c-span now free mobile app or wherever you get your podcasts. >> the very first president to attend the white house correspondents dinner was calvin coolidge in 1924. i had just been elected to the united states senate. >> the white house correspondents dinner. washington's premier black tie event is saturday, april 29th at 8 pm eastern. watch c-span's live coverage from the washington hilton hotel. including red carpet arrivals of journalists, politicians a celebrities. this year's headliner is the daily shows roy wood junior. and president biden is expected to speak. the white house correspondents dinner live saturday april 29th on c-span, c-span now our free mobile video app or online at c-span.org. former democratic congressman peter defazio of oregon talked about the state of global supply chains and china's dominance.

from the hudson institute, this is just over an hour. >> -- our schedule, starting right at 1:30. -- say something like that moving, okay.

okay, let's get started. thank you all for being here today, joining us live here at the top hudson institute. thank you for joining online. it's a pleasure, special thanks to c-span for being here with us today and for sharing this discussion with your viewers. a little background, this is the second in a series of conversations being organized by a new group called the american maritime security initiative. it's a joint project of the hudson institute and the navy at leads center for maritime strategy. the group is focused on the national and economic security challenges we face in dealing with china. as it relates to the commercial maritime industry. shipping is at the intersection of trade and transportation, national security and economic

security. our first conversation in the series was with marc busby, who focused his discussion on sea lift and national security. you can find that discussion on the hudson website. the focus today is on shipping and economic security. particular the concern that china might have or obtain the power to weaponize, that's an over used terms these days, but all use it, weaponize control over the international maritime supply chains. most experts would say that if that were to happen, if china were to gain that power and use it, the potential harm to the american and global economy could be catastrophic. so, we're delighted to have with us today chairmen peter defazio. who represented oregon's fourth congressional district, a purple district along the coast. he began congressional service in 1987 and retired just ten years, ten weeks ago. at the beginning of the current

congress. he served on the haves transportation and infrastructure committee for his entire tenure. it was chairman of the committee. which is the largest committee in congress. for the last four years. many accomplishments over 36 years, mister chairman. we don't have the time to go over many of them. but i can say from personal experience that i've always appreciated your deep understanding of the maritime industry and among many other subjects. thank you very much for your service in congress and your commitment to doing the job the right way. and welcome. >> thanks, mike, appreciate it. appreciate the opportunity. >> house retirement so far? >> it's a work in progress. >> we're glad to have you with us. we want to get right into the conversation here. the door were going to use to get into it is trade policy. it's going to sound a little bit like a confrontational question, but i'll ask it anyway. he told me earlier that you opposed every free trade

agreement that came before congress under 36 years. i found one or two that were okay. but you authored all of them. that included the most favored nation treatment for china and china's accession then into the wto in 2001. can you tell us why? tell us what your process was. >> it economics in college and graduate school, to me the theory of comparative advantage did make much sense in the 20th century. or, now in the 21st century. most of our trade has been based on that. secondly, a lot of our trade was colored by our coming out of world war ii. we have the marshall plan. we're the only industrial power in the world. we controlled the seas. it was, like okay, will allow a lot of concessions to other nations in order to move things along. but really came to a point with me with nafta.

clinton and gore selling it 05, hundred 600,000 jobs in the u.s.. if they look at mexico's total gdp, they spend every penny on american goods, was less in the state of new jersey. i? said how is that going to create fiber 600,000 jobs here? it isn't. it is all about going across the border to access cheaper labor, lack of environmental standards. and then clinton was having trouble passing it and finally since labor and environmental standards where it and it, they adopted nonbinding side agreements to get some democrats to vote for it and it passed. but not by a huge margin. so, in the event, they did things differently. when portugal wanted to come in they, said wait a minute. your low wage court system, your labor protections, your environment, you've got to bring all those things up before you can join. and they did. and the eu made them, took quite a period of time to exceed. we constantly said, is a country that there's really not

much rule of law, no judicial system, no labor protections, no environmental putin forsman. we are going to end into a borderless agreement with them regarding the production of goods. it was just a way to outsource. when china came along, with clinton, we had just come out of the soviet union collapse. sort of ten years before. this rosy period of okay, democracy in capitalism is ascendant. we'll bring china, along will bring them into this by allowing them to have mf and status, permanent mf and status and then exceed them to the wto at the follow the rules. i never believed they would follow the rules. of course they haven't. and at least before, when we had mf end on a limited basis, most favored nation status, we could set the time period over

which we would renew it and say, okay, well, if in two years you don't deal with these abuses, we're not going to run your status. we made a permanent and we made it permanent because the u.s. company is a wanted to move to china, which had even cheaper labor, wanted assurances that their investments would be protected indefinitely. so, we made it permanent and that was a huge mistake. >> so, grand infiltrating rights to china it was a mistake. >> but going to what we now call normal trade regulations. i think there is a way to deal with that, actually. i would reconsider moving them either back to an annualized or multi year most favored nation status, or even revoking their p and tr. we've already imposed a section

301 tariff on them. we felt that those tariffs did not cause a huge round up in price here because they manipulate their currency down and a lot of their industries are subsidized. you know, he added tariffs that come out of moving them from schedule one to schedule two, by saying, no you don't have that until you clean your act up, it would not be a huge inflationary increase here in the united states by any count for consumers. >> the assumptions that you mentioned, you don't trust that china would do what they said. the assumptions that were offered in selling the china free trade deals where that china would democratize. the economic freedom and prosperity would cause china's communist party to share power. certainly we assume that china wouldn't turn on america. the way it has over the last

few years. those don't seem like very good assumptions at this point. >> no, those assumptions have all been proven to have been mistakes. at the time. again, like i say, there's really sort of the glow, like the glow after world war ii. when we allowed discriminatory trade policies to be put in place against the united states. i mentioned one to you earlier that most people don't know about. most of our competitor nations have a value added tax. that's where they raise their money. they're all allowed under the general agreement trade and tariffs, now under the w. antifa, to rebate that entire value added tax to their manufacture when they export a good. in the 1950s, we allowed get to say you can't do that with income taxes. income taxes cannot be rebated that violate the general agreement on trade and tariffs. we put ourselves at extraordinary disadvantage as long as we are taxing corporations. then we've been trying to do with that.

for the federal tax, right that lowers revenues. we've created this problem by allowing that to happen. same thing when china exceeded later, we're in the glow of the dissolution of the soviet union. they will move in the direction of capitalism. and democracy, but it didn't work. that caused questioning in a lot of areas of our relationship, focus today is on shipping. -- you love the -- regulation of ocean shipping, and the merchant marine, except as it relates to national security, with the caveat that we don't necessarily need it. it seems to me that ocean shipping is critical to national security, as we've discussed. in any event, the supply chain crisis of the last couple of years fell squarely within the jurisdiction of your committee.

and congress eventually, your committee approved and the house passed the senate passed legislation that the ocean shipping reform act to respond to that. what are your thoughts about the supply chain crisis in that legislation? >> well, it was an immediate crisis. we head ships, 100 ships, waiting to get into l.a. long beach. it was causing, containers went from a few thousand bucks or 2000 bucks to $20,000 a container. and the shipping companies did not want to wait to load agricultural goods or u.s. goods and come back, they're happy just take empty containers and go back. there were all sorts of abuses that were being put upon the american industry. we had, basically gone through a series of deregulations overtime.

that relate to shipping. let me just go way back. 1882. secretary of navy, william coleman, any nation that relies on another nation for its supply of ships loses in peacetime it's commercial independents and, in time of war, places it's very existence at the mercy of the powers which control the ocean. that was 1882. then, in 1920, we adopted the merchant marine act, the jones act, which we've talked about and i think we need to talk about a little bit more. world war ii, the lead-up to world war ii in that, we had a u.s. maritime commission build 6000 ships. then, the end of world war ii we start to pull back, the ships were becoming obsolete, we saw a lot of them overseas. under foreign flags. then, you know, that we were giving subsidies to u.s. flags. so, they wouldn't have to

compete with cheap foreign labor, and a lack of other issues when they're under flags of convenience. then reagan took away the subsidies, and basically, most of the rest of the u.s. fleet got sold overseas. then, finally, don mccain in 1997, passed the ocean shipping reform act. here's the premise of that. this is to achieve a competitive and efficient ocean transportation system, a policy that would put greater reliance on the marketplace. well, we've done that. now we have three conglomerates that control 95% of the u.s. asia trade. so, the marketplace has created these conglomerates that have inordinate power, they were doing very abusive things. -- charges, one company controls the truck beds to take the containers off the port, they

said, you can only use ours. so, then, they had campaign container sitting on them. they were charging people -- because their containers were sitting on them. all sorts of abuses. we were really focused on the economic crisis. it wasn't a time when we could really focus on the longer term, how do we rebuild american maritime, we wanted to deal with the impact of inflation and the supply chain at that point in time. that's how the bill got shaped. in a crisis. >> so, we've pointed out, in some of our work that we discussed, the fact that, unlike air transportation and telecommunications and other critical network industries, there are no american shipping companies in the top 25 globally. there are just 85 u.s. flag trading internationally, out of a global fleet of something like 50,000. these are the companies and the

ships that carry transport just about everything, commodities, manufactured goods, our intermediate goods, which is parts for everything else. and because there are no large american international shipping companies, so few american ships, we have essentially no control over that maritime supply chain. logistic supply chain caring all the stuff. we are just customers in that deal. so, our consumer economy depends entirely on international shipping. the international, -- i'm pontificating here, please excuse me. the shipping equivalent -- and there's no american cars. no american drivers are companies involved in this business. was this discussed much during your work on the ocean shipping reform act? >> no, again, i told you, we were dealing with a longer term problems, i dealt with that. the jones act as the last vestige of maintaining a u.s. shipbuilding industry.

and having -- it has to be port to port. in the u.s.. and that has been under constant attack, and was under constant attack when i was chairman of the committee and before chairman of the committee. because there are groups that claim, well, this just drives up the cost for consumers. puerto rico has made a run on -- even though we have a g.a.o. report that says, actually, puerto rico's advantage by having a dedicated fleet of jones act vessels, modern vessels, because they need regular service from the u.s.. for a whole lot of things. if they didn't have that, they would be at the end of a very long international shipping chain, controlled by three conglomerates, and they are miniscule market. they would not be particularly industry in providing things on a timely weekly basis to puerto rico.

still, you know, we've had, there was just a recent, even under the biden ministration, after last hurricane. there was this, oh, they need diesel, they need diesel. actually, i talked to the puerto rico representative she said, there's no diesel shortage. so, the administration, being pushed by a small group of members of congress, who were claiming that this was a problem, waved the jones act for a ship that was already in transit, loaded with crude from the united states, and it was a foreign flag ship. they were allowed to divert to puerto rico. the total wages on that ship for the crew are one merchant mariner. for the u.s.. but they're always pushing and pushing and pushing. so, generally, in my time in

congress, i've been on the defense. i think people are now starting to wake up and it's time to go on the offense. it began to have a much more serious conversations about what's gonna happen. when we went to war in the persian gulf, we had to use foreign flagships. because we've got ready reserve fleet, which is pretty decrepit, that's the first place to start. rebuild, revitalize and modernize. we're doing a tiny bit of that. we have one of the merchant marine academy's, a new ship, they had a 60 will ship. we need to really focus on these things. we can build these ships here. and we can do a really good job. yes, they are going to be more expensive. but you get all of the spillover effects into our economy when you build those things here. as opposed to buying them from overseas, you don't get any of those added effects. you don't create the jobs and the other economic activity, the suppliers, and all those things. that go into the ships.

one other example, if i might. i thought this one out. the jones act stuff is very important. the wind industry. they're getting massive subsidies. or you have all sorts of wind inserted in the ocean around the united states. and, right now, the only insertion ships are foreign. dominion resources is building more. and other u.s. manufacturers, other companies, would build them, if they knew there is going to be a market. and they could compete. these are all within our territorial waters. they should all fall under the jones act. and i actually went, three or four years ago, to the wind industry when we're doing the coast guard bill. look, just let me do this. we'll have a five-year window. within five years, because basically, they contract about five years for this wind insertion, they were qualified u.s. manufacturers, ships available and crews where the jones act would apply, and they

initially agreed, by then the american petroleum institute got holman said, no, you can't do that. we would waver many, many years ago. we're doing all of our stuff in the gulf with foreign flags and foreign crews, and it's way cheaper. so, that's the question. do we value creating jobs, economic security, or are we just gonna chase the cheapest service? >> in the context of china, it's a very relevant question here, and i'm completely on board with what you said about domestic shipping in trade, but you talk about the international shipping industry, in the really small american -- in that system. in the sense, the bigger concern is, maybe what you alluded to in your quote from 1882, which is, if the country doesn't control its international shipping industry, it's in trouble. so, the trouble here, is not

just that we don't control it, the bigger concern is the dominance of china. in china's involvement throughout the system. that reflect the stated objective of president xi jinping, going back ten years ago, when his first -- one of his first speeches to the politburo, we're going to make china a global powerhouse, when it comes to the maritime industry. the full range of industries. because every country in history that does that grows and succeeds and does better than every country that backs away from the maritime industry and the seas declines. >> that's the belt and road initiative. one of our assumptions has been, we have all these foreign flagships. nd osome of them are our alliese can depend upon them. to carry our goods, or carry our troops. and, you know, in a time of conflict. but the chinese are spotting

themselves all around the world, 100 ports now, and they're getting influence in those countries, which controls the foreign flex. and, you know, it's less and less likely we're going to easily be able to call on many of these countries at a time of crisis, or these foreign flags, and say, hey, we gotta move our troops. we need to move our agricultural goods overseas, we can't get shipping. the chinese are being very, very delivered about this. some of them are putting in very strategic places, right by the suez canal, you know, djibouti. now haifa. they've got a contractor on the port of haifa, where the fleet is domicile, now they're going to be able to move everything in and out of that harbor. and we didn't get it to get

into cranes yet. >> i've got a few data point to run by, stop me anytime. china state owned shipping company, -- is going to become a top container carrier in the world, one of the three conglomerates you mentioned, no american company in the top 25. china has half the global order book for shipping instruction. compared to less than 1% for u.s. shipyards, 96% of shipping containers are made in china. around 80% of shipping cranes, gantry cranes, are made in china. the pentagon is concerned these cranes can be used to spy on our supply chains. another u.s. -- is concerned that all of this data is being combined with other shipping data, and giving the chinese the ability to track just about any container cargo ship anywhere in the world, including shipments of u.s. military cargo. you mentioned beijing having a foothold in 100 ports and 63

countries, and it growing share of the marine finance and insurance business, which of course, is one of the hooks that we relied on, or try to rely on, to boost enforce sanctions on russian oil. so, how should we react to all of this? >> well, i already suggested earlier, we may want to, and there is legislation pending in congress, introduced by republicans, and democrats, to reconsider permanent normal trade relations with china. and the question is, what do you move to? do you move back to a condition of time-limited approval, subject to them changing their behavior? or do you take the even bigger step of pulling the whole thing out and saying, look, there's so much abuse going on here, we're going to move you to the

same schedule of tariffs that we have for russia. which is, generally, up from an average of 3% to an average of 34%. except with the -- going down, and all that. i mean, it is gonna become anywhere near 34%. i think i mentioned earlier, there was a lot of press about this, there's a buick made in china, one section 301 was applied, it's 24% tariff they said, oh my god, prices are gonna go up $8,000 here in the united states. well, no, it went down, the chinese subsidize the industry, and the price of the buick imported to u.s. actually went down, despite the 24% tariff. so, it seems like we're going to need a really, really substantial club to deal with this. we can't let it go on much longer. at that point, we will be totally kept. >> so, just to take you to

recent action, the microchip act. the u.s. market share of micro chip manufacturing went from 25 or whatever it went from down to roughly ten or 12%, i mean, it was getting lower and lower. and we're relying on taiwan, relying on south korea, and increasingly, on china for certain ships. and the congress decided, that's not a good place to be. we had at least 10% of the market share their. thinking about that, in terms of the maritime industry, the american maritime into industry, yes, we have to get better relations with china. a firm footing for the economic and trade side of things. but in terms of starting to regain some footing for the american maritime industry, we're below 1% now. is there a path that we should be considering that would get us toward a more meaningful market share?

>> well, i think there's some minimal number of u.s. flag international carriers that we should -- that we need. to protect ourselves. like i say, we used to, we built a lot of the -- four world war ii. we used to give them a subsidy to deal with the fact that they're competing against this incredibly inexpensive foreign labor. the other things with flags of convenience. i think we need to have, i think this may be a conversation that's armed services, homeland, more than transportation infrastructure. they need to talk about what the minimal merchant fleet we need. if we are, just assuming, what worked in the past with a persian war, we can go to some of these foreign flags and say, hey, we need the ships and they provided them. let's maybe make the assumption,

with a chinese growing influence in many of these countries with the foreign flags, that if a conflict is coming, they might just influence those countries not to cooperate with us. i think we should be making that assumption. and talk about what's our minimum? what we need? i started with the ready reserve fleet. that's an easy thing. that is their specifically for the military. they need to increase the supply there, we need to update those ships. that's a basic starting point. then we have to emphasize, training mariners in this country to. >> we have a big workforce challenge there. also admiral busby talked about the ceiling, we have now 85 shift in international trade, he put the number 250 as being a reasonable number to really cover what a realistic sea lift requirement would be in light of what you mentioned, in terms of foreign flag, balking, chips

not responding. and attrition. these are contested -- these would be operating in contested waters. without u.s. total dominance of the airspace. we would lose ships. and we need a lot more ships. we need some ships for what we're talking about here, the economic side of things. >> we need to question the basic concept of flags of convenience. i mean, mongolia has been getting a lot of revenue through flags of convenience. okay, so, -- >> i hadn't realized that when. >> it's a new thing for them. they don't have too much shipping. but, you know, a number of years ago it was pushing hard on this, particular with the cruise lines, who are massive amount of american passengers, all foreign flag. i said, so, your flagged in

liberia. liberia happens to be the registry is somewhere and i think it's herndon, with a bunch of ex coast guard flag officers are the registry for liberia. but it's really great. it's really cheap. you avoid taxes, you got your registration fees really low. you're not held to our standards in terms of crew and equipment and all those sorts of things. so, i said, what happens the next time someone hijacks a cruise liner on the high seas? you're gonna call the liberian navy to come and assist? there is none. so, i mean, this is an absurdity what we've elect will happen here. it almost happened in aviation. they started to try and do it in aviation. somebody called norwegian error relocated, based itself in ireland, with weak labor laws, and they were going to fly planes to the u.s., crude by malaysian pilots, and singaporean flight attendants, under contract.

and said, they were gonna try and create flags of convenience, luckily, they collapsed. during the pandemic. but this is a model we do not want to replicate anywhere else. it's been a failure for us. imagine if we lost the u.s. heavy lift fleet, we would have what's called the civilian reserve, i mean, air fleet. and we subsidize the by -- planes to a certain extent, so that we can call on them to carry our troops overseas, because we have enough airlift capacity in the air force to do that. so, i mean, these are all just big red flags being waved. and >> your point about the aviation industry and the differences there is really important point. the aviation industry is structured totally different than the maritime industry, the maritime industry -- if troops are willing and able to meet certain safety standards, you're eligible to

operate international trade. you can bring -- >> yeah, there's questions whether we meet those those standards. a lot of times. >> i'm sure that's true. but in aviation, there's a controlled system. it's a very competitive system, but it's also controlled. so, if america gets landing rights in a country, or vice versa, it's an american flag airplane that gets those rights and not a flag of convenience airplane. that's just not the way the international shipping works. >> back to the flags of convenience. we got involved in the scandal in the philippines about ten or 12 years ago. where anybody could buy papers at any level. you want your captain's papers? here you go. your captain now. they were running this

marketplace, finally, they got clipped down on. flags of convenience does mongolia send out people to inspect their ships and their cruise? we can do a lot more port inspections, we can do a lot more enforcement on this side and say, if you're coming in under one of the suspects flags of convenience from a country, like liberia, that hardly exists? or others? we're going to subject you to -- we want to see the credentials of these mariners. we're gonna inspect the condition of the ship. and we've been doing very little of that. something else we could do to fight the flags of convenience play. >> you mentioned american allies. it seems to me, when you look at the total system, getting back to china here and the concerns we have around the degree to which they have control over so many segments of the international shipping supply chain, from shipbuilding

to crane construction, to information, to operating the ships, crowing them and so on. that, to me, is a major concern. from an economic security standpoint, they could decide, if they had the power, if they could acquire the power to exert control over that supply chain. can we trust that they wouldn't use it to our disadvantage at some point in the future? >> well, yet, overtime. for instance. no, we certainly can't. they said, well, don't worry. it would hurt the chinese a lot. because, economically, their exports. but that is a country that is very rigidly, controlled. >> just coming at a covid lockdowns. >> yeah, well, they have things like facial recognition, they monitor you. if you cross the street we are

not supposed to, you had a point in after a certain level, you lose rights or your kids lose rights to go to school. the level of control is extraordinary. in the u.s., i mean, if suddenly all these goods disappeared, there would be havoc. so, i don't believe that they wouldn't use that tool as they get more and more and more dominance. >> it seems to me, it's something that could sort of escalate, you could start at a certain level, they could start at a certain level, of opposing economic pain. and ratcheted up depending on how things go, and ultimately, if they completely shut down a system it would be catastrophic for everyone. again, as you say, they can absorb that, their political system is designed to absorb that, unfortunately, and hopefully, it will never come to that. that, to me, is a concern about

not just accepting that chinese control over so much power. >> back to my premise on conditioning mf and -- people say, wait a minute, it's gonna happen two years from now, or three years from now. meanwhile, you develop other sources. i had this fight, there is a chinese rail company, totally owned by the peoples revolutionary army. they were sending in totally subsidized light rail cars and trying to take over the whole u.s. market. they also were going into heavy rail and try to take over heavy rail. they put the australian heavy rail people at of business, in short order. i finally, was able to get an amendment on a bill to say, they can have no further contracts in the united states. because it was basically a state owned company that was not fairly competing, by the way, the stuff wasn't very

good. and we also had security concerns about them tracking people and things and all that. they're very clever. they had based their two manufacturers, one with busses, one with trains, in the districts of very powerful members of congress. who fought, because they have formed two jobs, there could be thousands of jobs making these things. they had 400 jobs taking off the shrink wrap and doing a little bit of assembly and, so, i couldn't end their existing contracts. now, they're going around to transit districts, that they already have, and going around and saying to other transit districts, will subcontract with you, and you can get this cheap chinese stuff that's totally subsidized. so, i mean, this is gonna be a very difficult, very difficult struggle. >> i think, when we talk about the maritime supply chain, a

piece of this that's important, supply chain in logistics or broad terms, that means a lot of different things too depending on who you're talking to, or what issues are. and this supply chain and logistics issues we're talking about here are not about a specific type of commodity of product, microchips or refined rare earths or himars rockets. it's the transportation system that brings all of this stuff to us that our concern is that that is outside of our control and what little were exporting back in particular what we said in the the people were hit really hard again back to china when they were going for mf in they allowed in a big shipload of wheat i had the wheat farmers there at my district east oregon big wheat country

they came in and said look this is gonna be a huge new market for us we've never baylor get in there before at the same time i had received a translated radio broadcast internally in china by a trade minister saying don't worry we're not gonna become dependent upon the united states for our food supply and you know what after that one ship went in and they got mf in the next year the same ranchers came into see me they all set their kind of hang doggedly and said are gonna say it say what say i told you so i said no i'm not gonna say that we have to fix this because they started using fido sanitary barriers they don't do this they do this in so many ways saying your wheat is not clean enough for us you can't bring it anymore so i mean this is a real dilemma i appreciate the conversation we've got some

time for questions i think it's a really important conversation and discussion i don't think they're easy answers that has been going on for such a long time in turning the corner and ship in the right direction is gonna take a look in a lot of patience i really appreciate your leadership on this to the ears and just open up anything you'd like to add would love to take some questions okay great let me open it up to questions from the audience in the back i was hoping could speak a little bit about preference there's been an effort by our own government and even a movement within congress to try and use the same flags of convenience for taxpayer purchased cargo particular from usaid and other food agencies can you talk a

little bit about that what do you think would get these agencies even some folks in congress to change their tune on cargo preference yes we've had to fight that because the ngos non governmental organizations get involved and say hey wait a minute we could supply more at a lower price if we use these foreign flag ships and that's been an ongoing often struggle over the last decade or so cargo preference definitely needs to be tightened up go-ahead more questions all the one i'm just thinking as we're talking microphone he's gonna give you a microphone thanking overtaken all this as you said we have become very very dependent on china we can go into any store

within a mile of here and find 100 million things made in china so obviously as consumers were very dependent on these things now so not trying to be confrontational how do you balance that because obviously there are national security concerns there's also concerns to consumers so which do we take more seriously good question very good question the question is can we mitigate it and balance it and deal with it i think the national security has to ultimately trump but you have to figure out how we're gonna get there because of the dependence now you know there are people beginning to reassure under policy that been adopted by biden in the chips act is going to cause reshoring with incentives others have decided to reassure because they experience that meltdown

during covid they said this could happen again so they're referring to some extent but we also have to be booking other areas of the world who aren't hostile to the united states as potential suppliers in the future that will take time it's going to take time here to get back up in chip manufacturing other areas and i had this fight numerous times over the percent of transit vehicle that would have to be manufactured in the u.s. every time we would raise it of the transit people would say oh my god we've been told there will be no more buses no more we've managed to overcome it and find substitutes we didn't today is going up to 75% it was three years three years five years are gonna move up to 75% as we

move up people move into those niches and say we can supply that we can supply this right now if they don't see any potential for a market they're not gonna make the investment and it's just like what happened with protective equipment if that was and it turned out during the pandemic i found out that the guy in texas i read an article in the wall street journal an old three implant he had six lines he can make masks and n95s only one was running a homeland security give this guy contract you gotta give my contract that says will buy this much over this period of time and we don't use it all we're gonna put it in strategic stockpile we might need it again you are guaranteed this purchase that kept going around and around they did a contract with a

dentist for dental offices not as big that's part of the key here assuring and some people don't talk about through industrial policy these market are gonna be there very good question i appreciate your response thing i would when you look at some of the things we're talking about on the maritime side of the market share that we're seeing for example container construction 96% in china 80% of ship to shore cranes we would not tolerate this in this country that kind of concentration and yet because they're outside the united states and different corporate entities we seem to be paralyzed to do anything about that if already played by the same roles and so on there

might not be the kind of issues we're dealing with now but they don't state owned enterprises under existing regularly state owned enterprises bringing things into this country that's the peoples republic of china government running those companies at a loss for the most part until they get enough market share and they take over anyone else is making it the conjecture price up yeah that ultimately happened with some of these things yeah i mean it's a bargain of what happens when they get to market and are totally dependent upon them about the competition between u.s. and china in certain countries like south america and africa can you talk more on

that thank you workers and a number of them have either literate or not worked out in and elsewhere ultimately failed but they still had to pay the bills using for the most part

through belt and road it's oriented toward the navy but they are getting a foothold in ports all around the world where their ultimate those sorts overseas. we have left the gap in the chinese -- the gap and the chinese are pursuing those things. michael: questions? >> hi, thanks for the

discussion. i wanted to get your thoughts on the impact of friend shoring and big u.s. manufacturers. apple is a big example. a recent example moving production out of china into other countries. how much do you think that will hurt china's shipping dominance? or an effect on the way they can dominate a lot of their basic manufacturing moves out? mr. defazio: the locale, to some extent, 95% of the asian trade is controlled by three conglomerates. as we pointed out earlier, 95% of the asian trade is controlled by conglomerates. one of those is totally dominate by the chinese and other partially, and one not so much.

but, you know, the location, if they grow more and more dominant and shipping, we are gonna go? i mean, except maybe europe. or wherever -- serves. so, i mean, in terms of a lot of we are talking, about the electronic a lot of that can be done by air. they're not putting that stuff in containers and ships. so, that hasn't been as much of a problem, except, of course, during covid. when flights were grounded and all that. that is something, at this point in time, where they can't dominate. and we can, u.s. fedex, u.p.s. can pick the stuff up and bring it here to united states. for certain, a lot of those consumer things you're talking about. in that case, it's gonna work. when you get bigger, heavier

items enough to go oversee it can be more difficult. for instance, if someone begins to compete with the chinese on the ship to shore cranes, huge. so, those are all gonna go, on their go on special ships. the chinese have built the specials ships. out of any bills has built a special ships to carry those things hole. >> we have limited experience with that. yeah, that's actually a proposal that the ports authorities are supporting at this point to start to reassure some of the crane construction. to try to reduce that, i'm not sure whether reshoring, or nearshoring or friend shoring, is going to, well, the more it happens, the more, and the threat that continues to happen the more likely it is the chinese will play better, play

by the rules more so there's less vulnerability to our supply chain when that happens. so, we've talked about central america, based on my experience, the benefit of going there, you get the lower liberate on showing his best of all. if they can make that work. ultimately, it's about diversifying supply chain sourcing decisions. that's really important part of all this. i think that it doesn't really, the party gets overlooked, maritime logistics supply the shipping part of it, because if the shipping is controlled by china, we are vulnerable, in my opinion. and we need to try to mitigate the vulnerability. >> gentleman in the middle there. >> thank you so much for the

discussion, i just want both of your thoughts on -- it's basically building this resilient, supply chain resilient, especially for southeast asia, you mentioned about the philippines and most of southeast asian countries, still have problems with standards on the u.s. side there is no talks on tariffs. . there's no discussion much on tariffs. what are the alternatives that the united states can offer to southeast asia? i know this is a very difficult question to tackle. i'm originally from thailand, so, we have do not have ftas, directly from the u.s. in thailand. there's any efforts, any thoughts on that. so far in congress. thank you. >> well, you're little beyond my area of expertise on that.

china in the wtvo, thailand? you're in the devito, you're getting schedule one tariffs, which of the lowest tariffs, virtually insignificant. our average is 3.4%, which is lower than any other trading nation in the world. under the schedule we have submitted to the debbie trio, under schedule one. so, thailand is already getting the same access as china, of course, that's probably a problem. they're getting the same access as china, because the chinese are probably subsidizing more than the thai government. i am not intimately familiar with the comparison between two systems, i think that thailand does not have large state owned enterprises.

it's mostly entrepreneurial and capital based. is that correct? >> yeah. >> so, you're still at a disadvantage, unfortunately. even though you are getting the tariff -- that's why i'm arguing that we should move china off of p and to your and begin to condition, or take away that, and put him on schedule to. that would be of great advantage to countries like thailand, suddenly, the average tariff goes from 3.4% to almost 24%. then your goods would become way more competitive coming into the u.s. than the chinese goods. >> thank you for the discussion today. i am interested in cranes. and other enabling acts expects of port management and all the darker things, i'm interested

in what you -- what particular scares you, and what you think we ought to do, it goes back to the resilience question. particularly, as we look at national security. implications. thanks. >> sure, we talked a little bit about haifa, where they control the port, and obviously, no with the movement of the u.s. ships in and out is, the same thing with cranes, it's like, you can basically, they can be tapping into what is going on what ship and where it's going. as they're loading the ship. which, would you know, if we got into more conflict or something strategic or tactical we needed to do, it unfortunately, they would have the intelligence just right from that spot. oh, there's fixes, we can tape over the cameras, we can do this. we can do that.

that's not the solution. just so we can get a cheaper crane. you it's a bigger issue than that. we used to make cranes, beautiful cranes here. we could make them again. and not have to worry about what sort of software is in them, and where it's transmitting the data as it loads the ship. and what they're gonna do with it. it doesn't necessarily have to be with conflict, just be competitive. this gives them an unfair competitive advantage. you're leading the ship to go there, okay, well, you can figure a way that we might get that market instead. i mean, that a number of courts -- >> just to build on that, the owner of the chinese crane maker was quoted, five years ago, saying, we sell systems, or something to that effect. in other words, what's valuable is not picking up the box off the ship, and putting it on the dock, it's the information that

we can derive from all of that. we can slice and dice that and sell that back to you and others, just like has done throughout the consumer economy today. a slice your card at the grocery store. that information gets sliced and diced and sold, and the information is really powerful in the consumer peacetime setting, and in some respects, that's competition. but it's also a real concern in the context of a global competitor that doesn't have our best interest in mind, and is government controlled. whether it's peacetime or in war, i'm sure there's concerns about that. >> it's a critical part of our infrastructure. something we haven't really thought about before.

>> front row. >> hi, how important do you think sustainable fuels are for the ships themselves. it's one area i think that the u.s. has a narrative, u.s. companies with sustainable fuels against our ccp counterparts. some companies, very nation industries, in a lake, madsen, crowley, are all on the cutting edge of actual greener fuels. which is something that the chinese companies and the shipping companies, especially, have been resilient to. with all these other areas that were being at disadvantage narrative wise, how important is it that we push the sustainable fuel side of things. >> well, in so many aspects of this, it's incredibly important. everybody talk about electricity. hydrogen is gonna be a solution. particularly, in shipping. potentially, in aviation. of course, the question is, how do you obtain the hydrogen? there is like four or five

kinds of hydrogen. they label them. brown hydrogen, that means it's just made out of regular natural gas. in the methane escapes with co2 escapes. then there's blue, where the oil company say, oh, we're gonna capture all of the co2 or excess methane emissions. and we're going to sequester it in the ground somehow. then, you move on to green, how do you produce the green? you produce green hydrogen by packing water. so, that could be very sustainable for using renewable power to crack the hydrogen. it's a very nascent, industry. part of the i.r.a., the investment reduction in the inflation reduction act, very inept lee named, irate people start thinking but the retirement accounts. i mean, my accountant called me

and said, what's this big i.r.a. bill going to do to my clients? nothing. so, you know, we are going to subsidize 600 and hubs. there's a bunch of applications. with all different technologies, in different parts of the country. ,, -- ,. -- they said, how can we do they want the diversity, and university built a solar array to crack water, and producing their own green hydrogen. and there's a market for it to. they've got troubles more than they need. >> then there's pink hydrogen, which is produced by nuclear power. and we're potentially moving toward modular, nuclear reactors. which are going to be standardized. they're not gonna have cost

overruns. they're only gonna have safety or security issues. he still have the waste issue to deal with. -- a couple of companies that are in the approval process. we have different ways of producing hydrogen. and there's tremendous promise there. other sustainable fuels, in terms of -- i read about something, i totally don't understand, it's in california. they can take any kind of mix waste, subjected to a plasma torch, the carbon comes out as a solid. and that's marketable for something. and they create hydrogen. i don't know works. there's a lot of cutting edge technology out there. now, or having conflicts between, because they're so little sustainable aviation fuel, they're worried about trucking moving to hydrogen. so, we've got to get ahead of this. electricity is not gonna be the

solution for aviation. even though some people are experimenting with hybrids. and it may or may not be the solution for long distance trucking in this country. because of the current battery technology which is really cold, the charging takes quite a while. at this point, we don't have any charging network. that's also part of the iija, in the i.r.a. is to build out a network, theoretically we're gonna build it a charging network that is being run by sustainable power. that's why all the investment and wind and solar and all those nain's, we are finally taking some very big steps. in that direction. i don't know that answer your question, -- >> morales. >> good answer, i enjoyed it. certainly learned a few things. >> i think we're about out of time, we can take one more, if anybody has a burning question they want.

all, right i want to stop and say thank you, mister chairman, it's been really good discussion for my perspective. we've certainly learned a lot. again, i want to thank you for your service in congress. your dedication to this country, you are a great example from young members of congress coming up and taking this seriously doing the best you can. you did a great job, we really appreciate it being with you today. and learning from you. >> 36 years, i never expected to stay that long. we checked the house historian before i retired, at a 14,400 people have served in congress, and the 65th longest serving member. i don't know what that says about me. but anyway. >> thank you so much. [applause]

>> hey, good to see you. >> i'm really interested in your advocacy.

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