The Senate Foreign Relations Committee Holds A Hearing On PRC Influence And The Status Of Taiwan

2 days ago

The Senate Foreign Relations Committee held a hearing on Wednesday on 'PRC Influence And The Status Of Taiwan’s Diplomatic Allies In The Western Hemisphere.'

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Transcript

00:00:00Welcome.

00:00:01I am delighted to open this hearing

00:00:03on the Western Hemisphere Committee,

00:00:05and we will now come to order.

00:00:07Before I begin my remarks,

00:00:08I just wanna give a shout out to the good senator

00:00:11from Virginia to my right,

00:00:13and tell him how much I appreciate the opportunity

00:00:18to work together with him on this.

00:00:20We had a chance to meet a little earlier in this week,

00:00:22and there are a lot of really good bipartisan issues

00:00:26for this committee to delve into,

00:00:28and delighted and honored to sit next to you here, senator.

00:00:32I used to be a Virginian, and we were talking.

00:00:36He was serving on the city council

00:00:38in the city where I lived when I lived in Virginia,

00:00:40and it's interesting how things turn out.

00:00:43Today marks five years since my bill,

00:00:46the Taiwan Allies International Protection

00:00:48and Enhancement Act, Taipei Act, was signed into law.

00:00:51This bipartisan act that I sponsored in the House,

00:00:54which passed unanimously through Congress,

00:00:56has been pivotal in protecting Taiwan's

00:00:58and the remaining diplomatic allies

00:00:59from Beijing's coercion.

00:01:01The Taipei Act strengthens Taiwan's position in the world

00:01:04by promoting deeper trade with Taiwan,

00:01:06supporting Taiwan's participation

00:01:08in international organizations,

00:01:10and most importantly, protecting Taiwan's relations

00:01:12with its allies.

00:01:13In short, it sent a loud message of US support for Taiwan,

00:01:17making clear that we stand with our democratic partners

00:01:19and will not tolerate attempts to isolate Taiwan.

00:01:23I'm proud of the Taipei Act's legacy,

00:01:25and hope this subcommittee hearing serves

00:01:27as reaffirmation of this five-year anniversary.

00:01:30The Taipei Act came as a response

00:01:32to Beijing's intensified campaign in the Western Hemisphere

00:01:35and the Pacific aimed at prying away Taiwan's allies.

00:01:38In Latin America and the Caribbean,

00:01:40this pressure is increasing.

00:01:43Specifically, the Taipei Act came as a response to Panama,

00:01:46the Dominican Republic, and El Salvador

00:01:48switching diplomatic recognition.

00:01:51Not only did they switch diplomatic recognition,

00:01:53but they adopted one China's principle,

00:01:56or China's claim that Taiwan is part of China.

00:01:59Honduras became the latest to switch recognition in 2023,

00:02:02severing its 82-year alliance with Taiwan

00:02:05after making exorbitant demand for billions in aid

00:02:09that Taiwan wasn't able to fill, but Beijing did for a price.

00:02:14Even regional institutions have not been spared.

00:02:16The Central American Parliament was pressured

00:02:18to expel Taiwan's observer and replace it with China,

00:02:22underscoring the breadth of China's influence campaign

00:02:25in our backyard.

00:02:26Beijing's tactics in our hemisphere

00:02:28are increasingly blatant.

00:02:30State Department officials have rightfully likened

00:02:32China's approach in our region

00:02:34to the 19th century imperialism,

00:02:36bribing local leaders with investments

00:02:38in ways that lead to debt dependency.

00:02:41Make no mistake, China's goal is to isolate Taiwan

00:02:43completely with the goal of silencing international dissent

00:02:46if China forces unification on Taiwan

00:02:49and it is deploying every tool at its disposal

00:02:51to achieve that end in our very own hemisphere.

00:02:54It is squarely in the United States' national interest

00:02:57to push back against Beijing's encroachment

00:02:59in our own backyard and to support those nations

00:03:01that continue to stand with Taiwan.

00:03:03China's influence efforts in the Western Hemisphere

00:03:05threaten not only Taiwan's position in the world,

00:03:08but also global stability and U.S. interest.

00:03:11We must respond with equal resolve.

00:03:13That means redoubling our engagement

00:03:14with Taiwan's remaining allies

00:03:15to ensure they have strong economic and security incentives

00:03:19to stick with Taiwan.

00:03:21The Taipei Act charts that, of course,

00:03:22the U.S. should prioritize support

00:03:24and diplomatic engagement with countries

00:03:26that maintain ties with Taiwan

00:03:28and consider downgrading relations

00:03:30with those who bow to Beijing.

00:03:32This aligns with the Trump administration goal

00:03:33of ensuring our dollars spent abroad

00:03:36are making America more safe, secure, and prosperous.

00:03:40That is why I will join a bipartisan group

00:03:41of House and Senate colleagues next week

00:03:43to introduce the Taiwan Allies Fund Act,

00:03:46which I view as a natural follow-up to the Taipei Act.

00:03:48This bill sets aside a portion

00:03:50of the already appropriated

00:03:52Countering PRC Malign Influence Fund

00:03:55to focus on helping countries that stand strong

00:03:57in the face of PRC pressure

00:03:59and maintain or strengthen ties with Taiwan.

00:04:01We cannot allow the Chinese Communist Party

00:04:03to buy out Taiwan's friends in our own backyard.

00:04:06We will continue to stand shoulder-to-shoulder with Taiwan

00:04:08and help it shore up its allies

00:04:09countering Beijing's coercion at every turn.

00:04:13Taiwan's allies in this hemisphere

00:04:14have shown courage and loyalty

00:04:16in the face of intense pressure.

00:04:18The United States will not abandon them.

00:04:19On the contrary, we will strengthen our allies' alliances

00:04:23with these partners, rejecting authoritarian influence.

00:04:27Together, we send a clear message.

00:04:29Taiwan is not alone, and the Western Hemisphere

00:04:30will not become a playground for the PRC.

00:04:33With that, I'd like to yield

00:04:35to the distinguished ranking member for his comments,

00:04:37Senator King.

00:04:38Thank you, Mr. Chair,

00:04:39and I am very happy to be holding this hearing

00:04:43on a really important topic.

00:04:44I want to congratulate Senator Kernis

00:04:46on his chairmanship of this subcommittee

00:04:49and on this first hearing.

00:04:51As he indicated, we talked and we feel like

00:04:54there's much good work that we can do together,

00:04:57and I want everybody to know

00:04:59that the title of this subcommittee

00:05:01might be the longest of any subcommittee

00:05:03in the United States Senate.

00:05:05This is the Subcommittee on Western Hemisphere,

00:05:08Transnational Crime, Civilian Security,

00:05:10Democracy, Human Rights, and Global Women's Issues.

00:05:14By tradition, while most of our hearings

00:05:17will likely be focused on the Western Hemisphere,

00:05:19we feel like we've got a pretty broad latitude

00:05:22to do human rights, democracy, promotion,

00:05:24other important issues, and I relish that opportunity.

00:05:28The chairman and I have some similarities.

00:05:29As he mentioned, he lived in Richmond

00:05:31when I was starting my career in public life

00:05:34as a city councilman there,

00:05:35but we also were both missionaries.

00:05:37He did his missionary work in Taiwan.

00:05:39I did my missionary work in Honduras,

00:05:41and so my passion for the Americas is driven by that,

00:05:45but that's something that we share,

00:05:47and the hearing today is very much driven, I know,

00:05:50by Senator Kernis's work as a legislator,

00:05:54but also his personal experience.

00:05:56Congratulations on the five-year anniversary

00:05:58of the Taipei Act.

00:06:00I actually remember it well.

00:06:01So this was a House bill, but the SFRC had a similar bill,

00:06:05and we worked on it in 2019 over what was a landmark bill,

00:06:09but also a bipartisan one.

00:06:10We can do good work together, and we need to keep doing it.

00:06:15We've got a great panel this morning.

00:06:16I wanna thank you, Mr. Ellis.

00:06:18It's always good to have you here and to see you again,

00:06:21but I have to admit a particular pride

00:06:23in welcoming Samantha Kustra,

00:06:25William & Mary's Aid Data Center Initiative,

00:06:28which is a program that was founded in collaboration

00:06:31between William & Mary, BYU,

00:06:33and Senator Kernis's home state of Utah, and also UT Austin,

00:06:37and you need to know, Samantha,

00:06:40that sitting behind you is one of the best talent pools

00:06:44that anybody with a college should be interested in.

00:06:47This is Thomas Jefferson High School, Day on the Hill.

00:06:51So these are all TJ seniors,

00:06:53one of the best public high schools in the United States.

00:06:55So do really well, and you might convince

00:06:57some of these guys that William & Mary

00:06:58is where they should go.

00:07:00We've got an opportunity today to deepen our discussion

00:07:03on the important topic that is bipartisan,

00:07:05the clear national security interest to counter,

00:07:09to ensure that the U.S. and its diplomatic,

00:07:11economic, and security partner of choice in the region,

00:07:14and that China's efforts to influence folks in the region

00:07:18to pull away from the U.S. and support policies

00:07:21counter to the U.S. are not successful.

00:07:23The U.S. and the 34 neighbors

00:07:25that we share in this hemisphere

00:07:27share deep ties, economy, family ties,

00:07:30cultural, historical ties,

00:07:32and we need to make sure that we're building

00:07:34off that foundation and off that history

00:07:37rather than taking steps that push our allies away from us

00:07:40or letting them drift away from us

00:07:42without paying sufficient attention.

00:07:45U.S. assistance and engagement are vital

00:07:48to countering threats to national security.

00:07:50We have an essential role to play

00:07:52in bolstering the stability of the region.

00:07:54When we do that, when we help the regional economies

00:07:57and regional political stability,

00:07:59we not only benefit these neighbors that are our friends,

00:08:02but we also reduce issues like narco-trafficking

00:08:05or migration flows to the United States.

00:08:07So we're very, very tied together.

00:08:09Every crisis in the region that affects people in the region

00:08:12affect our homeland, too.

00:08:14And there are two reasons why China is moving

00:08:16so aggressively into the region,

00:08:18why we have to be equally strategic in our response.

00:08:21Not only is the PRC trying to box us

00:08:23into a corner in our own neighborhood,

00:08:26they're also really coming hard

00:08:27after Taiwan's diplomatic partners,

00:08:29often at the cost of prosperity and good governance.

00:08:33The PRC's tactics in the region

00:08:36bring significant corruption, economic degradation,

00:08:39environmental challenge, and we've seen that again

00:08:42and again and again in the region,

00:08:43the area where I think it's been most manifest to me

00:08:47is in the relationship that the PRC has had

00:08:49over many years with Ecuador,

00:08:51that has left Ecuador victimized by illegal fishing

00:08:55around the Galapagos, environmental despoilation

00:09:00around drilling or substandard infrastructure projects,

00:09:04and that has put Ecuador in a real jam,

00:09:05and Ecuador in recent years has been more open

00:09:08to interacting with the U.S.

00:09:10because they've seen the cost

00:09:12of deep engagement with China.

00:09:15The PRC is very, very focused on the issue of Taiwan,

00:09:18and the fact that in this region and the Americas

00:09:21have been some of the most longstanding ties

00:09:23between nations and Taiwan.

00:09:25Now, our U.S. joint assistance programs with Taiwan

00:09:28have bolstered Taiwan's diplomatic partnerships

00:09:31in the area.

00:09:33The chair mentioned some of the areas

00:09:34where we have partners in the region

00:09:36drifting away from Taiwan or changing their policy,

00:09:39but as an example, in February 2024,

00:09:42the U.S. International Development Finance Corporation

00:09:44signed an agreement with its counterpart in Taiwan

00:09:47to advance private sector investments around the world,

00:09:50and the landmark program is focused

00:09:52on the Western Hemisphere and the Indo-Pacific.

00:09:55Direct U.S. foreign assistance

00:09:56is one of the several important tools

00:09:58for countering PRC advances in the region,

00:10:01but the status of some of these foreign assistance programs

00:10:05is very much in question right now

00:10:07in the early months of the Trump administration,

00:10:09and we want to try to make sure

00:10:11that we're using tools at our disposal

00:10:13to do what I know is a Trump,

00:10:15the Trump administration very much

00:10:17wants to counter Chinese dominance.

00:10:19They very much want to do that,

00:10:20and you see that in military investments, et cetera,

00:10:23but one of the ways we counter Chinese dominance

00:10:26is also in the humanitarian aid diplomatic space,

00:10:29and I'm sure we're gonna be talking about that today.

00:10:33Trade, leveraging private sector partnership

00:10:35is another one of the great tools we have.

00:10:37The PRC is disrupting commercial exchanges

00:10:41with countries such as Guatemala,

00:10:43and they're exerting pressure on other countries

00:10:44like Paraguay as a means of coercing them

00:10:47into compliance with Taiwan policies.

00:10:50So there could be short-term gains

00:10:52for some nations in doing this,

00:10:53but often at the cost of long-term stability and prosperity.

00:10:57So shared values of democracy, freedom of expression,

00:11:00rule of law need to remain at the core of our engagement.

00:11:03In this way, too, supporting democratic Taiwan's ties

00:11:06throughout the region is in our collective interest.

00:11:08I'll turn it back over to the chair

00:11:09so we can begin the hearing,

00:11:11and there is a vote occurring during this hearing,

00:11:14so you'll probably see us leave at different times.

00:11:18You may see other colleagues joining and leaving

00:11:20as votes are underway, just to explain that,

00:11:22but that will yield back to you, Mr. Chair.

00:11:25Thank you, and we'll just deal with that as it comes at us.

00:11:28I think you all are familiar with the drill

00:11:30here in Washington.

00:11:32Thank you, Senator.

00:11:33Dr. Evan Ellis is a research professor

00:11:35of Latin American studies

00:11:36at the U.S. Army War College Strategic Studies Institute

00:11:40with a focus on the region's relationships with China

00:11:43and other non-Western hemisphere actors,

00:11:46as well as transnational organized crime

00:11:51and populism in the region.

00:11:52Dr. Ellis is the leading expert

00:11:54on the China-Latin American relations

00:11:56and has published hundreds of works on the subject.

00:11:58Dr. Ellis has also served

00:12:00on the Secretary of State's policy planning staff

00:12:03as the office responsible for Latin America

00:12:05and the Caribbean, as well as international narcotics

00:12:08and law enforcement issues.

00:12:09Dr. Ellis, the floor is yours.

00:12:11I think you understand the five-minute limits

00:12:13and the lights, so you're welcome to begin.

00:12:17Chairman Curtis, Ranking Member Cain,

00:12:20thank you very much for the opportunity

00:12:21to share my work and thoughts with you here today.

00:12:24Since 2005, PRC-based companies

00:12:26have invested $203 billion in Latin America

00:12:29and its bilateral trade with the region

00:12:31has reached $500 billion.

00:12:33China has also built significant

00:12:35people-to-people networks in the region,

00:12:37including 44 Confucius Centers.

00:12:39It provides paid trips for numerous academics,

00:12:42politicians, police, and military, and even judges.

00:12:45It similarly pays for trips for journalists to the region,

00:12:48including Lito Rubin and Kaiki Gamara of Paraguay,

00:12:51as well as Juan Canel Cabrera

00:12:53and Claudia Mendez of Guatemala, among many.

00:12:56It supplies free media content reflecting PRC narratives.

00:12:59It carries favor with chambers of commerce in the region,

00:13:02as well as friendship caucuses in their legislatures.

00:13:05It does all of this to buy goodwill,

00:13:07access, and intelligence.

00:13:09The PRC's dominant position

00:13:11in the region's digital infrastructure

00:13:12includes Huawei and telecommunications

00:13:15and cloud services, including the Mexican government

00:13:18and other governments in the region,

00:13:19as well as heat vision and surveillance systems

00:13:21and Nuketech custom scanners.

00:13:23These create risks, both of espionage

00:13:26and also intellectual property theft.

00:13:28China also props up authoritarian regimes,

00:13:30such as Venezuela, not only through loans,

00:13:33but also through systems that support repression,

00:13:36including riot control vehicles

00:13:37and facial recognition cameras for tracking down protesters.

00:13:41If the PRC starts a war with the U.S.,

00:13:44its surveillance facilities in Cuba

00:13:46and its commercial operations close to the U.S.

00:13:49could be used as launch points

00:13:51to disrupt U.S. force deployment and sustainment.

00:13:54In Panama, beyond Hutchison's not yet sold two ports,

00:13:59the operations of Costco, CCCC,

00:14:02and numerous other Chinese companies

00:14:04give it the combination of physical presence,

00:14:06technical knowledge, and relationships

00:14:08that could allow it to shut down the canal.

00:14:11The China-friendly firm Notark

00:14:13has assets from the defunct China Land-Bridge venture,

00:14:17which it may use in a new bid

00:14:18for the Panama-Cologne container port.

00:14:21In Peru, Costco's exclusive control

00:14:23over the port of Chiang Kai

00:14:25could allow it to resupply PLA naval forces

00:14:27in the Eastern Pacific in time of war.

00:14:30PRC access to space from the Western Hemisphere,

00:14:32not only the PLA-operated facility in Noycan, Argentina,

00:14:35but also others in Venezuela, Bolivia, and Chile,

00:14:38including Ventorones, could also be used

00:14:41and allow it to target U.S. satellites

00:14:43and also to attack the U.S. from space during time of war.

00:14:47With respect to Taiwan, for me, our partner's survival

00:14:51as an autonomous, democratic entity

00:14:53is crucial for peace in Asia

00:14:55and also to limiting PRC projection in the Pacific

00:14:59as well as in the Americas.

00:15:01As the number of states recognizing Taiwan dwindles,

00:15:03CCCP confidence that it can end Taiwan's autonomy

00:15:07at an acceptable cost grow,

00:15:09increasing the risk for all of us of a major war.

00:15:12In the last seven years, as you noted,

00:15:14five of the 12 nations in this hemisphere

00:15:16that recognize Taiwan have abandoned it for the PRC.

00:15:19The results for those who switched

00:15:21have been largely negative.

00:15:23Indeed, none of those who switched

00:15:25meaningfully increased either exports

00:15:27or actual Chinese investment from that move.

00:15:30Moreover, their PRC imports grew rapidly,

00:15:33harming local businesses.

00:15:35Those diplomatic switches also allowed the PRC

00:15:37to rapidly expand its presence and influence

00:15:40through MOUs, free trade agreements,

00:15:42training programs for government officials,

00:15:44Confucius Institutes, infrastructure projects,

00:15:47and paid trips to the PRC.

00:15:49Of Taiwan's remaining friends,

00:15:51Paraguay's President Santiago Pena remains steadfast.

00:15:55Still, the PRC is constantly wooing Paraguay's elites.

00:15:58I note, for example, the case of PRC agent Xu Hui

00:16:02who entered the country under false pretenses

00:16:04to lobby the Paraguayan Congress.

00:16:07In the Caribbean, the March 12th election victory

00:16:10of the incumbent People's United Party

00:16:13decreases the risk of change there.

00:16:15Still, small governments, including St. Kitts and Nevis,

00:16:18including also St. Vincent's and the Grenadines,

00:16:20and St. Lucia are tempted by the money of Chinese investors.

00:16:24In Haiti, frankly, I worry about Vivan Sam

00:16:27and a possible takeover leading

00:16:29to a lawless criminal government

00:16:30who would be tempted to turn to the PRC for financing.

00:16:34My recommendations to the committee include,

00:16:37number one, supporting programs

00:16:38to build partner institutional capacity

00:16:40to limit PRC advance,

00:16:42including the evaluation of contracts and investments,

00:16:44fighting corruption,

00:16:46and overseeing Chinese commercial and other activities.

00:16:49Two, an expanded and less constrained

00:16:51development finance corporation

00:16:53to leverage private sector good U.S. investment.

00:16:56Number three, leveraging democratic partners

00:16:58in Asia and Europe in order to finance and win projects

00:17:01to deny that space to the PRC.

00:17:04Farther, DOD, DHS, and intelligence community preparation

00:17:09for likely PRC actions, not only in the Indo-Pacific,

00:17:13but also in the Western Hemisphere in time of war.

00:17:16Strengthened messaging on the U.S. commitment to Taiwan,

00:17:20including, and I believe this is very important,

00:17:21CODELS and STAFDELs there,

00:17:23as well as defense and technology assistance

00:17:26supported by this Congress.

00:17:27And finally, greater state department

00:17:30and other U.S. government coordination with Taiwan,

00:17:32including, in my judgment, privileged treatment

00:17:35for those states recognizing it,

00:17:37both in terms of economic matters

00:17:38and also in international organizations.

00:17:41Thank you for the opportunity to testify.

00:17:43Thank you, Dr. Ellis.

00:17:44We're gonna, oh, you're gonna,

00:17:46we'll wait for just a minute.

00:17:46Okay, excuse me.

00:17:48Samantha Custer is the Director of Policy Analysis

00:17:51for AidData.

00:17:53AidData was formed in 2009 as a partnership

00:17:57between universities in the states

00:17:59of both Senator Kaine and myself.

00:18:01We've been marrying Brigham Young University

00:18:02and Development Gateway

00:18:03to provide global development stakeholders

00:18:05with more granular and comprehensive data

00:18:07on foreign assistance projects worldwide,

00:18:10including efforts by China and other adversaries

00:18:13to leverage their assistance programs

00:18:15into concrete policy gains.

00:18:17She holds a dual master's in Forest Service

00:18:19and Public Foreign Service

00:18:22and Public Policy from Georgetown University

00:18:24and has a 20-year track record of leading teams

00:18:26and supporting evidence-based decision-making

00:18:29as an international relations scholar practitioner.

00:18:33Ms. Custer, the floor is yours.

00:18:39Chairman Curtis, Ranking Member Kaine,

00:18:41thank you for the opportunity to share my thoughts

00:18:43on China's influence and the status

00:18:45of Taiwan's diplomatic allies in the Western Hemisphere.

00:18:48My remarks today are my own views.

00:18:51They don't represent the official position

00:18:52of William & Mary, AidData, our funders, or our partners.

00:18:56Beijing and Taipei are locked in a contest for influence

00:18:59in the Western Hemisphere.

00:19:01One of the PRC's stated aspirations

00:19:03is reunification of Taiwan with the Chinese mainland.

00:19:06Latin America is a strategically important battleground

00:19:09to advance the same in two respects.

00:19:11First, Beijing wants to peel away Taipei's support

00:19:14in a region home to over half of the countries

00:19:17that still officially recognize Taiwan.

00:19:19Second, operating in America's backyard is an opportunity

00:19:23for the PRC to deter Washington

00:19:25from coming to Taipei's aid.

00:19:27A decade ago, 22 countries worldwide

00:19:29maintained full diplomatic relations with Taiwan.

00:19:31Today, this number is down to 12.

00:19:34Half of the defectors were from Latin America.

00:19:37Of Taiwan's remaining allies, seven are in Latin America.

00:19:41These holdout countries are outliers

00:19:43in continuing to recognize Taiwan and host its embassy,

00:19:47even as their peers defect.

00:19:50Seven additional countries straddle a middle ground.

00:19:53They're what I would call fence-sitters.

00:19:55They tacitly engage with Taipei

00:19:57on economic and cultural issues

00:19:59via a representative liaison office,

00:20:01but stop short of official recognition.

00:20:03Taiwan and its allies must work to prevent slippage

00:20:06of additional countries moving down the recognition chain

00:20:09from official to tacit recognition to no relations at all.

00:20:14Taipei's economic statecraft

00:20:15has been outmatched in Latin America.

00:20:17Beijing exploits economic asymmetry to pressure leaders

00:20:21to back its preferred policies,

00:20:22including derecognition of Taiwan.

00:20:25Over two decades, the PRC bankrolled

00:20:27nearly 2,500 development projects

00:20:29in Latin America worth 300 billion.

00:20:33But this money is not without strings attached.

00:20:35For each dollar of aid it supplied,

00:20:37Beijing provided $28 of debt

00:20:40for projects expected to generate commercial returns.

00:20:43Holdout countries that recognize Taiwan

00:20:46cannot access these funds.

00:20:47Conversely, those who make the diplomatic pivot

00:20:50to adopt the one-China policy are handsomely rewarded.

00:20:54Taiwan is well-regarded as a development partner,

00:20:56but it operates with little scale and visibility.

00:20:59Its budget is in the hundreds of millions per year,

00:21:02but financing is on more generous terms.

00:21:05Cash-strapped economies have signaled

00:21:07that they may be willing to stop recognize Taiwan

00:21:10in exchange for assistance.

00:21:12Announcements of new projects bankrolled by Beijing

00:21:14followed quickly on the heels

00:21:16of a country changing its policy.

00:21:19PRC development finance is deployed

00:21:22to crowd in Chinese trade and FDI

00:21:24in similar sectors and geographies.

00:21:26Critical minerals such as copper and lithium were priorities

00:21:30as well as investing in companies

00:21:31involved in power generation,

00:21:33electricity distribution, and mineral extraction.

00:21:37Latin America saw a 22-fold increase

00:21:40in trade with China over nearly two decades,

00:21:43and Chinese FDI to the region

00:21:44was worth nine billion in 2023 alone.

00:21:48Prior to derecognition,

00:21:49Latin American countries saw sizable drops

00:21:51in the share of exports to China.

00:21:53Following a pivot, trade with the PRC rose,

00:21:56declined with Taiwan, and several countries

00:21:58signed new trade and investment agreements with Beijing.

00:22:02Comparatively, Taipei's economic statecraft is disjointed.

00:22:06Despite its comparative advantage

00:22:07as a leading producer of semiconductors,

00:22:10Taiwan's direct trade and investment with the region

00:22:12is very modest,

00:22:14while its aid is focused mostly in the social sectors.

00:22:17So rather than asking why Taiwan

00:22:19has lost some of its diplomatic allies,

00:22:22we should consider why it has not yet lost all of them.

00:22:26Holdout countries like Paraguay, Guatemala, and Haiti

00:22:29have two reasons to recognize Taiwan.

00:22:32They might be concerned about ideological affinity.

00:22:35They may also see alternative economic opportunities

00:22:38such as US trade or humanitarian assistance flows.

00:22:41Fence-sitters like Brazil or Chile

00:22:44have a strategic rationale for holding the middle ground.

00:22:48They may have a foreign policy based on neutrality,

00:22:50or they may capture economic or political gains

00:22:53from playing both sides,

00:22:54doing just enough to satiate Beijing,

00:22:56but still aiming to please the US.

00:23:00Of course, holdout countries still face pressure

00:23:03from their citizens in Beijing to change course,

00:23:05and the strategic calculus for these fence-sitters

00:23:07could shift with uncertainty in US trade policy.

00:23:11So to help Taiwan retain existing allies

00:23:13and attract new ones,

00:23:14I want to talk about three lines of effort for the US.

00:23:18Expanding co-financing and co-branding

00:23:20of US development cooperation efforts

00:23:22in the Western Hemisphere with Taiwan.

00:23:25Prioritizing renewal of things

00:23:26like the generalized system of preferences

00:23:28and strengthened aid for trade

00:23:30that help Taiwan's allies in the region

00:23:33utilize duty-free access to US markets.

00:23:36And finally, promote cooperation

00:23:37between American, Taiwanese, and Latin American firms

00:23:40to build resilient supply chains in critical industries.

00:23:44Thank you, and I look forward to your questions.

00:23:45Thank you, Ms. Custer.

00:23:46We're gonna excuse my ranking member.

00:23:48We're gonna excuse the ranking member for just a moment,

00:23:50and then we'll switch roles and vote.

00:23:52So he's demonstrated a lot of confidence in me

00:23:57to leave me here by myself.

00:24:00I want to start, go off script just a little bit,

00:24:03because I think it's really important

00:24:04for anybody watching this today

00:24:06to understand why this matters.

00:24:09So Dr. Evans and then Ms. Custer, if you would start.

00:24:13Why does this matter?

00:24:14Why does hanging on to these countries matter

00:24:16for the United States?

00:24:26Senator, it's an excellent point,

00:24:27and I think one that's very important for us to be clear on.

00:24:31So first of all, from the perspective of the conflict

00:24:35or the rivalry with the PRC,

00:24:38understanding that as the number of allies

00:24:41that Taiwan has goes towards zero.

00:24:44In the context of increasing military

00:24:46and other superiority in Asia by the PRC,

00:24:49the temptation is that that brings us closer

00:24:53to a war in Asia.

00:24:55The extent to which Taiwan is seen as not isolated,

00:24:57I think, at least, is one of the factors

00:24:59that keeps us farther away from that war.

00:25:01Also understanding that if Taiwan is lost

00:25:04as an autonomous democratic ally in Asia,

00:25:07that geographically allows the PLA and PLA Navy

00:25:11to project itself out beyond Guam,

00:25:13into the Indo-Pacific, to Hawaii, and to the U.S. coast.

00:25:16But also looking just at Latin America

00:25:18and the PRC economic, but also military

00:25:21and political advance in Latin America.

00:25:23The way, and I've shown this time and time again

00:25:26in my own research, the most rapid way

00:25:28for the PRC to advance in military and economic terms

00:25:31is when you have a flip,

00:25:35because that flip is associated with non-transparent MOUs.

00:25:38It is associated with, often, free trade agreements

00:25:41which open up markets to PRC companies

00:25:44in sectors like electricity and telecommunications and others.

00:25:46It's typically associated with the establishment

00:25:49of Confucius Institutes, training programs

00:25:51for government officials, and a range of other things.

00:25:53And frankly, if we look at which states

00:25:55still continue to recognize Taiwan,

00:25:58they are states ever closer to the United States.

00:26:01They're in the Caribbean, in the U.S.

00:26:03Maritime approaches, as well as in Central America,

00:26:06if we talk about Guatemala and Belize.

00:26:08In other words, it becomes a national security imperative

00:26:11and really one of the best ways

00:26:13to push back against the PRC.

00:26:17And frankly, at the end of the day,

00:26:18also for both the region itself

00:26:21and also for the United States,

00:26:23Taiwan is an excellent democratic ally.

00:26:25It's a partner with very good development projects,

00:26:28even if at a smaller scale,

00:26:29and it's a good partner for coordinating

00:26:31to push forward democracy and help to address

00:26:34and promote the conditions in the region

00:26:36of the types of regimes that we in the U.S.

00:26:38would like to have.

00:26:42I would add to that three things.

00:26:44So first, it matters economically.

00:26:47Taiwan is the leading supplier and producer

00:26:50of semiconductors in the world

00:26:52that the U.S. economy relies upon.

00:26:53So not only would it disrupt our economy,

00:26:55but some estimates indicate that if Taiwan were to fold,

00:26:58that would have probably about a 10% disruption

00:27:02to the global economy.

00:27:03So that's big.

00:27:04That's a big deal.

00:27:05Geopolitically, the U.S. is actively trying

00:27:08to advance its interests with the PRC across the globe.

00:27:12If we fold on Taiwan,

00:27:15if we see diplomatic allies being hemorrhaged

00:27:17away from Taiwan, that gives China essentially

00:27:19a major victory in this competitive battle.

00:27:22And then finally, from a security perspective,

00:27:25I think the more that countries in the region

00:27:28tip into China's camp away from Taiwan,

00:27:32that increases exposure for the U.S.

00:27:35to things like these dual-use ports,

00:27:37these emphases on space observatories and the like

00:27:40that strengthen China's hand.

00:27:42So just to point on that, you mentioned the 10% hit.

00:27:46I think that's to our GDP.

00:27:47Put that in comparison, the Great Depression was 7%.

00:27:51So if you want to understand what type of an impact,

00:27:54that's dramatic.

00:27:56I also want to use this opportunity to point out,

00:27:58oftentimes when we have these conversations,

00:28:00it feels like we're talking about the Chinese people.

00:28:02And I want to be really clear.

00:28:05I think Americans love the Chinese people,

00:28:06love the Chinese culture.

00:28:08That's not where our problem is.

00:28:09It's an authoritarian government that's more oppressive

00:28:13on its own people than anyone else.

00:28:14And I just think that's really important

00:28:16to designate for our conversation.

00:28:19Dr. Ellis, let's go to the Panama Canal.

00:28:22You mentioned that just briefly.

00:28:24And I think you rightly said that these two ports

00:28:28were not yet transferred.

00:28:29But we've got some hope here

00:28:32that these are moving out of those hands.

00:28:35After Secretary Rubio's visit, Panama announced

00:28:37it was pulling out of the Belt and Road Initiative,

00:28:41which it joined when it switched diplomatic recognition.

00:28:45Given these developments, is there a pathway

00:28:48to get Panama at least to upgrade their relationships

00:28:52with Taiwan and perhaps give some type of representation,

00:28:58even if it's a representative's office

00:29:01or something like that?

00:29:01How do you see that playing out there in Panama?

00:29:04Senator, I think it's a great and important question.

00:29:06And I think I would address three different pieces.

00:29:09Number one, I think the Belt and Road changeover,

00:29:12Panama's renouncing of the Belt and Road, was important.

00:29:15But it's important also to recognize that it was symbolic.

00:29:18It contractually doesn't necessarily get

00:29:21the United States any greater security.

00:29:23But again, I think it's a move in the right direction

00:29:25and we should continue to press for that option

00:29:27with other states in the region as well.

00:29:28With respect to a representative office,

00:29:30a TECRO-type office, again, I think that's a possibility.

00:29:34But I think both the administration,

00:29:36the Secretary Rubio at State, and this Congress

00:29:40should be ready to fully defend it.

00:29:41I remember when our friends in Guyana,

00:29:43the Irfan Ali government a couple years back

00:29:45tried to allow Taiwan to open up an office.

00:29:47And the PRC pressure was so strong

00:29:49that within, I think, three hours,

00:29:51they were forced to double back on that.

00:29:53And so I think we should absolutely press

00:29:55for that as a doable thing.

00:29:57But we should be ready to defend it.

00:29:59And the other thing I think is we have some opportunity

00:30:01as we move in the right direction

00:30:03with respect to the BlackRock deal.

00:30:05But we should also be attentive to the fact

00:30:08that Chinese actors, the PRC, are trying to reverse

00:30:11that deal, even with their delegation

00:30:14that came just days ago.

00:30:16Also, there are risks from other operators,

00:30:19such as Costco, such as the possibility

00:30:22of a new Panama Clone container port

00:30:24in which the China-friendly company,

00:30:27No Torque, could operate, as well as actors

00:30:29such as Huawei and others.

00:30:30And so I think we need to continue to be vigilant

00:30:32in that area, and certainly be prepared

00:30:35to not only press forward, but also follow through

00:30:37in things like TechGrow offices.

00:30:41Adding to that, I think there is a momentum

00:30:44that we're seeing in Panama right now.

00:30:46You think about the fact that Panama

00:30:48is one of only two countries in the world

00:30:50that has announced that it's backing out

00:30:52of China's Belt and Road Initiative.

00:30:53And that's significant.

00:30:55In terms of this recognition chain

00:30:57that I talked about before, from no relations

00:30:59to the tacit liaison office to the full,

00:31:02I think the risks for countries in the region,

00:31:05or the pain that they feel, is highest

00:31:07when they go all the way to full recognition.

00:31:10That middle ground, the fence sitters

00:31:13don't seem to be paying as much of a cost to do that.

00:31:16So I think with the right economic incentives,

00:31:19the right support from the U.S.,

00:31:20there definitely could be an opportunity

00:31:22to get a liaison office in Panama.

00:31:26All right.

00:31:28I'm told I need to go vote.

00:31:30Will our good witnesses tolerate just a pause here?

00:31:34And I will be back.

00:31:37And if Senator Kaine returns before I do,

00:31:40he's authorized to start again.

00:31:42And then I'll be back as quick as I can.

00:31:44Thank you for understanding.

00:31:53Yes.

00:31:55And I'm gonna ask some questions.

00:31:57And I know that the chair will come back

00:31:58and we'll probably have a bit of a dialogue.

00:32:02Dr. Ellis, I wanted to ask you,

00:32:04just elaborate a little bit more on what you said

00:32:06about what China's doing right now in Guatemala and Paraguay.

00:32:10So Paraguay has been very, very solid

00:32:13in support of Taiwan and resisting PRC influence.

00:32:17The new Arevalo government,

00:32:19slightly over a year old in Guatemala,

00:32:21I think has been a real breath of fresh air

00:32:23in that country domestically,

00:32:25trying to push back against a culture of corruption.

00:32:29They had to kind of work through their own version

00:32:33of January 6th on the day that President Arevalo

00:32:35was inaugurated in January of 2024.

00:32:39But talk a little bit about what the PRC is doing

00:32:41in both of those countries to kind of break them away

00:32:44from their support for Taiwan.

00:32:47Senator Kaine, thank you for the question.

00:32:48So first of all, to put it in general context,

00:32:51as you know very well, in all of the countries,

00:32:54there is a constant process of lobbying.

00:32:56That lobbying often involves the courting of local elites,

00:33:00sometimes bringing them over to the PRC,

00:33:02whether through business opportunities

00:33:04or through consulting opportunities, paid trips.

00:33:07That also includes journalists

00:33:09to try to frame the debate.

00:33:11As a compliment, you also see a number

00:33:14of different activities with respect

00:33:16to what I would call economic blackmail.

00:33:19The promise of how much more one could export,

00:33:22usually a false promise if one only changed relations,

00:33:25and the pressure to saying, well, if you don't change,

00:33:29then you're not gonna get even what you're getting today.

00:33:31And so that pattern applies in both countries.

00:33:34And so in Paraguay, because it is very important

00:33:36to meet exporters, as you know,

00:33:38a lot of working, especially through Nadera Noble

00:33:42that China bought about 10 years ago,

00:33:44is some of the agro-logistics firms,

00:33:46a lot of whispering in the ear of the Paraguayan

00:33:49agriculturalists that if only you change relations,

00:33:52you could sell so much more.

00:33:54But on top of that, you also see some,

00:33:57what I call surreptitious lobbying.

00:33:59I mentioned the Chinese agent, Xu,

00:34:02who was basically entered supposedly to give a talk

00:34:06and tried to lobby in the Paraguayan Congress.

00:34:09And on top of that, you also have, I think,

00:34:12some threats to make Paraguayan exports difficult.

00:34:15I have had the fortune of being able to engage

00:34:18with Paraguayan government, including with President Peña.

00:34:21And I know that because of his background

00:34:24with the Colorado Party, there is a certain,

00:34:26at least, principal determination there.

00:34:28But again, the threats are always there.

00:34:31With respect to Guatemala, of course,

00:34:33slightly different challenge with the Arevalo government.

00:34:36But again, the same promises of agricultural exports,

00:34:39the same type of lobbying.

00:34:40I mentioned in my initial testimony

00:34:42the number of different Guatemalan and Paraguayan reporters

00:34:46that are brought over.

00:34:47The one woman that I mentioned with her program,

00:34:50Con Criterio, which is a very influential

00:34:52Guatemalan program, she was brought over for three months

00:34:55for a orientation trip to the PRC.

00:34:57And those type of things are not common.

00:34:59So you have that.

00:35:00And indeed, when President Arevalo first came in

00:35:02and he was trying to walk that delicate balance

00:35:04that so many of our friends are,

00:35:06trying to say, well, we want to have the economic benefits

00:35:08of the PRC, and at the same time,

00:35:11to continue politically with our Paraguayan friends,

00:35:15there was a moment, and the PRC is very good at doing this,

00:35:18where they cut off critical exports of,

00:35:20I believe it was a type of Guatemalan nuts,

00:35:23essentially to send a warning that if you don't switch over,

00:35:27even what you're getting now could be lost.

00:35:29But again, I think the principled stance

00:35:30of President Arevalo in sticking with our Taiwanese allies

00:35:35has continued apace.

00:35:38But again, those pressures are there for both, sir.

00:35:41Do you have something, Ms. Custer, you want to add in?

00:35:43Please.

00:35:44Yes, please.

00:35:45In my written testimony, I talked about

00:35:47how Beijing's approach in Latin America,

00:35:49economics is the cornerstone,

00:35:50but the information operations and the public diplomacy

00:35:53that Dr. Ellis was talking about is exactly the megaphone

00:35:56that amplifies these things.

00:35:59I very much agree with Dr. Ellis's observations.

00:36:01I would add a little bit more to say that

00:36:04China is playing this out in two dimensions.

00:36:08One is that it is trying to engage indirectly

00:36:13by tapping into this fear of missing out.

00:36:16It's really interesting when you look at

00:36:18the post-2016 defectors in Central America,

00:36:21Panama, 2017, the DR, 2018, El Salvador, 2018,

00:36:25Nicaragua, 2021, Honduras, 2023.

00:36:29Countries are looking at each other.

00:36:31They're seeing what their neighbors are getting

00:36:34for partnering with China,

00:36:35and that is a very, very powerful story.

00:36:38Interestingly enough, too,

00:36:39in addition to the Paraguay example you provided,

00:36:42Dr. Ellis, I would also add

00:36:43there was an interesting anecdote

00:36:45about China's interactions with Paraguay

00:36:48during the COVID-19 pandemic,

00:36:50and essentially using access to vaccines as a stick

00:36:55and a carrot, I guess you could say,

00:36:56to try to pull off Paraguay.

00:37:01I have many questions, but here's one.

00:37:03Is the Chinese MO in interacting with countries

00:37:08in the Americas different in any significant way

00:37:12from their theory of the case

00:37:14when they're interacting with African countries

00:37:16or other Asian countries?

00:37:17And if so, describe a little bit how it's different.

00:37:21Maybe I'll speak to that first.

00:37:23So I'm a comparativist by nature,

00:37:25so I look at this across different regions.

00:37:27And so I had a starting point

00:37:29when I looked at China and Latin America,

00:37:31and there is a remarkable similarity in how China engages.

00:37:36Economically, again, is the cornerstone.

00:37:38It leverages the interplay very well

00:37:41of development, finance, trade, and investment,

00:37:44and then uses all of these

00:37:45public diplomacy information strategies to boost its voice.

00:37:49But I think what is unique and interesting

00:37:52about the Latin America case specifically,

00:37:55one is that the emphasis on derecognition of Taiwan.

00:38:00You see quite a significant split,

00:38:03and it's a two-track system.

00:38:05Those that play ball with China on Taiwan

00:38:08get all of the goodies,

00:38:10and those that do not are locked out.

00:38:12And so that comes out in starker relief here.

00:38:14And then I think there's also some unique concerns

00:38:17regarding the dual-use ports

00:38:18and some of the other investments

00:38:20that it's making in strategic industries in Latin America

00:38:22just because of the geographic proximity

00:38:25to the U.S.

00:38:26Dr. Ellis.

00:38:27So I also, as a comparativist,

00:38:29fully agree and appreciate that.

00:38:31And for me, what's interesting is that we do find lessons

00:38:34looking at what the PRC has done in Africa,

00:38:37what the PRC has done in Central and Eastern Europe,

00:38:39corresponding to a study that I did not too long ago.

00:38:41And not surprisingly, again,

00:38:43these policies come from the same Chinese culture,

00:38:45that they come from the same organizations,

00:38:49both the commercial side and governmental,

00:38:51in Beijing and in Shanghai.

00:38:53But there are differences

00:38:54that reflect the geographical imperatives,

00:38:56the composition of governments,

00:38:58the different cultural legacies.

00:38:59For example, China's involvement

00:39:00with the legacy of decolonialization in Africa

00:39:03and some of its relationships there.

00:39:04And when we talk about geography,

00:39:06certainly what you do see is that on the one hand,

00:39:08again, seven of the 12 nations in the world

00:39:11that continue to recognize that Taiwan

00:39:13are found in this area.

00:39:16And oh, by the way,

00:39:17if you look at it from the perspective of the military,

00:39:19and I've worked in support of DOD my entire career,

00:39:21you can't help but noticing that the vast majority,

00:39:24with the exception of Paraguay,

00:39:25are dramatically close

00:39:27to strategic United States facilities

00:39:30from Central America, from the Caribbean.

00:39:32And so the opportunity for a flip

00:39:35is as much strategic in terms of the PRC's advance

00:39:38as it is from the isolation of Taiwan.

00:39:41And one of the other things that I just wanted to point out

00:39:43is the role of Chinese companies.

00:39:45While typically the promise of selling things comes later,

00:39:50but it is of note that there are certain companies

00:39:52that do operate, even in countries that recognize Taiwan,

00:39:55specifically Huawei comes to mind.

00:39:57And what one finds is that oftentimes Huawei

00:40:00acts as the unofficial representative

00:40:02in trying to curry some of that favor.

00:40:04But there are absolutely lessons to be learned

00:40:06from what the PRC is doing elsewhere

00:40:08to how it is approaching Taiwan and the Americas.

00:40:10So I'm gonna make a critical comment

00:40:13and ask some questions that are critical

00:40:14of Trump administration activities in the Americas.

00:40:18But I'm always duty-bound to say something good

00:40:22if there's something good to say, and there is.

00:40:23I think the announcement that the president made

00:40:26around the time of the State of the Union

00:40:28about the acquisition of the Panamanian ports by BlackRock

00:40:32from the Hong Kong syndicate Hutchinson,

00:40:34that was real positive.

00:40:35And it could have gone in a much worse direction

00:40:38for the United States.

00:40:39And I know the administration was strongly behind that,

00:40:42encouraging it, that's a plus.

00:40:44And I know from being on the Armed Services Committee

00:40:47and looking at investments that are being made,

00:40:49even as the White House and the Secretary of Defense

00:40:56are looking for cuts at the Pentagon,

00:40:57they're exempting things like Indo-Pacific.

00:40:59They clearly are recognizing the pacing threat is China.

00:41:04But I'm really worried about things like the decision

00:41:07to de-escalate or shutter the Inter-American Foundation,

00:41:09some of the pausing of USAID contracts,

00:41:14because I think that sends a message

00:41:16that the U.S. is retreating from some of these areas

00:41:19and China's not gonna retreat.

00:41:21In fact, they see anything that looks like a retreat,

00:41:24they wanna flood the zone and put more resources in.

00:41:28As I'm interacting with heads of state in the Americas

00:41:31and warning them about beware of the apple

00:41:36presented by China,

00:41:37because it might have a razor blade in it,

00:41:39they say, we're pretty sophisticated

00:41:40in recognizing the challenges of Chinese offers,

00:41:44but you have to have something on the table.

00:41:47It can't just be we're gonna turn down interaction

00:41:51with the Chinese unless you have something on the table.

00:41:54And they frankly view what we have had on the table

00:41:57for quite some time as being woefully inadequate.

00:42:01Now, I think they're partially correct,

00:42:05and then there's partially a messaging problem on our side

00:42:08because they don't give us credit

00:42:10for everything the American companies

00:42:12are doing in their area.

00:42:14So they kinda set that aside.

00:42:15They're looking at what the U.S. government

00:42:17has on the table,

00:42:18and they find that to be significantly less

00:42:21than what the Chinese government

00:42:23or Chinese industries run by government have on the table.

00:42:26So we need to do a better job

00:42:27through things like the DFC and others

00:42:29to really package what the U.S. is doing.

00:42:33But how much does it hurt us when soft power levers,

00:42:38like the Inter-American Foundation or USAID

00:42:42or other investments are being kinda put

00:42:46into question right now?

00:42:51Thank you, Senator Kant.

00:42:53So I think I would start by saying

00:42:55that when you're talking about how the U.S. engages

00:42:58in Latin America now and moving forward,

00:43:01one of the key things that we need to be thinking about

00:43:03is demonstrating that we have a Latin America strategy,

00:43:07not just a countering China strategy.

00:43:10And that Latin America strategy needs to be

00:43:13about shared prosperity, shared security.

00:43:16But then the question is, okay, that's nice rhetoric.

00:43:19That's nice language.

00:43:20What are you going to do to show,

00:43:22not just tell, that this is happening?

00:43:24And I think here, this is where I would say

00:43:26our economic statecraft levers of development finance,

00:43:30trade and investment are critical.

00:43:32All of them are critical.

00:43:35I think that there's nervousness

00:43:36about what some of the changes

00:43:40that the Trump administration are enacting

00:43:42with regard to foreign assistance, development assistance.

00:43:46It is provoking questions about,

00:43:48is this lever going away?

00:43:50Is this tool of statecraft going away?

00:43:52I think I'd be the first to say

00:43:53that there is a lot about U.S. development assistance

00:43:57that is in need of reform and that benefits from reform.

00:43:59But I think the abruptness of how those changes were made

00:44:03created questions rather than answers for people.

00:44:06Of course, we still have muscular tools

00:44:08like the Millennium Challenge Corporation,

00:44:10the Development Finance Corporation

00:44:12that can be used to continue to engage on this lever.

00:44:16And then there's a question about packaging.

00:44:18I think you also said, Senator Kaine,

00:44:20and that is one of the unique things, I think,

00:44:21it is about living in a democracy

00:44:23and a robust market economy like the United States

00:44:26that's different than our competitor in China.

00:44:30And that is the private sector,

00:44:32civil society, private philanthropy,

00:44:34so many different actors engage,

00:44:38American companies engage in Latin America.

00:44:40But you're right, it's very difficult

00:44:41to pinpoint who they are, what they're doing.

00:44:44And so for that reason, I think we do need to be talking

00:44:47about a whole of society contribution.

00:44:50One of the things that I've been working on

00:44:51with the State Department in other regions of the world

00:44:53that would be beneficial to do in Latin America

00:44:56is trying to quantify what is the value economically

00:45:00of engaging with the US?

00:45:01What does that look like in terms of private sector,

00:45:03trade and investment?

00:45:04What does that look like in terms of development finance?

00:45:07Our ambassadors and diplomats

00:45:09don't have easy answers to those questions.

00:45:11Dr. Ellis.

00:45:13Thank you very much, Senator, an excellent question.

00:45:16And first of all, my understanding

00:45:18is coming from an academic standpoint,

00:45:20but recalling some of the same answers

00:45:22that I gave during a previous hearing,

00:45:24I believe in front of yourself

00:45:25and the Foreign Relations Committee not too long ago.

00:45:30I think there's a range of different things,

00:45:32as you pointed out, number one,

00:45:33recognizing that the appropriate use of national power,

00:45:36and again, I think that's something

00:45:37that Secretary Rubio and others understand,

00:45:40to make our adversaries know that we care

00:45:43and make our partners know that we care.

00:45:44And so to me, as I mentioned with Senator Curtis,

00:45:48the importance of having this at least momentary victory

00:45:51with BlackRock, with Hutchison,

00:45:53but also the follow through to make sure

00:45:54that that deal is not foiled.

00:45:56Also, I think one thing that's important

00:45:58that is for me hopeful

00:46:00with President Trump's administration

00:46:03is the renewed focus on the private sector,

00:46:06making sure that the private sector

00:46:11is leveraged to provide alternatives

00:46:13and not overly constrained in terms of the way

00:46:15and where we can help.

00:46:17Also, there is a question I believe which is fundamental,

00:46:20and this goes back to your point about institutions.

00:46:24And so for me, one of the ways in which,

00:46:27as a free market society,

00:46:29we're never gonna be able to out-transactionalize

00:46:32the Chinese, and so in many ways,

00:46:34the question is how do we limit

00:46:36some of the more predatory aspects of their advance?

00:46:38And to me, one of the things that is critical for that

00:46:41is working with partners

00:46:42to help strengthen their institutions

00:46:43in terms of anti-corruption work,

00:46:45in terms of pushing for transparency,

00:46:47in terms of their ability to evaluate contracts.

00:46:50There are things that are equivalent

00:46:52to what we have in the U.S. for CFIUS.

00:46:53Basically, help them to get it right

00:46:56on a level playing field.

00:46:57And my hope is that we continue,

00:47:00as we try to figure out,

00:47:02throwing out which wheat and which chaff

00:47:03on some of these programs,

00:47:05that some of those things, working with our partners,

00:47:07we will continue in that direction.

00:47:09And I think at the end of the day,

00:47:10another thing which becomes very important is,

00:47:14again, to give our partners reasons

00:47:17why they wanna work with us.

00:47:19And I think, again, this is a balance that I see

00:47:21Secretary Rubio also working to do very well,

00:47:24to show that we care and to apply pressure

00:47:27and to pursue the U.S. interests where appropriate,

00:47:30but at the same way, to still give reason to believe

00:47:33that there is an inherent own reason

00:47:36to work with us as a dependable partner.

00:47:38As I cede back, having gone way over my time,

00:47:41but this has been great,

00:47:42I do wanna just underline what Ms. Custer said

00:47:46about we need a Latin America policy,

00:47:47not a countering China and Latin America policy.

00:47:50Latin American nations,

00:47:52a critique that they would have of us

00:47:54is the U.S. policy toward Latin America

00:47:56is always really about somebody else.

00:47:58The Monroe Doctrine, that was really about Europe.

00:48:01It was telling Europe that they couldn't be involved

00:48:03in Latin America.

00:48:04And they worry that we're only interested in them

00:48:08to counter somebody else rather than interested in them.

00:48:11And then even that interest can be episodic.

00:48:14We're worried if there's an immigration crisis

00:48:17and as soon as it abates a little bit,

00:48:19okay, we're not worried anymore.

00:48:20We're worried if the Soviet Union is doing things

00:48:22in Latin America, then Soviet Union collapse,

00:48:25we're not worried anymore.

00:48:25So I think the notion of a Latin America policy

00:48:28that's really about Latin American prosperity

00:48:31and stability is good work that can be done,

00:48:35that needs to be done in a bipartisan way

00:48:36between Article I and Article II branches,

00:48:39that I yield back.

00:48:40Thank you, Mr. Ranking Member.

00:48:42And with a little footnote

00:48:44that I'd still like to come back to some of my questions,

00:48:46I will yield to the good Senator from Oregon.

00:48:48Thank you very much, Chair Curtis.

00:48:51Good to see you in the Chair's seat.

00:48:53You have so much power now.

00:48:56Well, I wanted to go back to a journey of December 2023

00:49:02when a group of us led by Senator Kaine

00:49:05went down to Guatemala.

00:49:07President-elect Arevalo had been here.

00:49:10A couple of us had met with him

00:49:11and he said, I may never actually become president

00:49:14either because they will invalidate the election

00:49:16or I'll be assassinated.

00:49:18And I asked him, would it be helpful

00:49:21if a group of us come down before the installation

00:49:23to show American support for the integrity of the election

00:49:26and the integrity of the democratic process?

00:49:28And he said, that's the single best thing you could do.

00:49:29So we went.

00:49:31And while we were there,

00:49:32the Attorney General of the country invalidated elections.

00:49:37And we immediately did a press conference

00:49:39and stood up for the integrity of the elections,

00:49:42integrity of democracy.

00:49:44Some European delegations did the same the same day.

00:49:47And by the end of the day,

00:49:48the then president, the outgoing president

00:49:51said he would stand by the elections and the installation.

00:49:53I was very, very pleased to see America

00:49:56standing up for democracy,

00:49:58standing up for integrity of the process.

00:50:02President Arevalo ran on economic development

00:50:05for the whole nation.

00:50:07And that really made a huge impact

00:50:09on the indigenous population

00:50:12being recognized and they had a champion in him,

00:50:15which they often didn't have in a president in Guatemala,

00:50:19and his effort to take on corruption.

00:50:21And you just mentioned corruption a moment ago.

00:50:24Now we are cutting programs that support anti-corruption

00:50:28and anti or support economic development.

00:50:32What impact will those cuts have on the stability

00:50:36or success of Arevalo's effort to improve living

00:50:41and stability and take on corruption

00:50:44and establish a better democracy?

00:50:49Senator, thank you very much for the question.

00:50:51And first for me, framing to be perfectly clear,

00:50:54my understanding is that the administration

00:50:56is in the process of evaluating the wheat with the chaff,

00:50:59which things make sense to continue in some new form

00:51:02versus what things don't.

00:51:03But for me, and also, frankly,

00:51:06to dovetail off of what Senator Kaine said,

00:51:09for me, there is no other region in the world

00:51:11with which what happens, whether for good or bad,

00:51:14most directly impacts the United States

00:51:16through ties of immigration or commerce or security.

00:51:21So understanding that connectedness,

00:51:23I think is probably the entire committee shares,

00:51:26understanding that one of the biggest impacts

00:51:29for opening up the doors for China,

00:51:31and we see that with, for example, Venezuela,

00:51:34when again, frustrations with corruption

00:51:36opened the door for Hugo Chavez and then Nicolas Maduro,

00:51:39or for example, in Ecuador,

00:51:41talking about how Rafael Correa came to power,

00:51:43or in Bolivia, how Evo Morales first came to power,

00:51:45that frustration with corruption,

00:51:47oftentimes in the sense that governments are not performing,

00:51:49opens up the door for radical left that hijack democracy,

00:51:53and often in terms of who buys the most Chinese arms,

00:51:57who buys the most Chinese security systems,

00:51:59who engages with the Chinese in the most problematic ways,

00:52:02what you see is that when there's a loss of faith

00:52:05in democracy, that often opens up those doors.

00:52:07So I certainly would concur that helping our partners

00:52:12to succeed as democratic governments

00:52:14in the fights against corruption

00:52:15and other things is important, and at the same time.

00:52:19You've kind of leapt forward

00:52:20to my second and third questions,

00:52:23but I'll just acknowledge that.

00:52:25I do think that cutting the terminations

00:52:28of foreign aid programs that have included

00:52:29supporting democracy programs and good governance

00:52:32will have an impact.

00:52:33Maybe some of those will be restored, as you say.

00:52:35Maybe there's the chaff that can be set aside.

00:52:39I think it's very important to carefully defend

00:52:43the programs that support his efforts

00:52:45in economic development and strengthening

00:52:47the institutions of democracy.

00:52:49But then this has broader impacts,

00:52:50so what you've leapt forward to,

00:52:53and certainly if we have a weaker relationship

00:52:56with Guatemala and terminate these programs,

00:52:58creates a more open door for China.

00:53:00But I wanted to ask about one specific aspect.

00:53:03Maybe it's been asked about,

00:53:05but I wasn't here for the rest of the hearing,

00:53:07so I apologize, and that is whether

00:53:10undermining programs in Guatemala

00:53:13might also undermine the ability of President Arevalo

00:53:17to continue to support Taiwan.

00:53:18He's under tremendous pressure

00:53:21to abandon the recognition of Taiwan.

00:53:24We've encouraged him to sustain that,

00:53:27but if we're doing less on economic development,

00:53:30China has the opportunity to say,

00:53:31well, we'll do more, recognize us.

00:53:37Thank you very much for the questions.

00:53:40I wanted to go back first to your earlier comment

00:53:42about democracy, and I think when you talk

00:53:44about democracy erosion, there's really three things

00:53:47that we need to be looking at with that.

00:53:49One is public apathy.

00:53:53Globally, you're seeing citizen surveys

00:53:55that are uncertain about whether democracy

00:53:58is delivering economic growth,

00:53:59and that is a major challenge, I think,

00:54:02for democracy.

00:54:03I think secondly is that you do have

00:54:05wealth-maximizing, power-maximizing politicians

00:54:08that are looking for opportunities to accumulate power,

00:54:12but then you also have motivated external salesmen,

00:54:15and I think that kind of brings us

00:54:16to the point of this hearing.

00:54:19China and Russia and other authoritarian allies

00:54:21are very happy to find ways to demonstrate

00:54:25that their models of development,

00:54:27their models of governance are more attractive,

00:54:30that they will deliver, and I think there's

00:54:32an opportunity for the U.S. to counter that

00:54:35in two respects.

00:54:36One is bolstering Taiwan, who actually has

00:54:39made an effort to demonstrate that you can

00:54:41have development and democracy to be successful.

00:54:44It's not very good about telling its story

00:54:46as a successful democracy, so that's certainly

00:54:48one thing to think about, but two,

00:54:50in terms of the U.S., there is a whole society approach

00:54:54that we need to be thinking about here.

00:54:55Our civil society, our private sector,

00:54:58our government, engaging in places like Guatemala

00:55:02to shore up democracies, and to do that,

00:55:06you're thinking about investing in watchdog capacity

00:55:09of civil society journalists and whatnot.

00:55:12You're thinking about increasing the technocratic competence

00:55:14of officials in these governments as a counterbalance

00:55:17to politicians, and then investing in accountability.

00:55:20I would like to see the U.S. continue to be a voice

00:55:23and put resources behind doing these things

00:55:26from a government perspective, but at minimum,

00:55:28we should also be working with our private sector

00:55:30and civil society actors to shore that up further.

00:55:33So I'm over my time, but I just want a kind of a yes,

00:55:37no if possible.

00:55:38Does canceling programs that we support in Guatemala

00:55:43on economic development and democracy building

00:55:45make it harder for Guatemala to maintain

00:55:48its current relationship with Taiwan?

00:55:53I think we need to get the programs that we support right,

00:55:55sir, and make every program dollar that we spend count.

00:55:58That wasn't exactly an answer.

00:56:02Okay, so you're gonna not answer that one,

00:56:05but how about for you, Ms. Custer?

00:56:10I am similarly going to give you a non-answer,

00:56:13but I will say that when it comes to

00:56:16fighting economic pressure from China,

00:56:20we've removed an important stick and lever at our disposal

00:56:23and makes it easier for Guatemala.

00:56:25You're the experts, and you don't want to answer

00:56:27the question, so I want to tell you how I think

00:56:30the right answer is.

00:56:32Absolutely, if we undermine our programs with Guatemala,

00:56:35it creates economic pressures that China will see

00:56:38as an opportunity, and that opportunity will go

00:56:41with a requirement that Guatemala abandon

00:56:44its relationship with Taiwan.

00:56:46I think that's the right answer.

00:56:47If we had further time, I'd ask you if you disagree

00:56:50with that, but we're, thanks.

00:56:54And on that note, I'll turn to a few questions of my own.

00:56:59Ms. Custer, you talked about Taiwan telling its story,

00:57:02and I want to just point out, in 1979,

00:57:05I actually lived in Taiwan, and Taiwan was under

00:57:08martial law at the time, and the United States

00:57:12put a lot of time and energy into our relationship

00:57:14with China, and to some degree, we pulled back,

00:57:16well, not to some degree, we pulled back

00:57:18our diplomatic relationships with Taiwan,

00:57:21and now you let that time pass between 1979 and now,

00:57:25and you have a full-force democracy,

00:57:28prospering, doing well, freedom for their people,

00:57:32and you have, of course, China has gone

00:57:35the opposite direction, and I think that is

00:57:37a fabulous story to tell, one we really should

00:57:39be shouting from the housetops here in Washington, D.C.

00:57:44Dr. Ellis, let me have you put on your former

00:57:46state policy planning staff hat, and did you see

00:57:50evidence of Chinese interference in local

00:57:53electoral processes, or overt efforts to sway

00:57:57political leaders to sever their relationships with Taiwan?

00:58:03Yes, sir, so first of all, I think it's important

00:58:06to understand how it is multifaceted,

00:58:08and I probably should, and I'm gonna speak

00:58:10in terms of having followed this for about

00:58:1220-plus years as an academic, and certainly

00:58:16the unclassified portion of what I saw

00:58:18while I was at the State Department,

00:58:19but what you see, again, is this weaving

00:58:21of a tapestry of all level, it's the economic

00:58:24blackmail selectively applied that we saw before,

00:58:27it's the whispering in the ears of business lobbies

00:58:30and agricultural and other sectors,

00:58:32it is the bringing people over to the PRC

00:58:36in terms of journalists or others to try to get

00:58:38favorable coverage and access, it is sometimes

00:58:41the inappropriate things, I'll mention one

00:58:43specific case that I haven't mentioned yet, of course,

00:58:45which was the flip of Taiwan.

00:58:48Now, I've spoken with President Varela,

00:58:51and I know that he would deny that there was

00:58:52a quid pro quo, but it did not go unnoticed

00:58:56among people that right after he flipped

00:58:59to the PRC in 2017, that the family rum business

00:59:03that was in his brother's name suddenly got

00:59:07a really big contract from the PRC.

00:59:11Similarly, it was not unnoticed that his Vice Minister,

00:59:15Nicole Wong, again, who I know, a wonderful

00:59:18person, very bright person, but after she played

00:59:21a critical role in that flip, literally just months later,

00:59:25she got a very cushy job representing

00:59:28China Harbor Engineering Corporation,

00:59:29and so I think there is this sense of both

00:59:33the offers and does China play dirty,

00:59:36and including some of the more indirect electoral things.

00:59:40And if I may, just one more thing,

00:59:42and Ms. Custer also alluded to this,

00:59:45but really to emphasize the promise of benefit

00:59:49is often an unrealized promise.

00:59:52I have done several studies which have been published

00:59:55looking at IMF data, in which you actually see

00:59:57that if you look at the two to three years

00:59:59after recognition, when you include both what is lost

01:00:02from Taiwan and what is gained from the PRC,

01:00:06in almost every single case, it's either flat or it falls.

01:00:09In part, that's because some of the traditional products,

01:00:11such as coffee and fruit, there's no real reason

01:00:15for the PRC to bring them in refrigerated containers

01:00:17halfway around the world when they can get the same product

01:00:20from Vietnam or the Philippines.

01:00:21That's oftentimes a symbolic thing.

01:00:23At the same time, their export agencies oftentimes

01:00:26don't have the expertise that they need.

01:00:29And indeed, when you look at the actual investment projects,

01:00:31there's a certain amount of work that is done paid for

01:00:33by those countries, but not in Panama, not in Costa Rica

01:00:38with the disastrous Route 32 project,

01:00:40not in the Dominican Republic where something like

01:00:43$600 million of electricity projects were promised

01:00:46that never happened, not even in El Salvador

01:00:49where there's talk about La Unión.

01:00:51In almost every single case, those promises have been empty,

01:00:54but it's those hopes that often are sold,

01:00:57whereas I think that the benefits that Taiwan provides

01:00:59often right-sized for our partners

01:01:01are something that's much more tangible to their benefit.

01:01:06Ms. Custer, did you want to comment on that?

01:01:08Yes, please, sir.

01:01:10So first, picking up on this,

01:01:12we call that buyer's remorse.

01:01:14You asked me earlier, Senator Kaine,

01:01:16about how we see things differently in Latin America

01:01:19than in other parts of the world.

01:01:20One is the newness of a lot of these relationships.

01:01:24I field surveys of private, public, and civil society leaders

01:01:28in 141 low- and middle-income countries,

01:01:30including many in Latin America.

01:01:32And what you see are differences in how leaders

01:01:35think about what they've gotten

01:01:38in the relationship with China.

01:01:39And you see a lot more skepticism and doubt

01:01:41starting to flood in in places like East Asia and Pacific,

01:01:44for example, where these countries have a longer history

01:01:47with a lot of these projects,

01:01:49where you're starting to see not only the promises,

01:01:51but the delays, the disruptions,

01:01:53the challenges environmentally,

01:01:56challenges with governance and corruption.

01:01:58And so this has soured things a little bit.

01:02:01Other studies have shown

01:02:02that China gets a public perception bump

01:02:05when it announces a new project,

01:02:07but it actually has a decline at the end of these projects.

01:02:10So those are the stories

01:02:12that actually aren't really being told yet in Latin America,

01:02:15but there's an opportunity there for learning.

01:02:16And then, you know, to the point-

01:02:18Before you leave that, can I ask this?

01:02:20Can you bifurcate the difference between that reaction

01:02:23from people on the ground and the leaders?

01:02:26Does that make sense?

01:02:28Yeah, that's a great question.

01:02:30So when I talk about leaders,

01:02:32it's a fairly broad way of defining it.

01:02:35So mid- to senior government officials,

01:02:37civil society leaders, private sector leaders.

01:02:40Typically, these leaders are thinking

01:02:42about a slightly different set of agenda items than citizens.

01:02:46Citizens are often historically undecided

01:02:50when it comes to China,

01:02:51but you do see a souring of public opinion,

01:02:54mostly in terms of reaction to news media,

01:02:57but also a souring when it comes to what's happening

01:02:59in particular communities

01:03:01that are affected by these projects.

01:03:02When it comes to leaders, what is a more compelling case

01:03:05is where am I going to get financing

01:03:07for infrastructure projects?

01:03:09And I'm looking to China.

01:03:10And so there is a little bit of a difference there,

01:03:12but even in places like the East Asian Pacific region,

01:03:15you're seeing a souring on both counts.

01:03:18Very good.

01:03:19So I'm gonna still put my bookmark down,

01:03:22but yield to the Senator from Florida.

01:03:26Welcome.

01:03:28Thanks.

01:03:29Well, thank you, Chairman.

01:03:31Thank you all for being here.

01:03:34So first off, do you think China's our friend?

01:03:40Either of you think their government has decided

01:03:43they want to do whatever's,

01:03:45act in the best interest of America?

01:03:48Either of you?

01:03:52Do I think that China is our friend?

01:03:54I'm not sure that friend is necessarily

01:03:56the vocabulary choice that they would choose.

01:03:58I think they view the U.S. as a superpower.

01:04:01It is someone that they can't ignore.

01:04:03It's somebody they have to accept

01:04:05and find ways to work with.

01:04:06The question is more about managed competition.

01:04:08So in what areas are we going to compete?

01:04:10In what areas are we going to cooperate?

01:04:12That's not quite the same thing as a friend,

01:04:14but it is someone you have to live with.

01:04:19For me, Senator, thank you for the question.

01:04:20The Chinese people are our friends.

01:04:22The Chinese people are human beings

01:04:24living in an oppressive communist system,

01:04:26which fundamentally, through the dominance of government,

01:04:30crushes the initiative that they have

01:04:33and the freedom that they have.

01:04:35Now, looking at China as a system,

01:04:36what I'd certainly say is that, for me,

01:04:38the objectives of the Chinese Communist Party

01:04:40and the leadership of the Chinese state,

01:04:42it's all about China.

01:04:43It's about capturing as much value added

01:04:45for the Chinese as possible.

01:04:46It's about the restoration of the military

01:04:49and other power of the Chinese state

01:04:51after what they see as 150 years of humiliation.

01:04:54But what that implies is the question

01:04:56of whose security is taken away,

01:05:00whose democratic systems is taken away,

01:05:02in whose interests do international organizations

01:05:05and institutions flow, whose liberty is lost,

01:05:10whose territorial claims are lost.

01:05:11If we look at the events of the PRC

01:05:13in the South and East China Sea

01:05:15with the militarization of reefs and stoles

01:05:17and what they've done with the Philippines

01:05:18and the Vietnamese and others.

01:05:20And at the end of the day, creating the dilemma for us

01:05:23that if we have to work,

01:05:27if we have to someday fight against the PRC

01:05:30because of Taiwan or something else,

01:05:32that is going to be a horrific challenge.

01:05:34And so, you know-

01:05:35Let me interrupt you for a second, make it easier.

01:05:37So, do you think a friend would give your kids fentanyl?

01:05:46Do you think a friend would do that?

01:05:48No, answer is pretty simple.

01:05:50They wouldn't do that.

01:05:51Do you think your friend would sign a document

01:05:54that they are gonna comply with some organization

01:05:58or some trade deal and completely lie?

01:06:01I don't think so.

01:06:04Do you think a friend would try to steal your job?

01:06:08Probably not.

01:06:10You think your friend would try to take the property

01:06:14of your next door neighbor?

01:06:16Probably not.

01:06:17So, that's the party, the Communist Party, right?

01:06:22Okay, so how do you think

01:06:27that when you see the Communist Party

01:06:29do what they're doing,

01:06:30how are we supposed to try to be helpful to Taiwan?

01:06:33What would be the biggest reasons,

01:06:34biggest ways we can be helpful to Taiwan?

01:06:39So, first of all, to ensure Taiwan's survival

01:06:42as a democratic autonomous entity,

01:06:44to make sure that, as happened with Hong Kong

01:06:47and violation of the commitments to Hong Kong,

01:06:50that Taiwan's autonomy is not crushed,

01:06:53in part because it is in our security interest to do so.

01:06:58What would you do?

01:06:59What would you do that we're not doing?

01:07:02So, a range of different things, sir,

01:07:04but number one is to make sure-

01:07:06Just give me the top three.

01:07:09To have a clear commitment backed by military

01:07:13and other capabilities to be able to defend

01:07:15the autonomy of Taiwan is fundamental

01:07:17to U.S. long-term security interests in Asia,

01:07:21and as part of that, also to resist encroachment on Taiwan

01:07:26and its group of friends in the Americas and other places

01:07:29in order both to help maintain the autonomy

01:07:32and friends of Taiwan,

01:07:33but also as a vehicle to restrict China's advance.

01:07:39How about you?

01:07:41What are your top three things

01:07:42that we ought to do to help Taiwan?

01:07:44Or do you think we should?

01:07:46In terms of helping Taiwan directly,

01:07:50I mean, I think there's a question

01:07:51as to how much does formal recognition matter

01:07:55versus broadening the support base of actors

01:07:58that see the value of an independent Taiwan,

01:08:01and I think a lot of the conversation earlier

01:08:04in this hearing had focused around

01:08:06how do you actually claw back wins

01:08:10from a lot of these actors?

01:08:11How do you push countries across the recognition chain?

01:08:15So those that aren't recognizing Taiwan at all right now,

01:08:19having a liaison office,

01:08:21how do you actually get the incentives right

01:08:23for partners in the region to do this?

01:08:25For those that maybe are opening up the door

01:08:27to full recognition, how do you move up that chain?

01:08:30So I think a lot of the conversation

01:08:32that we've had thus far has been about

01:08:34how do you get the economics right?

01:08:36How can the U.S. actually be part of the solution

01:08:39together with Taiwan to broker economic opportunities

01:08:43for countries to stay on board?

01:08:46Do you think we should continue to try

01:08:50to buy everything we can from China

01:08:53when they want to demolish our way of life,

01:08:54kill our citizens, build a military to defeat us,

01:08:58lie about every deal they ever did?

01:09:00Do you think we ought to stop buying their crap?

01:09:05I think I would answer the question by saying

01:09:07it is in the interest of the U.S. to diversify

01:09:11its supply chains, to diversify its trading partners.

01:09:14And Latin America is a great place to do that.

01:09:17We could be doing more to build and buttress

01:09:20our relationships from a trading perspective there.

01:09:22That's a win for the U.S., that's a win for Taiwan,

01:09:25and it's a win for the region.

01:09:29For me, I think there's a lot more that we can do

01:09:32in terms of restricting PRC's ability

01:09:34to obtain the technology, especially the technology

01:09:37that help in areas such as AI and other things

01:09:40that both represent military threat

01:09:42and strengthen the Chinese state,

01:09:44and also allow a dominance of certain industries

01:09:47that in a globalized form undercut our ability to compete.

01:09:52In addition to that, I think there's more

01:09:54that we can do with financial sanctions.

01:09:56I think there are certain areas where we need to make sure

01:09:59that we don't do more to undercut our own strength

01:10:03in trying to move away from working with the PRC.

01:10:08So I think there are some areas where we certainly

01:10:10can cooperate and have economic,

01:10:12but we absolutely do, I believe, need to understand,

01:10:16as you pointed out, Senator,

01:10:17that we are in a very serious competition

01:10:19and we need to make sure not only that we preserve

01:10:22the autonomy and democracy of Taiwan,

01:10:27but also our own strategic space

01:10:29and being able to compete against the PRC

01:10:32and not find ourselves in a position

01:10:35where we are technologically outmatched,

01:10:37militarily outmatched, and otherwise,

01:10:39by allowing certain economic things.

01:10:41So I think there's a lot more that we can arguably do

01:10:43if we do it intelligently in that space, sir.

01:10:45Thank you, Chairman.

01:10:47Thank you, the gentleman yields.

01:10:49Sincere thank you to both of our witnesses.

01:10:51Thank you for dealing with our little recess there.

01:10:55For information of the members,

01:10:57the record will remain open

01:10:58until the close of business tomorrow, March 27th.

01:11:01We ask that the witnesses respond as promptly as possible.

01:11:04Your responses will also be made part of the record.

01:11:07With my thanks to the ranking member and on both of us,

01:11:09we thank everybody for being here.

01:11:11The hearing's adjourned.

The Senate Foreign Relations Committee Holds A Hearing On PRC Influence And The Status Of Taiwan

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