a step back and look at the big picture, America remains reliant on China for fourteen of thirty-three minerals we depend on most. We are a hundred percent import reliant for thirteen critical minerals outright, and more than fifty percent reliant for twenty more. So China is the world's leader in refining. with an average market share of near seventy percent. What can we do? The administration is doing great work. XM, DOW, Energy, Commerce, they're all working hard. The Vault, the DLA. We're big fans of what the Pacsilica that you mentioned, uh Under Secretary Helberg, the Philippines, this is a road map for the economic security zone. Uh, I think they're doing fantastic work, we just have to follow through and congressional help will be key. We need, with these security zones, We need uh durability to make things bankable. They must survive. You must have political risk insurance that survive administrations, both here and there. There should be consequences when governments break the rules. Um, we're we're in the Congo right now. You have you have Congolese imports to w not imports, they're exports to China of cobalt, which they have now cut off because of Chinese oversupply. Well we need American companies, we have an American mine, Virtus, which is in country. We have Glencore, my former company, that wants to ship all their material to the US. We have to make sure we, we work with the government, and an economic security zone would be ideal. So you, it would survive administration, survive governments. Anyway, there are a bunch of things that you're proposing. We really appreciate that you follow through on it. The um, the, the national security threat is exactly what this is. You all know and we we really appreciate you welcoming us here to uh talk about it. Thank you.

Thank you, Mr. Alleman. I now recognize Mr. Sullivan for an opening statement.

Chairman Mills, Ranking Member Moskowitz, and members of the subcommittee. Thank you for the opportunity to uh appear before you today. My name is Paul Sullivan. I'm the President of International Business for Acro Bridge. Acro is headquartered in Persephone, New Jersey, with our manufacturing facility in Milton, Pennsylvania. We are the world leader in the design, manufacture and supply of modular steel bridges with projects delivered to more than a hundred and fifty countries across the globe. We have approximately three hundred and fifty employees, but our work supports thousands of additional American jobs across steel production, galvanizing, logistics, engineering and related industries. From our perspective, the subject of this hearing is both timely and practical. Infrastructure is no longer just a development issue, it is a core element of economic security. Roads, bridges, ports, power systems and logistics corridors determine how goods move, how communities connect, how supply chains function, and how countries reduce dependence on strategic competitors. Economic security zones can be a powerful tool for American economic statecraft but only if they are built on trusted infrastructure, transparent procurement, resilient supply chains and competitive financing. A zone cannot succeed if the roads and bridges that connect it are financed built in ways that create new dependencies, weaken local sovereignty, or reward opaque and non-transparent practices. ACRO sees this challenge every day in international markets. American companies often offer better quality, stronger technical compliance, safer designs, and better life cycle value. But we are frequently competing against foreign firms that arrive with the coordinated backing of their governments, export credit agencies, development finance institutions, diplomatic networks, and political influence. The People's Republic of China has made infrastructure a central instrument of its global strategy. Chinese firms, including state-owned and state-supported uh enterprises, often compete with subsidized finance, bundled project packages and diplomatic support that private US companies cannot match on their own. The challenge is not fair competition. We welcome fair competition. The challenge is competition distorted by tide financing political pressure corruption, failure to meet technical specifications, weak quality control, limited skills transfer and disregard for intellectual property. This problem is not limited to China. In some markets, European competitors also benefit from highly coordinated national export strategies, export credit, uh, support, uh, development, finance support and diplom diplomatic advocacy. The broader point is that American firms increasingly compete not only against foreign companies, but against foreign systems. That is why US government support matters. ACRA uses US government resources in a range of ways, to identify partners locally, identify, or excuse me, understand local markets, engage with public sector customers, support meetings with high level decision makers, and encourage fair and transparent procurement. US ambassadors, embassy teams, the departments of state and commerce, and commercial diplomacy more broadly, can open doors and reinforce that American companies bring quality, accountability, safety, and long-term partnership. USX and Bank and DFC are also critical. Export finance and development finance can help level the playing field when American companies face competitors backed by aggressive, foreign credit systems. But these tools must be coordinated early and must move at the pace of strategic competition. If the United States waits until a tender is issued, the project may already have been shaped by others. Our recommendations are straightforward. First, make infrastructure a core component of economic security zones. Second, engage earlier in the project life cycle, including feasibility, procurement design, technical specifications, and capacity building. Third, strengthen coordination among the departments of state and commerce, EXIM, DFC, USTDA, and other US agencies under a whole of government approach. Fourth, ensure that procurement rewards life-cycle value, technical integrity, durability, and local capacity, uh, rather than simply the lowest initial price. And finally, make sure small and medium-sized American exporters have a meaningful role in this architecture. The United States has extraordinary strengths, world-class companies, trusted technology, deep capital markets, unmatched diplomatic reach, and a reputation for quality and accountability. But those strengths must be organized for the competitive environment we face today. Strategic competitors are using infrastructure, finance, procurement, and industrial policy to gain influence and lock in dependencies. The United States must respond with an integrated strategy that aligns American companies American diplomacy American finance and American values, all in support of the American worker. Thank you for your opportunity to testify. I look forward to your questions.

Thank you so much. Mister Packard, I now recognize you for five minutes.

Great. Chairman Mills, Ranking Member Moskowitz, and members of the subcommittee. My name is Clark Packard, and I thank you for the opportunity to testify. I'm a research fellow at the Cato Institute, and I've, most of my research focuses on US international trade and investment policy with a specific focus towards China. Today, the United States faces genuine economic security challenges. In two thousand twenty five, after the Trump administration imposed sweeping tariffs on Chinese goods, Beijing responded with a near total embargo on exports of seven rare earth elements and the magnets made from them. The decision disrupted supply chains uh with semiconductors, defense supply chains almost immediately. Ford Chicago assembly plant shut down for a week due to the shortage of rare earth magnets. This is a very serious vulnerability. My concern is not with the diagnosis, it is with the treatment. Again, China's dominance over certain critical products is real. Take tungsten, used in armor-piercing munitions, certain missiles, aerospace components, semiconductors, et cetera. China controls about eighty percent of the global supply chain. The economic security zone in the Philippines is a response to a legitimate problem. Perhaps it will bear fruit, but it should be pursued with other market-oriented tools. Consider where we stand. National security tariffs on steel and aluminum were doubled to fifty percent. And those tariffs apply to friends and rivals alike. A ten percent global tariff now applies to much of what Americans import. Tariffs imposed since two thousand twenty five amount to the largest tax increase as a share of the US economy since nineteen ninety three, at roughly one thousand dollars per household alone. Virtually all economic research shows that the Americans are paying for the tariffs, whether at the checkout counter or through higher prices for American manufacturing. Ironically, the tariffs make it more expensive to build everything downstream. More than half of what the United States imports today are intermediate inputs used by American producers. Broad-based tariffs are in effect a tax on manufacturing itself. Likewise, American exporters from farmers to aircraft makers end up paying a stiff price. In two thousand twenty-five, after the United States imposed those tariffs, American manufacturer shed about seventy five thousand jobs. The ad-hoc and constantly evolving tariffs also create massive uncertainty in the US economy. They undermine uh the predictable and stable conditions necessary for investment to expand. To out-compete China, the US needs trusted allies, yet our erratic and costly trade policies have strained relationships with our closest allies. When we tell NATO members that their steel and aluminum exports threaten American security, or treat a Japanese firm's investment in a US steel producer as a security threat, we signal that American commitments are conditional and easily reversed. That is a gift to Beijing, which is happy to present itself as a more reliable economic trading partner. It is not that Korean and Japanese firms are suddenly enamored with China. It's that their export-dependent economies have little alternative. Consider Canada, which is part of our own industrial base and one of the largest suppliers energy, uranium and critical minerals. Yet because of the tariffs and the threat thereof, Ottawa is now openly hedging against the United States, deepening ties with the European Union and moving to strike a trade deal with China. When a country that helps arm us starts looking for the exits, we have miscalculated badly. Likewise, for all its flaws, the Trans-Pacific Partnership would have cemented an American-led trading block to offset China's gravitational pull in the region. Instead, we abandoned this potentially game-changing tool. Binding, enforceable, and crucially legally codified trade agreements are how the US should build resilient allied supply chains at scale. Yet as we raise our barriers, our partners are lowering theirs, with one another and excluding us. And the exemptions make the case. The administration has essentially conceded this point. The US recently lifted tariffs on phosphorus and fertilizer to help lower costs for American farmers. As grocery prices kept Crept up, the administration exempted hundreds of food items from its tariffs to help lower prices. And in one area it guards most closely, the artificial intelligence build-out, the administration carved out the advanced chips and data center equipment, that power American AI. Each carve-out is an admission that protectionist tools raise prices, disrupt supply chains, and undermine the very resilience that they're advertised to provide. If es exceptions are necessary, perhaps the the rule deserves a second look. Economic security zones may prove helpful, but they should be pursued in conjunction with other market expanding tools. We need policies that affirm market incentives that make American firms and those of our allies more competitive. We need to open doors to friends and allies, not hide behind tariff walls. I look forward to answering any questions the committee may have. Thank you.

Thank you very much, Mister Packard. I'd like to ap- thank the witnesses for your opening statements. A lot of great points were made. Mister Bremen, you talked a lot about political risk insurance, US capital, local engagement, and making sure policy match, I think that's great. Mister Holliman made some very strong points, and this is just my initial visceral reactions, for lack of participation in key areas where China and others are advancing, looking at the smelting and processing capabilities here in the United States, seventy-five percent of cobalt being in the DRC which we know China focused on fifteen of sixteen rare earth mineral mines within the continent of Africa alone but also the understanding that reliancy and dependency is unacceptable when you're the world's strongest nation. Uh, Mister Sullivan made some great points when we talk about the ideas of small and medium sized businesses being able to advance. That's why I co-sponsored the REINS Act, which would actually look at permit reforms and knocking down some of the over-regulation that was stifling businesses so we can promote growth. And I think that's a key thing. But also, looking at the awards processes, cuz you're right, in most international businesses, especially in emerging markets, before that tenders hit the market, it's already been awarded, and we know that relationships are key elements of this. When it came to, Mister Packard, I had quite a few, I know you're talking about the Nippon, Japan, fourteen point four billion dollar trade that was with US steel, but we also know that had it not been for President Trump, that not only would America not have the preferential treatment of US steel to come here before any others, but CFIUS would have likely have needed to be utilized where the Biden administration was going to allow that to go through, with zero restrictions eliminating US steel capabilities. Canada, With regards to Canada, they would make a great fifty-first state. I think that they'd be an amazing place and uh, I look forward to their governor uh, having discussions. When it comes to agreements, look, the bilateral tri-dollar agreements, we've looked at AUKUS and things like that with easing ITAR restrictions for five-I partners. I think that'll continue to strengthen things. I understand the fears, the risks, and the uncertainty sometimes of tariffs. But a brief history lesson would point out to eighteen sixty to nineteen thirteen where ninety percent of federal revenue actually originated from tariffs. And I would argue that outside of Biden's auto-pen, that in nineteen thirteen, probably the worst president in American history would have been Woodrow Wilson, with the sixteenth and seventeenth amendment being ratified, uh, essentially stripping out American capabilities, but also denying dep- our independence as individual states and individuals, as the tenth amendment had rightly afforded for us. That's my visceral reaction on that. Um, as opposed to uh having my initial uh questioning, I'm gonna go ahead and first recognize uh an amazing representative uh a a true hero to America who has served proudly. Uh Jim, I recognize you for five minutes from your line of questioning.

Thank you, Mister Chairman, and thanks for holding and conducting this meeting, and I appreciate all the witnesses being here. Look forward to your comments. You know, um, you know, I think the President has made it clear that the economic security is an essential element to our national security. I think Congress must ensure that the government has the tools and the authorities needed to meet and defeat our adversaries. And as we've heard from our witnesses, emerging tech is a highly important and and a very informative part of our strategy. And so China is is still continuing to push um uh while conducting this kind of diplomacy and the dual-use surveillance technology critical mineral processing, next generation communications infrastructure, and joint research initiatives offered as carrots can gain access and leverage over others so as part of our effort to strengthen our economic security, we must ensure that our diplomats and foreign service officers have the background needed to science and technology to enhance our economic options. So we should ensure that the embassy staff receive training and have the necessary background to recognize and help the U. S. take advantage of economic opportunities which I have introduced, H R eighty two twelve, the Technology Diplomacy Training Act. As the technology continues to rapidly evolve, our diplomatic efforts will depend on understanding how technology priorities connect with other diplomatic and economic efforts. So, my question is, several of uh of you panelists, you have um you're right on the front lines and you're working on uh uh right there where it's critical and so uh some of the things that that's happening with China, so in your experience, here's the question, in your experience do you have a greater understanding of STEM fields and emerging technologies by embassy staff, would that be valuable? For embassy staff has background in STEM training.

Uh I would say absolutely and also a clear understanding of of the whole of government opportunities that are available to them.

Yeah, it's definitely important for them to know the technologies, so stem trading w would be important. I think we need a a rounded, especially if if they're in country dealing with um with the companies that are working in these countries, we need them to be well-rounded. A lot of times we we go to, I just came back from from Kinshasa, and we had a a group of people that were very dialed in. to what's going on in Congo. They knew the metals, where the metals went. What they were used for eventually in technology. Um, so, uh, I've met both sides, and I've been around the world to a bunch of these. So, yes, we do. Absolutely, sir.

Uh, I think, Acro's position on this certainly would encourage greater stem training. But I think greater commercial diplomacy, uh, training in general is very welcome. If we're gonna implement a whole of government approach where all the various agencies and departments state commerce uh uh USTDA Exim Bank DFC if they're all to work in coordination properly you need uh diplomats who understand the deal cycle, what it looks like to go into emerging and frontier markets and start from uh the G to G framework of connecting with uh public sector clients. arranging uh the uh scope of works that will ultimately uh uh develop a a successful project, uh and then provide the financing, which in over ninety percent of the cases is absolutely required. Um uh I think financing, the the training related to financing is also critical for our diplomats. A lot of them do not have a firm grasp of all of the stages of of the financing milestones with respect to either US Exim Bank or DFC. A and you know from ACRA's perspective and in our experience and most of the markets we work in are uh emerging or frontier, uh if you can't bring the financing you're not in the game. Forget about the specs, you're you're not even listened to. Uh and yet the United States finds itself within six months of having its export credit agency lapse. And these are one of those issues that I think we really need to investigate how not only can we sharpen the tools, that these companies are using, but also ensuring that our diplomats have a firm grasp of the ins and outs of the project life cycle. Thank you.

Yeah, I don't I don't have a ton to add. I do think that it would be important for, you know, understanding the nexus between the STEM aspects and the technologies themselves and the products used from them.

And Jim, if you got another question, you're free to go over time.

I just I just wanted to I appreciate I appreciate the comments, because I think that's so important, because AI is moving so fast right now and and we need to make sure our diplomats understand you gotta recognize you gotta recognize when you got a positive situation. And so I think that's important that we have that kind of training for the diplomats. And uh the only other question I have is um uh are there any other areas that we need to support in terms of trying to make sure that we have the financing and the support available for our investors in other countries. Is there anything else that we need to be doing?

Congressman, respectfully yes. I think by far the most important policy tool that can be created is one that focuses on neutralizing political risk at large. I think everything else is quite secondary to that.

You know, I uh I know that it uh if you're gonna invest in farmland, if you don't have the financial backing, you're kind of in trouble. So That that's an important part of having the funds available. Thank you very much and I yield back.

Thank you so much. At this time I'd like to recognize uh another fellow veteran Marine hero and an amazing guy uh out of Ohio. We'll recognize uh Representative Max Miller for five minutes.

Thank you, Chairman. Truly appreciate it. And thank you, your witnesses, for taking the time out of your busy schedules to come speak with us on this very important topic. Truly appreciate it. It's been refreshing to see an administration our economic security seriously. Both the State Department and the Department of War deserve high praise for making tangible progress in this area, no doubt. We policy makers in the United States obviously should do what we can to secure our supply chains, but in the global economy we now live in, it is impossible to onshore everything. That's where Pak Silica and economic security zones come in. These are innovative ways to get the United States and our allies on the same page when it comes to our shared supply chain security goals. The Luzon Economic Corridor is a massive investment that will deliver real prosperity to the people of the Philippines, America, Japan, and others. It will also serve as a force multiplier for the US and allied forces in the Western Pacific by leveraging significant investments in shipbuilding and aerospace manufacturing from Hyundai and Collins Aerospace. So, to any of our witnesses, the Philippines obviously makes sense for an economic security zone like this, given our relationship with them and their strategic location. But where else makes sense for future expansion of this model of supply chain resilience that you see throughout the globe?

Yeah, th thank you very much, Representative Miller. Appreciate you. Thank you for your service as well. Um, the other places we see are many. Uh, currently we are working with uh with Saudi Arabia to do a a copy paste critical minerals processing plant where all of the metal can come back to the United States, but it's centrally located near another country, Pakistan, which has had an increasingly important role and stance toward the United States positive stance. It's a country that is full of metal, copper, antimony, um, tin, tungsten, m- many of the metals that we're we're uh trying to get a hold of in the United States. If you had a nexus between Saudi Arabia, Pakistan, you could do processing in Saudi Arabia. You're it's it's a perfect example of a place where we could go and set something like that up. Also Congo, Uganda, Zambia, Namibia, a lot of countries in in the central center of Africa, have metals that we're building processing for. We currently have a contract with Glencorp to take Congolese Hydroxide, out of the pocket of China, and bring it to Missouri, right, where we're building a plant. So, we wanna replicate this around the world, bu build a national champion. We need multiple critical mineral national national champions. I just came back from Panama, another great interesting right on our doorstep place where we can get copper, cobalt, a bunch of metals that we need together with a friendly country. That's why ES this this ESZ idea is so important.

Thank you, Mister Alam and I really appreciate that answer, I'm sorry.

Yeah, no, I would like to add to that. Uh, you mentioned Panama and I think it's um a fantastically well-positioned country right here in the hemisphere. I would say generally speaking the Western hemisphere is uh is a place where economic security zones are well placed. And uh my most recent experience in Honduras suggests that it's by far perhaps the most underrated and highest potential country in the hemisphere right now, if the conditions were right. So we're really excited to see how the current administration there has started to shift things more towards a business-friendly environment, and economic security zones there could be transformative.

Damn, thank you. And this really, uh, kind of goes right into my next question that I have here. Uh, given your background, Mister Hollivan, Mister Sullivan, uh, given your background in metals trading in Africa respectively, I'm very interested to hear your perspective on where you think the economic security zone focused on critical minerals makes sense. We were kind of just diving into that right there with you were saying, uh, I understand China's deeply involved in this sector in Africa, but cracks are showing and African nations seem that they're wising up to the nefariousness uh that's going on finally. Um, and the Chinese investment within the industry. So, I just wanted to say, you know, thank you for your perspectives on that, and anything you could share regarding that, um, would be great.

J- just one thing on on the back of what we we've been saying. So, I I've been in and out of Africa working for Glencore and other trading companies for years uh watching the Chinese come in and they think about things differently. Th- it's twenty-five years and maybe eight trillion dollars they've been spending on all of this. while we have not been participating, they don't care about a financial return. They care about a strategic return. And this is the the the crux of the issue, and economic zones is our way. We're not USA Incorporated. We cannot function the way they do. It is, it's extremely smart. It's also not fair. It is not a level playing field. So, we need to step up, and I think this economic security zone is a way to do it. Sorry.

Absolutely.

No, just with respect to the critical minerals piece, uh you can't uh uh draw on critical minerals without supportive industries and sectors like infrastructure. Uh and what we have found, and we've worked in over forty countries across Africa, is that what um African governments are really yearning for is mutually beneficial partnership not exploitative relationships and I think for uh the United States and Acre Bridge in particular what is our value proposition? It is a race to the top in quality innovation, but also comprehensive partnership and service. We are there for the long haul and they know that and they believe that, but they're offer often asking, where are the Americans? And oftentimes uh there aren't many firms that operate in emerging and frontier markets because they're not sure if the tools that they would need to compete in those markets will be available and as I mentioned earlier just as one example, USX and Bank, credit agency there are over eighty five export credit agencies around the world and each of the countries that we're competing against have very muscular strategies around their export credit agencies their development finance institu institutions. And if you're in emerging and f uh and frontier markets and you're you're proposing a project and you don't have financing uh you may be uh may as well be walking in on uh on a horseback with bayonets because you don't have a chance. And I think uh From ACRO's perspective, we're a we're a small to medium sized enterprise. So we feel that we offer the template on how American companies across uh the industrial heartland can participate in what we believe will be a more expansive partnership across Africa and other parts of merging and frontier markets but to do so we've gotta have those tools and without those tools, which means seasoned, skilled diplomats who understand that their job is commercial diplomacy, First and foremost, helping American companies, because what does that do? It's helping American workers. And they also have to understand the deal cycle, how things start from preliminary inquiries all the way through to project execution. Um we do all of those things, but sometimes we have our hands tied behind our back with the lack of these tools. And I can assure you that Acrobridges already, you could say, well Paul, uh don't worry, we'll get XM back, uh we'll get it signed up for another ten years. by the end of the year, but what I can share with you also is that governments are already telling us that the political risk is not us, it's you, because we can't depend on the tools that you're bringing to the table, and we need these projects executed before t a date certain, and if you don't have the financing, we can't wait around. So these are some of the real uh you know we could share anecdotes all day long, but the blood and guts of doing international business in these challenging markets whether it's critical minerals infrastructure, agribusiness, the list goes on. You need these tools.

Yeah.

You need the diplomats who really understand them. Um and we need to make the awareness quotient much higher out in middle America,

Yeah.

especially with SMEs. They feel um you know, they don't have giant government affairs departments sitting in Washington DC. They run a nice business in middle America. You know, we manufacture in Pennsylvania. Uh but they don't understand how to utilize these tools. So if there's any uncertainty, they just kind of back away.

Yeah. Well, thank you very much, and I truly appreciate the education, and it's very necessary, I believe, for our constituents back home to hear the reality of where we are. Uh and the education that you gave uh in my about thank you, Chairman, about eight and a half minutes going on, nine so far, uh is definitely gonna be helpful to the people back home of the seventh district. So,

Thank you so much. And again, both these gentlemen, whether it be Congressman Baird or Congressman Miller, they live in the heartland America. They understand the significant importance of the blue-collar industry. They understand what it is to put jobs and money back into their districts. And I can tell you that both, uh, Representative Baird and Congressman Miller, they fight hard every single day to bring jobs back to their hometowns to make sure that the America First agenda is being promoted but also to guarantee that we get to a position whereby the economy in America is our peace through strength solution. So I really thank uh Representative Miller for the questions that he's asked, and so uh if we wanna do a second round we can. Uh with that I now recognize myself for five minutes for a series of questions. How do economic zones, the economic security zones envisioned by the Trump administration, compare to the employment and economic development zones developed in Honduras, and the broader network of free trade zones around the world?

Chairman.

Chairman, thank you for the question. Uh, in essence what the economic security zones seek to create are the predictable good governance conditions that American enterprise needs in order to operate effectively abroad and if they had strong statutory foundations they would be very similar to the Zedes from Honduras but they don't yet have that here in the US.

And what are the key similarities and differences And how might they impact international investment in the domestic political support for the zones?

Well, as we have heard, a lot of the foreign adversaries don't compete on a level playing field. What the zones can create in allied countries are conditions in which on the merits American enterprise can compete and win, but in any case at least compete fairly. Structured adequately, they would not just be a short-term agreement, they would be long-term in nature. with consequences attached if their agreements are violated by subsequent administrations. What this means is that uh capital can flow with a long-term horizon to build infrastructure and industrial base of of of strategic interest and in so doing, also benefit the local population.

And then kind of in my last, as I kind of tether this a little bit, um what lessons from the ZEDEs like might be incorporated into the development of regarding governance and relations with host governments and local populations, because I know you talked about local population involvement. In my trip to Honduras, two things really stuck out significantly, that the incoming and new Honduran government wants to move away from Chinese adversarial capabilities and move towards Taiwan, which is recognising about a two point two billion dollar fisheries industry and the shrimp capabilities, but also that China has moved in and essentially eliminated the microeconomics of local uh jobs and support that's in the area, something you see a lot in Africa as well. Um so what could we learn from the ZEDEs that we could kind of implement into this new framework of a security economic zone that's coupled with political risk insurance?

Yes, eh well what we have seen in a place like Honduras is that there is tremendous potential but the the conditions of good governance sometimes take longer to build than any given four year administration. We've been making progress with the current administration and we're grateful for their support uh but they have a big mess to untangle that the prior one left, um ushered no doubts by China and other adversaries. So what we have learned is two things. On the positive side, when you build the right conditions, capital flows, and it develops strategic industries, creates local jobs, and deepens the relationship. But, if you don't have stability, through multiple four year cycles, then what could happen, as it happened in Honduras, is that the cha the rules change. And so, while the rules are in place, they work, but if they are not stable, they just don't attract strategic capital. And then you create opportunities for places like China to come in. So the key missing element, I would say, are policy tools that make these long-term commitments with immediate consequences if they get violated. not options that take five to ten years through international arbitration, millions and millions of dollars to maybe work out this is an irrelevant time frame for political actors that need to get elected every four years. So it has to be immediate, has to be substantial, and not to penalize, but to deter, to deter, because often, like the current administration, might be very intent in doing the right thing, but once they're gone, the next administration might

Well, I wanna congratulate. I mean Honduras under President Tito has done an amazing job to rid itself of what is usually a plaguing problem that only gets out through warfare, which is the settlement of communism.

Yeah.

And they've done an amazing job coming in and actually defeating the Communist Party, but also starting to minimalize the impact which China can have to the economy by looking at good strategic partnerships. And again, I cannot impress upon the the importance of strengthening the Western hemisphere. If we're gonna look at our capabilities and we're gonna try and strengthen ourselves,

Mm-hmm.

what better place to look at bilateral and trade agreements than in our own hemisphere and in our own backyard. Stronger economic agreements, as we talked about, and economic prosperity is national security. But it also will help us with our issues with illegal immigration. It'll also help with s with stopping criminal migrants from crossing our borders, because when they have jobs and they have prosperity in their own country, they're not seeking to leave that country to try and seek it elsewhere. I wanna extend that round of questioning out though, if I may, on the ZEDEs to see how you think that we can utilize some of that existing framework to help strengthen what we're trying to build moving forward. So anyone who would like to comment?

So I I I would just say in short terms financing, insurance, diplomacy and infrastructure is the China model, right. They they come in full guns a blazing, the country's behind them, they give them everything. I've been in meetings where you'll have an infrastructure group or a mining group bid on something in an African country and they'll say, this is great, we you win, that's the right number, but where's the money? Oh, well Bank of China. I've got ten guys from Bank of China. And then who's gonna operate? Well, they're right here as well. You know, they they come as a whole of government approach. We need to look at building a framework where we go in like that. And I don't know how technically it can be done. I'm a commodities trader, but I like the direction of this conversation, and especially this economic security zones. We have tools, XM doing fantastic work, DFC. I know the the Pentagon is doing a lot of very important interesting things. Um, commerce, I don't wanna leave anybody out, but eh they're working on it. The admin is hard at work. I think this is another tool for them, economic security zone.

Would anyone else like to comment or I can move along?

Uh uh just a a quick comment to remind everyone that when we speak in abstract terms about economic power or economic security we're again uh probably better served by reminding ourselves of the faces behind this and I think the Acro story is uh is a particularly interesting one. Chairman, as you're aware, our manufacturing facility is in Pennsylvania. Our bridges are made with a with one hundred percent US steel. All of our service technicians are former US military personnel who assembled and installed our bridges in Afghanistan and Iraq. We have a great legacy serving the US military over decades. We've supplied hundreds and hundreds of bridges, not just to the US military but other militaries allied and beyond a around the world. Uh but it all comes down to the workers in New Jersey, Pennsylvania, and a dozen other states who are serving all fifty states across this country. But when you're talking about working in emerging and frontier markets, there's often this kind of sense that it's distant, it's far. What does it really mean for us? This is again American jobs, supporting American families to live the lives that they hope to lead. To do that you need economic leadership. To do that with your emphasis you need commercial diplomacy that employs or at least fully understands the sharp tools that we actually have. Uh and we need to scale these. Uh it's not just the tools themselves, but it's the uh the federal government employees who serve those institutions at EXIM and DFC. It's one thing to authorize, it's another thing to staff, so that they can accommodate the deal flow that this administration anticipates and is ready to support. So I I I would only add we have experts here on economic security zones. I think ACRO's uh position as a steel fabricator of modular steel bridges that serve, you know, o over a hundred and fifty countries across the globe, don't lose sight of the faces all of this is meant to serve, which is the American worker and American families. Thank you.

Well, American businesses, American innovation, American workers are the greatest in the world. And we're great at putting up bridges, and as Iran is finding out right now, we're also great at taking down bridges. Uh, with that, I will recognize another great veteran, uh, a ranger an infantry officer, an amazing guy, and uh also from the heartland of America, the great state of Ohio. So I recognize the gentleman from Ohio, Representative Davidson, for five minutes.

Yeah, thanks, Chairman. Thank you guys for being here for this hearing and uh apologize for being in and out for part of it, um w w with multitasking here. Um but uh I'm also the Chairman i of uh the Subcommittee for National Security and Illicit Finance, which is part of the Financial Services Committee. And there's a lot of overlap between what we're working on there and what we're talking about here today in foreign affairs. Frankly, a number of my colleagues uh l like myself are members of both committees. And when you look at, you know, the jurisdiction, we're working on the Defense Production Act, which goes through treasury, but obviously ASK has homelands uh House Armed Services Committee has a big impact. Commerce has a big impact. If State Department has a big impact. Um this is a whole government kind of approach, and thi this administration has been phenomenal on addressing trade and national security components of our industrial capacity. I think the uh concern that some people have had is, well, OK, how do we beat China without becoming too much like China? We don't want state-owned enterprises. And so some people have been alarmed with, you know, equity stakes in businesses, for example. And I remember, you know, not long ago we were having a knock-down, drag-out fights over just even the Export-import bank. And as a former manufacturing guy myself, uh, in manufacturing companies before I came into Congress and after my time in the military, you know, I I look at it like why would we unilaterally disarm? How are you going to compete in a world market where, uh, other companies can do trade credit and you can't? Uh, because there is a void in terms of what commercial banking can do where they can't cover some risk. And that's the intent. But I wanna highlight one thing here, that uh I wanna make sure that all my colleagues uh h and and you all are aware of, uh is the Export-Import Bank created a stockpile uh of critical minerals. Sixty most critical minerals. They created a twenty percent uh participation rate by private sector, so there's a real demand signal on that. And it's less prone to politicization than um, you know, the strategic petroleum reserve, which, you know, people argue at times has been or hasn't been, whatever. But here you've got a clear demand signal, it's sixty critical minerals, and I just wonder i you know uh you know maybe you, Mister Hallman, you you you could highlight um the importance of getting things like that for just continuity for American manufacturing and American supply chains.

Sure. Th and thank you for the question, and thank you for your service also, Representative Davidson. Um, th this is an issue we we've been banging on about for years, and we're so pleased to see that Chairman Jovanovich and XM have have gone forward with the vault. The vault is a fantastic concept. The Chinese have been doing it for years. I, as a commodity trader for years, would watch the Chinese overproduce, bury the price of a commodity, you name it. Maybe it was an American company or a Swiss trading company trying to buy a mine. They would bury the price to make it uneconomical, and when the price hit rock bottom, they would buy all of the global stockpiles of the metal. This just happened with cobalt. Last year there was an oversupply of cobalt, cobalt went down to eleven dollars a pound, fourteen thousand tons was sitting in the stockpile in Rotterdam, they bought it all. Right, that that's thinking like a trader, but you're a country. Well this is what the vault is gonna do. If you wanna dump, we're buyers, right? The American vault are the buyers. And then we can give that benefit back to the US companies and to the US taxpayer. I think it's a fantastic strategy. They're working on it. We're coordinating with them. But this is a a really good physical step, an actual step that's being done by the admin, and I applaud it.

Yeah, that's a perfect illustration, and thank you. That's exactly what happens, is they make it so there is no price discovery. And part of the whole point of markets is that you can discover a price. And aside from that, this is where Defense Production Act kicks in. S for some um critical minerals, rare earth minerals, There's no way to do price discovery because a hundred percent of the processing is in China, so there is no market price. The price is whatever China sets the price at. If you wanna raise capital for that, you can't really be a true fiduciary and commit to repay debt, uh, because you can't really tell what the market price is. And so this leaves companies that wanna produce it in America in a void. For a long time, the void has been filled with with grant making. Well, the federal dollars just go in grants. And the surest thing is, just a little ways down the road I need another grant. Right, so there's there's there's no fierce accountability from a venture capital or private equity coming in and providing staking for it. Uh there there's uh there's no way for the capital formation to take place. So this is where the equity stake comes in, uh so that they get the capital, but they also have to feed to the fire to deliver the production capacity. That's the case being made for the Defense Production And you know, Mister Sullivan, you've worked in both of those worlds. Uh, could you give us some thoughts on how this interacts, uh, you know, with, with the US effort for, you know, both more domestic production with the Defense Production Act, uh, incentive, but also what we're talking about maybe broadly is, in some places like the Philippines, for example, you might be able to do that in a friendly third country where you have a close relationship and strong defense partnerships with. And and steer some of that investment there without going full Defense Production Act. So uh could you share your thoughts on that?

Yeah, I mean, uh Acro Bridge is not expert in the Defense Production Act, but we do make a bridge that serves military purposes, whether it be line of communication or or or other military applications, uh uh emergency uh response bridging, you know. Uh i if former military career you would know that our bridges uh are are are drawn from the old World War Two Bailey Bridge. twenty first century modern iteration, our soldiers are trained to build a fifty one meter acro bridge within twenty four hours by hand it's an extraordinary technology the all these components fit within forty foot high cubes are distributed all around the world and and installed immediately so the rapid mobilization the high quality all of those things. I'm getting to this point which is supply chains. So one could argue that okay well you know do we need X bank, do we need the defense why aren't we allowing the invisible hand? I've we've heard those arguments. The fact is is we need US government support, we need congressional support to uh help us compete on a level playing field with uh competitors out of China Europe and beyond. Uh and if we can't, those uh capacities will shrivel within our own economy and you will need them at a certain point in time. Uh to remove these tools, whether it be Eximbank or some of the other uh items of the Defense Production Act that you think will help uh uh American firms uh uh stay nimble and innovative and and and secure economically. Um if you don't have those tools, it's akin to running into battle and leaving all your tools on the nightstand. It doesn't matter once you're out there.

Yeah.

Uh and that's what we're finding when we're in these markets. We are literally being told, we'd love to work with you, but you're within six months of lapse.

Yeah. Yeah,

And we got

and so the funding authorities are are a big challenge there. And look, that's what happens. That's usually one of the shortcomings of uh central planning, like what why historically the American market has outperformed uh, you know, government driven economies. And I think that's why we need to, you know, make sure that we don't become uh China in our effort to counter China. And we keep the private sector demand signal. I I applaud Chairman Yovanovitch for doing that at XM. And we are working to kind of how do we put parameters around defense production active? If we do that, I think when you look at friendly countries that we can do uh these uh, you know, capital formation zones in and get critical supply chains for friendly countries that we you know feel that are defensible, um you're looking at de-risking the supply chain. You know the last thing, I think one of the areas that we've been able to stay zero tariffs on uh is is air aviation and aerospace so you know obviously Airbus they sell a lot of planes, so does Boeing, uh you know GE in Cincinnati, Ohio makes a lot of engines uh. But there are other engine makers around the world. And, you know, China wants to compete in that space. There we've had zero tariffs. And when we have zero tariffs, when we do have a level playing field, we outperform everybody. Uh, our our our companies in our country outperforms. But what happens is, you know, as Mister Hallman, you highlighted, uh, if you let China go unchecked, well they do steal the market. They they they shape it, and they're essentially buying the market. There is no Market. This is like watching boxing when one guy can hug and clench and the other guy can't. Uh, you you that's why the referee has to break it up and make them fight. And I look, I think the Trump administration is finally finally addressing what Ross Perot saw, and frankly most everybody else was wrong about. There was a giant sucking sound. Uh, and what? Cuz you weren't fighting on equal footing. And, you know, China promised to be on equal footing when they committed to be part of the World Trade Organization. And for a long time our State Department, our Commerce Department, our US Trade Representatives, have done nothing about it. So thank you for highlighting that today. Chairman, thanks for having this hearing. And I yield.

Thank you so much. I really appreciate your great line of questioning and thank you for the answers that was provided. Feeling dull to me for a moment, I wanna ask, get to a couple more things. Um, how could the United States own free trade zone program? Uh, the US foreign trade zone program fit into the Trump administration's economic security zone network to support US manufacturing and supply chain initiatives like Paxilica? Any thoughts on it? Please.

Yeah, d I mean, uh uh uh taking out the specifics of these economic security zones, I do think that that historically we have used free trade agreements to raise standards in foreign countries. Other countries want, desperately want access to the US market. And take the Peru, the the old Peru FTA. Um, the goal behind that was not to lower tariffs and export more, I mean, all those were fine side effects, but it was to get the Peru government to create the invet uh the sort of um conditions that's welcoming of investment. So the the point I would always make is that FTAs are gonna be more stable, because they're codified into law, they're not sort of done on an ad-hoc basis. Um i and you know I I just think that that's the tool, again not with not i with respect to to the economic zones, but just generally using FTAs for that purpose, I think, is is a noble goal. And the US has a history of succeeding with that. You can take the China, uh, you know, joining the WTO out, but but take that again, take that out. The US has not all these agreements are are as bad as people seem to think they are. In fact, they're they provide lots of benefits.

Yeah, and if I could build on that, um, the foreign trade agreements um the free trade agreements, they are really powerful legal tools, okay, and um what they haven't been used for yet is to serve as anchors for this type of special economic zones. Because as I have seen and I think we all agree here, if there's no stability in these foreign markets, you ca and level playing fields, you can't compete. 'Kay, so you can make up for the lack of competitiveness through all sorts of other tools. And maybe that has a place. But the ultimate objective is to unleash the American entrepreneur abroad. And for that you need the right conditions. And so you can do that at a nation-state level, and it won't work. We've seen it through Washington consensus. Or you can support these economic security zones. But the question is how do you make those stable? How do you give them the weight of not just US law, not just domestic law, but international law. And that is where these free trade agreements can play a significant role. Imagine a situation where the US were to offer, in essence, a free trade agreement with an open invitation for other countries that wanted these economic security zones within their territory to ascend into. All of a sudden what they would have been doing is they would upgrade the stability of those zones to international law standards. And if the terms of the agreement are such where the US government stands fully behind the stability of set agreement, I think you solve the problem at the root, which is the political risk. And you do that through political risk insurance.

And, Mister Berman,

Yeah.

if I may, just sticking with you really quickly, um, what types of support has Prospera sought from the US government and what if any support has Prospera received?

Um the most important thing

And feel free to be very candid.

Sure. Well, um, you know, uh as you know we're engaged in international arbitration, so there's some of this that it's a bit delicate because of that. It's as if you were in a active litigation. Um, but the the most important thing that the US can do is just unapologetically stand for US investments abroad. especially when they know full well that they're legitimate, that they're advancing strategic interests, and to not, you know, to say things how they are, to be straightforward, and and for that to not depend on who's on the White House at any given point in time. That's why I think that a a congressionally created policy framework is important so that it isn't so variable from one administration to the next. Creating the conditions and then standing for the American enterprise abroad is is super important.

And for everybody that's here, you know, I I saw you shaking your head and I know that you talked about this vehemently, about the fact that um whether it's the business, consulate sector, whatever, that there should be more involvement and there should be more advocacy. And I can tell you that from my time in working around various uh embassies, I remember when I was in Iraq working at the US embassy there, I watched the British embassy go to bat and truly advocate for British businesses, far beyond what I saw with American d- diplomats. Even so much so that some of our own core bread and butter contracts for industry that should have gone to us went to the UK because of the intense advocacy that was given uh within that actual sector. And so I know the significant role and importance and the strength and the power that these embassies can yield. The problem I see is that there isn't any power being yielded by the Americans, and there's tremendous power being utilized by our competitors and other adversaries. Uh, would you like to comment on that, Mister Sullivan?

Sure. You know, at any given year, uh, Acro's revenue is derived, uh, anywhere between fifty to ninety percent in international markets. And I would say that ninety percent of our work in international markets uh are coming out of emerging or frontier uh markets where Uh everything is built around government to government relationships. So, you know, if you're talking with anyone in the embassies about how projects are advancing, it's, you know, what is the bilateral relationship, what's the G to G? Uh and part of that is also because financing is so important and you can't have export credit agency or development finance uh funding without having uh some kind of um sovereign backing. So uh when we uh succeed in these markets, we are very pleased to uh endorse the efforts of some of our finest civil servants who are our political econ officers our ambassadors our chargees d'affaires our uh commercial service officers th some of them are just extraordinary. But the point that was made earlier about um our foreign service officers should be unapologetically um uh supporting US business, I I think that's too soft frankly. I'll go back to this and I don't wanna sound too demanding, But it's their job. And I think this administration has been very clear in saying that diplomats are to lead in commercial diplomacy, move forward, support American companies, some more support American jobs. We have seen it uh across the world in supporting Acros business, which supports our factory in Pennsylvania. Uh however, to your point, uh the commitment to that um is uneven. It varies from embassy to embassy, individual to individual. Some folks join the foreign service with different motives in mind. Uh others have embraced this turn that's about a decade long of commercial diplomacy and moving American business forward, which keeps coming back to the point that you raised in your remarks at the top of the program here which are uh economic security is national security so the idea that this is just some business that's topping off coffers for for American companies. Uh, it's much bigger than that. And that's what, uh, uh, uh, diplomats should understand, uh, and if they're not interested in that, they probably shouldn't be diplomats.

And, mister Packard, I had a q- question I wanted to get your insight on. You know, how would you envision the US government and host countries' plans to, uh, provide oversight for these economic security zones to prevent illicit trade activities?

Yeah, that that's a really good question. I know uh I believe just yesterday the DOJ brought a big uh trade fraud case. Um I I would say that trade enforcement is extremely important, right? Like I'm a committed free trader. Uh but I also understand the need for for enforcement. Um and whether that entails, you know, beefing up um, you know, customs officials to to do more screening using enhanced technology, Trade fraud really is i is a problem. I uh one of the things I would say is part of the reason it has expanded is because US tariffs. When we make when we put in tariff barriers, people are still gonna try to buy those goods, and they're looking for ways to s circumscribe or s or, excuse me, uh skirt past the the the tariff wall. Uh you see that with transshipment and and all kinds of, you know i in all kinds of areas of trade. Um And so, you know, I think there's more that the US can do on the enforcement side, solidifying that piece, but also working to coordinate a and uh bring allies in closer, right? If you go back to the nineties, Mexico was drifting in a very leftward way toward the failed socialism of Latin America. The Clinton administration made the wise decision to expand the US-Canada FTA by bringing Mexico in, as a way to push to push back against really troubling economics and and policies that that could have come right up against our border. So thinking about using trade in strategic ways like that, FTAs, using them, you know, all kinds of tools, but definitely using FTAs to to kinda push uh these things forward. And and again, you you you cultivate better relations with with allies who are gonna be more willing to you know, concede on certain things and and cooperate. Um, and and I just think that the the current system is is pushing those very countries we need away from the US orbit.

Thank you. And then, I I think, Mister Holliman, Mister Nolan, you might be kind of at the best position on this, given uh your experience and where you're at. But could you define for us, so that people can understand, especially those uh who end up reading this hearing, Could you define a logistic corridor, and how it would operate in the context of a proposed kind of network economic security zone?

Sure, I I think a great um example of that would be the Lobito corridor that goes into Angola from the the Great River Region, Congo area. So, uh, a logistics corridor is anywhere you're taking the first principle fundamental material which eh we all wanna talk about the end use, the battery, the computer, but how does it get there? It's gotta come out of the ground somewhere in the world. It has to get first mined, then processed originally, either an ore or a concentrate, loaded into trucks, taken to a port or to a train station. Um, and right now, you know, Africa, amazing, amazing, super rich country, it should be overflowing with abundance and jobs for the, for the people of Africa. And it it is so split up, there's not a good east-west corridor right now. If we were to do an economic security zone that included Rwanda, Burundi, DRC, and the Lobito corridor, you would have from Dar es Salaam to Lobito, east-west corridor, rail, which would really open up the African continent to all of these these logistics. From either place, you can load things into vessels. We specifically will use New Orleans. um for barge reloading or train reloading up to our site in Missouri, our multi-metallic site. Um, w we have, you know, a super fun site, we're environmentalists at heart, but we need to bring these people, the these metals back, and you can bring them from all over the world, but you must have consistent logistics. Right now, to go from Congo to China where most the material goes, it's a fifty four day truck ride down to Durban, South Africa. You don't have many other options. Uh, America needs to get in the game. We need to step up the game at the first principles level and build our processing in America. And I think this economic security zone, the the Poussin uh initiative is a really good one. I think that's a great way to um to do it for the United States.

Uh, Chairman, if I might add to this, 'cause I'm so surprised the Lobito corridor was raised.

Please.

Uh ACRO is currently supplying a hundred and eighty-six bridges to Angola, and this is an example of where a US initiative has its primary first principles objectives but it ends up crowding in all kinds of other projects because the uh host government is is ultimately suggesting well hey we don't simply want this, we want a a transformative uh development agenda and we want your innovation, your quality, your long-term partnership, your service. Uh and ACRO has built this um hundred and eighty-six bridge project around uh the atmospherics, if you will, that were created by the momentum of the Lubito corridor. So the all the things that you mentioned uh Michael, but in addition uh there are all these other companies that ultimately participate because it creates kind of a bilateral sense of good feeling, and encouragement, and trust, and uh you know uh I could see uh without being an expert in economic security zones, but any time there is this kind of bilateral coordination This creates the opportunity for other American companies to assert their value proposition, and in a mutually beneficial way, which is distinct from other models that we've discussed prior.

And the countries are asking for it. You know, that that's the proof that it is it is there.

Yes. Yeah.

They they have seen the Chinese model. They're sick of it. The they want African jobs for Africans. They don't want a Chinese city coming in everywhere. They're building or mining or operating, right? and Americans will work that way.

This is the thing that we've seen in all the countries,

I think it's a win-win.

that China makes a tremendous amount of promises. But what they do is they bring in their own workers to try and boost their own economy and boost their own capabilities. They also promise the stars and deliver the clouds, when they come in and say, we're gonna build this new city, we're gonna build this new energy terminal, this capability, this capacity. When in reality, what they're doing is they're preying upon countries that are in poverty, that are naturally resource rich. so they can then utilize those resources to try and advance themselves, which is why they'll utilize economic coercion as they did in Panama and Honduras originally, which is why they were going after Africa as a key target for rare earth minerals and critical minerals uh exploitations. Uh, and what you see right now, the second largest population of Chinese outside of China is where? In Durban, South Africa. And so we know exactly what China's tools are, and the better part of that, we know the quality of American goods. And that's something that nobody else can compete with in Amer- and in the world, is our innovation, our capabilities, our capacities, and our quality. But we only are gonna be able to advance ourselves if we put ourselves at the table. And too far and too many times, we are not participants in the discussion. Uh, Mr. Packard.

Yeah, just real, real quick. Uh, I mean, the, the Trump administration the first term, uh, opened up FTA negotiations with Kenya, and the Biden administration backed away from that. That would be i- That would be a tremendous first step. The US is not offering any country in in Africa any kind of binding deal like an FTA. And again, Ambassador Lighthizer understood that, and I think, you know, beyond the economics, it sets a precedent and then you can kind of build from there. But the US has to get off the sidelines. It's been fourteen years since the United States did a new trade agreement with uh with a new country other than renegotiating the USMCA. Other countries continue to move on. The Biden administration said trade agreements are tools of the twentieth century. That's that may be the case in the US, but it's not the case in the rest of the world.

I would agree with that. I wanna be clear that in this subcommittee we invited all of our Republican and Democrat colleagues. And unfortunately, only as you witnessed, our Republican colleagues showed up because they care about advancing in ensuring that we have security economic zones, that we have advancement in economics, that we're looking at bilateral agreements, that we understand that a strong economy means security, stability, and also national security. But I'm gonna afford them a slight bit more time. So what I'm gonna do is I'm gonna take a quick ten minute break so that everyone can go get coffee, water, utilize the restroom, et cetera. We'll come back if none of our colleagues have shown up, then at that point we'll go ahead and come in for our closing statements. So with that, we're adjourned for the next ten minutes. Committee will come to order. Before I opening the closing s or I provide my closing statements, I wanted to just touch on something because you mentioned, Mister Bremen, about and I don't wanna put you in a position knowing how uh tenuous things are with regards to arbitration and things that you can be said here. can be utilized in a uh litigative manner, but I wanna point out something. You know, in response to the Honduran National Congress's April twenty twenty two unanimous decision they repealed the employment and economic development zone, enabling legislation for Prospera, which is a Delaware uh incorporated company, had a major investment in there, filed your arbitration for alleging about eleven billion in overall damages before the International Center for Settlement of Investment Disputes. Prospera, you've obviously alleged the violation, which is rightfully so, under chapter ten of the Dominican Republic Central uh America Free Trade Agreement. And I also just want to point out the fact that, you know, the Department of State in Washington and the Guadalupe meet regularly with both parties to encourage both sides to resolve this impasse. Uh, the department has raised this and other commercial and investment disputes in meetings with uh President Azura uh and his team since January of twenty twenty-six inauguration. Uh, this ongoing dispute remains an irritant and is a is raised regularly. But the US government and the private sector hopefully are looking towards the new Honduran government being able to resolve and get a promising response to this concern but please keep us up to date on what the outcome is in regards to this arbitration how the US government is continuing to engage with the newly formed government But at the end of the day, these types of violations in arbitration should be dealt with rapidly. And drawing this out, administration after administration after administration, knowing the monetary damages which were incurred as a result of violating these economic agreements, is something I hope that you'll keep our committee abreast of, and also allow us, if need be, to hold further hearings, launch investigations, and also see how we can get resolution in this. So I hope that you'll keep us updated and uh uh again I won't ask you to comment necessarily because I know that's a very tricky situation but I want you to know that we're aware of it and that as an American company we will continue to advocate and look for resolution on this arbitration um it is very important to us.

Okay.

Flip to my script. I thank the witnesses for your eval your test- uh valuable testimony and the members that were here. for their questions. The members of our subcommittee may have some additional questions for the witnesses and we will ask you to respond with these in writing. Pursuant to committee rules, all members may have five days to submit their statements, questions, and extraneous materials for record, subject to the length and limitations. If there's nothing further, without objection, the committee stands adjourned.