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[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]

 
             DEPARTMENT OF COMMERCE FISCAL YEAR 2009 BUDGET

=======================================================================

                                HEARING

                               BEFORE THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 13, 2008

                               __________

                           Serial No. 110-94

      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov

                  U.S. GOVERNMENT PRINTING OFFICE
49-636                    WASHINGTON : 2008
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                    COMMITTEE ON ENERGY AND COMMERCE

                  JOHN D. DINGELL, Michigan, Chairman

HENRY A. WAXMAN, California          JOE BARTON, Texas
EDWARD J. MARKEY, Massachusetts          Ranking Member
RICK BOUCHER, Virginia               RALPH M. HALL, Texas
EDOLPHUS TOWNS, New York             J. DENNIS HASTERT, Illinois
FRANK PALLONE, Jr., New Jersey       FRED UPTON, Michigan
BART GORDON, Tennessee               CLIFF STEARNS, Florida
BOBBY L. RUSH, Illinois              NATHAN DEAL, Georgia
ANNA G. ESHOO, California            ED WHITFIELD, Kentucky
BART STUPAK, Michigan                BARBARA CUBIN, Wyoming
ELIOT L. ENGEL, New York             JOHN SHIMKUS, Illinois
ALBERT R. WYNN, Maryland             HEATHER WILSON, New Mexico
GENE GREEN, Texas                    JOHN B. SHADEGG, Arizona
DIANA DeGETTE, Colorado              CHARLES W. ``CHIP'' PICKERING, 
    Vice Chair                       Mississippi
LOIS CAPPS, California               VITO FOSSELLA, New York
MIKE DOYLE, Pennsylvania             ROY BLUNT, Missouri
JANE HARMAN, California              STEVE BUYER, Indiana
TOM ALLEN, Maine                     GEORGE RADANOVICH, California
JAN SCHAKOWSKY, Illinois             JOSEPH R. PITTS, Pennsylvania
HILDA L. SOLIS, California           MARY BONO, California
CHARLES A. GONZALEZ, Texas           GREG WALDEN, Oregon
JAY INSLEE, Washington               LEE TERRY, Nebraska
TAMMY BALDWIN, Wisconsin             MIKE FERGUSON, New Jersey
MIKE ROSS, Arkansas                  MIKE ROGERS, Michigan
DARLENE HOOLEY, Oregon               SUE WILKINS MYRICK, North Carolina
ANTHONY D. WEINER, New York          JOHN SULLIVAN, Oklahoma
JIM MATHESON, Utah                   TIM MURPHY, Pennsylvania
G.K. BUTTERFIELD, North Carolina     MICHAEL C. BURGESS, Texas
CHARLIE MELANCON, Louisiana          MARSHA BLACKBURN, Tennessee
JOHN BARROW, Georgia
BARON P. HILL, Indiana

                                 ______

                           Professional Staff

                 Dennis B. Fitzgibbons, Chief of Staff

                   Gregg A. Rothschild, Chief Counsel

                      Sharon E. Davis, Chief Clerk

                 Bud Albright, Minority Staff Director

                                  (ii)

                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, opening statement.................................     1
    Prepared statement...........................................     2
Hon. Anna G. Eshoo, a Representative in Congress from the State 
  of Califonia, prepared statement...............................     3
Hon. Jane Harman, a Representative in Congress from the State of 
  Califonia, opening statement...................................     4
Hon. Eliot L. Engel, a Representative in Congress from the State 
  of New York, prepared statement................................    40

                                Witness

Carlos M. Gutierrez, Secretary, Department of Commerce...........     4
    Prepared statement \1\.......................................
    Answers to submitted questions \2\...........................
\1\ Secretary Gutierrez of the Department of Commerce did not 
  submit a prepared statement.
\2\ Secretary Gutierrez of the Department of Commerce did not 
  answer submitted questions for the record.

             DEPARTMENT OF COMMERCE FISCAL YEAR 2009 BUDGET

                        THURSDAY, MARCH 13, 2008

                          House of Representatives,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The committee met, pursuant to call, at 9:10 a.m., in room 
2123 of the Rayburn House Office Building, Hon. John D. Dingell 
(chairman) presiding.
    Members present: Representatives Dingell, Eshoo, Stupak, 
Wynn, Harman, Allen, Schakowsky, Solis, Inslee, Matheson, 
Barrow, Barton, Upton, Whitfield, Shimkus, Fossella, Buyer, 
Murphy, and Burgess.
    Staff present: Phil Murphy, Valerie Baron, Andrew 
Woelfling, Amy Levine, Consuela Washington, Will Carty, Neal 
Fried, Courtney Reinhard, Brian McCollough, Chad Grant.

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Dingell. Today the committee will be receiving 
testimony from the Secretary of Commerce with respect to the 
Administration's fiscal year 2009 budget request. The Chair 
advises members that the committee will follow the same 
procedures as prior full committee hearings with respect to 
opening statements and questions.
    The Chair notes that it is unfortunate the secretary will 
only be able to be with us until 11:30 a.m. The Chair therefore 
is going to urge the members to proceed as efficiently as 
possible, and the Chair requests the cooperation of all 
members.
    Without objection the full statement of the Chair will be 
inserted in the record. The Chair advises that the clerk and 
the counsel at the hearing will maintain a list of members and 
will advise the Chair which members should be recognized and in 
what order under the following procedure. One, members who are 
present when the committee is called to order. These members 
will be recognized in order of their seniority on the full 
committee. Two, members who arrive after the committee is 
called to order. These members will be recognized in the order 
in which they arrived at the hearing but after all members who 
were present when the Chair called the committee to order.
    The Chair notes that the committee is troubled by the 
Administration's budget request for the department. I note that 
it proposes drastic cuts in the Economic Development 
Administration and in the Minority Business Development Agency 
and that it would essentially eliminate the manufacturing 
extension partnership, something which the Chair believes is 
extremely important and which the experience of this committee 
has indicated is extremely valuable to the development of 
business and opportunity in this country and for people around 
the world.
    As you know, Mr. Secretary, a time when hardship for the 
manufacturing sector in this country has been going forward at 
an unpleasant rate, these programs provide vital assistance to 
hardworking men and women and their employers, many of whom are 
small manufacturers.
    The Chair also notes that the Administration has proposed a 
$17 million cut in the National Telecommunications and 
Information Administration's funding and has requested no 
additional money to educate consumers about the digital 
television converter box coupon program. NGIA has extremely 
important responsibilities in this matter, including public 
safety operability. And we note that it must provide adequate 
resources to conduct its mission, and it must receive these 
from the department and from the President's budget.
    Mr. Secretary, we welcome you to the committee today. We 
thank you for your courtesy and for your time, and we look 
forward to your dialogue with the committee on these and a 
number of other important matters. So, Mr. Secretary, please 
consider yourself both recognized and welcomed.
    The Chair is going to inquire do members seek recognition 
at this time for opening statements. Gentleman from Michigan, 
Mr. Upton.
    [The prepared statement of Mr. Dingell follows:]

                   Statement of Hon. John D. Dingell

    Today the Committee will receive testimony from the 
Secretary of Commerce regarding the Administration's request 
for Fiscal Year (FY) 2009. I thank my friend, Secretary 
Gutierrez, for appearing before the Committee. Mr. Secretary, I 
have a number of tough questions about the Administration's 
budget request, as I am concerned it will not support the 
Department's core mission of fostering the foreign and domestic 
commerce of the United States.
    I am troubled, particularly due to the country's de facto 
state of recession, that the Administration has proposed 
cutting important development programs administered by Commerce 
Department bureaus, such as the Economic Development 
Administration and the Minority Business Development Agency.
    Similarly, I am disappointed that the Administration has 
proposed funding for the National Institute for Standards and 
Technology by more than $100 million. This includes the 
effective termination of the Hollings Manufacturing Extension 
Partnership program, which was authorized for $122 million in 
the 2007 America COMPETES Act. At a time of economic hardship 
for working men and women I would like to know the 
Administration's rationale for the proposed evisceration of 
these valuable programs.
    In addition to its chilling effect on the Department's 
economic development programs, the Administration's request for 
a $17 million decrease in funding for the National 
Telecommunications and Information Administration (NTIA) raises 
serious questions about its ability to perform key 
responsibilities. NTIA must clear advanced wireless services 
spectrum, promote greater transparency in the work of the 
Internet Corporation for Assigned Names and Numbers, and 
coordinate the Public Safety Interoperable Communications grant 
program. I am particularly troubled that the Administration has 
requested no additional funding to support consumer education 
for the converter box coupon program, especially in light of 
the looming national transition from analog to digital 
broadcast signals.
    In closing, by way of this hearing and subsequent 
correspondence, the Committee would like to learn in greater 
detail about the Commerce Department's efforts to address the 
following challenges:
     Controlling the cost and improving the accuracy of the 
2010 Census;
     Ensuring that the National Oceanic and Atmospheric 
Administration effectively manages existing atmospheric 
satellites, as well as responsibly acquires new ones;
     Making certain that the U.S. Patent and Trademark Office 
achieves better and more efficient results; and
     Promoting U.S. exports and fair competition in 
international trade, as well as enhancing export controls for 
dual-use commodities.
    I thank Secretary Gutierrez for his testimony today. I am 
certain this morning's dialogue will be fruitful.
                              ----------                              

    Mr. Upton. I want to preserve my opening statement for 
questions so I will pass.
    Mr. Dingell. That is within the gentleman's rights. 
Gentlewoman from California.
    Ms. Eshoo. Good morning, Mr. Chairman. I will waive my 
time. [The prepared statement of Ms. Eshoo follows:]

                    Statement of Hon. Anna G. Eshoo

    Good morning, Secretary Gutierrez, and thank you for 
testifying today about the Commerce Department's budget request 
for the 2009 fiscal year.
    We have many important programs to discuss today, including 
many that directly impact our nation's ability to innovate and 
compete in the global marketplace. But I want to bring your 
attention to a particular matter that affects my constituents 
and the Districts along much of the Pacific Coast.
    I'm very concerned by the alarming drop in the salmon 
population in Northern California and Oregon. The Pacific 
Fishery Management Council announced earlier this year that the 
Fall 2007 run of adult salmon on the Sacramento River was among 
the smallest ever recorded. Not only is this troubling from the 
perspective of fish conservation, it will have a serious 
economic impact throughout Northern California and the Pacific 
Northwest. As you know, low salmon returns to the Klamath River 
in 2006 caused a commercial fishery failure. It took far too 
long for the Department of Commerce to declare that failure and 
for those affected by the fishing restrictions to receive 
federal assistance.
    This year the situation seems worse, and communities along 
the West Coast need your swift intervention. I recently joined 
a number of my colleagues in writing to you requesting that you 
take steps to declare a commercial fishery failure to speed 
federal aid to the fisheries and individuals whose livelihoods 
depend on robust salmon runs. I look forward to hearing your 
response regarding that request, and would like to know how you 
plan to address such a striking decline in an important natural 
resource.
    A recent report from a NOAA Fisheries Service oceanographer 
indicates that the rapid decline in the salmon population is 
due to unusual changes in weather patterns and ocean currents 
that disrupted the food chain, causing young salmon to starve. 
This may be connected to climate change which could make salmon 
among the early casualties of global warming. With this 
possibility, we clearly need to be investing more heavily in 
research to understand climate change, its impact on our oceans 
and environment, and possible mitigation strategies. Why, then, 
have you proposed to cut the budget for all of NOAA's research 
programs, including Oceanic and Atmospheric Research? With the 
imminent threat that global warming poses, especially to our 
coastal regions, we cannot afford to under-invest in research 
in this area.
    Given the President's expressed interest in innovation and 
promoting American competitiveness, I find it surprising that 
there is no funding for the Technology Innovation Program which 
received strong bipartisan support when it was authorized by 
America COMPETES. The Administration's plans to shut down the 
Manufacturing Extension Partnership is equally puzzling. While 
I am pleased to see that R&D at NIST overall will increase by 
4.7%, I'm troubled by the cuts to TIP and MEP - programs which 
facilitate the development of new methods and paths to 
commercialization and are designed to help innovations reach 
the marketplace. How does the Administration propose to help 
develop and mature new technologies, when it terminates the 
programs designed for that very purpose?
    I want to thank you, Mr. Secretary, for your hard work and 
leadership on immigration reform. We need to increase the 
number of H1-B visas, develop a pathway to citizenship, and 
address other aspects of our immigration policy to reward hard 
work and ensure that we have a system that will both train and 
retain foreign talent in our country. I know you understand 
this and I know the President understands this. I look forward 
to working with you during the remainder of your time in office 
to address these important matters.
    Thank you again for testifying today and I look forward to 
hearing about your plans to address these issues.
                              ----------                              

    Mr. Dingell. Gentlewoman has done so. Gentleman waives his 
time. Gentlewoman from California.

  OPENING STATEMENT OF HON. JANE HARMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Harman. Thank you, Mr. Chairman. And welcome, Mr. 
Secretary. I just wanted to underscore your comments, Mr. 
Chairman, about the importance of the DTV transition. This is 
not, in my view, about converter boxes to convenience 
consumers; although, it matters. This is about whether or not 
we are going to make spectrum available for emergency purposes, 
and I know you share this goal, Mr. Secretary. But it is very 
concerning to see that your budget, in my view, doesn't fund 
your ability to successfully help us achieve this goal.
    Thank you, Mr. Chairman.
    Mr. Dingell. Gentleman from Maine.
    Mr. Allen. Mr. Chairman, I waive my opening.
    Mr. Dingell. Gentleman has waived his opening statements. 
The Chair apologizes. The gentleman from Georgia.
    Mr. Barrow. The same, Mr. Chairman. I will waive.
    Mr. Dingell. Gentleman waives. Then, Mr. Secretary, the 
Chair makes you welcome and recognizes you for your statement.

  STATEMENT OF CARLOS M. GUTIERREZ, SECRETARY, DEPARTMENT OF 
                            COMMERCE

    Secretary Gutierrez. Thank you, Chairman Dingell and 
distinguished members, Ranking Member Barton. It is my pleasure 
to come before you today to talk about the Commerce Department. 
While I have had the privilege with you before, today is likely 
the last time that I will come before you as Secretary of 
Commerce.
    It has been a great privilege to serve the American people. 
I am grateful for the confidence that President Bush has had in 
my ability to lead this great agency. Over the next year, the 
department will continue to focus on American competitiveness, 
measuring American life, growing American exports, and 
protecting America's environment.
    I have submitted my full testimony for the record, but 
today I would like to highlight----
    Mr. Dingell. The full testimony will be inserted into the 
record at the appropriate place.
    Secretary Gutierrez. Thank you. And I would like to 
highlight just a few initiatives if I may, Mr. Chairman.
    Let me begin with a few words on the census bureau, which 
is part of the Department's Economic and Statistics 
Administration. The 2010 census is one of the highest 
priorities and most important responsibilities of the 
department. We are working to address some of the challenges 
currently facing the 2010 census, and I would like to show you 
that I am personally involved in bringing key issues to the 
surface and developing a way forward.
    The American people expect and deserve a timely and 
accurate decennial census, and the department and I will not 
rest until they have it. We want to have not just the good 
census but the best census we have had. In addition to 
measuring American life, Commerce plays an important role as 
stewards of our nation's environment through the National 
Oceanic and Atmospheric Association. We are responsible for our 
oceans and waterways and marine fisheries, our weather service, 
and a number of other resources to utilize America's natural 
attributes to strengthen our economy while protecting our 
valuable resources.
    I would like to say a few words about our economy, which we 
believe remains fundamentally sound; although, we are recently 
confronting and faced with strong economic headwinds resulting 
in slower growth. Our unemployment remains low at 4.8 percent, 
but we were disappointed with the recent employment report. Our 
gross domestic product grew at a solid 2.2 percent last year 
but, as you know, slowed in the fourth quarter. Consumer 
spending has moderated. Businesses continue to invest, but the 
rapid cost of oil and other commodities are having an impact.
    While the stimulus package will help in the short term, in 
the long term we need to continue to nurture a pro-growth, pro-
jobs environment of lower taxes, less regulation, and more 
export opportunities.
    Trade is playing an increasingly significant role in the 
overall economy with net exports accounting for 26 percent of 
GDP growth. We are the world's number one exporter with $1.6 
trillion in goods and services exported last year. This 
represents a 12.6 percent increase over 2006, marks our fourth 
consecutive year of double-digit export growth. And for the 
first time since 2001, our trade deficit declined.
    To continue our export growth, America must maintain its 
posture as the leader in the global economy, committed to 
breaking down economic barriers and engaging with countries 
around the world. Free trade agreements are one of the best 
tools we have to do so. Our free trade agreement partner 
countries accounted for nearly 46 percent of U.S. goods exports 
in 2007 and nearly 30 percent of our export growth in 2007.
    This Administration has been a strong advocate of free 
trade, and while we are pleased by the strong bipartisan 
support for the Peru Agreement, which President Bush signed in 
December, there are three remaining agreements with Colombia, 
Panama, and South Korea that we believe deserve a vote in 
Congress. Opening these markets is good for America's exporters 
and workers and will continue to make our nation more 
competitive in the global economy. However, these agreements 
are more than economically significant. They are a matter of 
national security. The pending agreements of Latin America and 
Asia are with allies who border countries whose leaders share 
visions far different than our own.
    Let me focus for a moment on Colombia, a nation that has 
had a history of violence and upheaval but has made enormous 
strides on a path to peace and prosperity, strides which are 
made possible by the bipartisan support of the U.S. Colombia is 
a stunning example of bipartisan foreign policy success. The 
U.S. has contributed more than $5.5 billion to Plan Colombia, 
an initiative to promote the peace process, combat the 
narcotics industry, revive the economy, and strengthen 
democracy.
    Since 2002, kidnappings are down by 83 percent, terror 
attacks by 76 percent, homicides by 40 percent, and Colombia 
has made great strides in the health care and education of 
families and children.
    I have just returned from leading my fourth bipartisan 
congressional delegation to Colombia. Each and every time I 
have been awed by the turnaround that country has made. 
Colombia has fought back against the narco-terrorists and drug 
lords and is reclaiming its country.
    Importantly, the country lead by democratically-elected 
president Alvaro Uribe has made the turnaround while staying 
true to democratic principles. Given the recent tensions in the 
region, it is increasingly important that we stand by Colombia. 
All of Latin America is watching closely to see if the U.S. 
stands by Colombia in these challenging times. Colombia is a 
key strategic ally in our own hemisphere, and the 
Administration has a strong desire to work with Congress to get 
the FTA with Colombia as well as Panama and South Korea up for 
a vote.
    The Commerce Department also has a special role to play in 
the next year in helping our nation make the transition to 
digital television. This year, the National Telecommunications 
and Information Administration continued to work with its 
federal and industry partners to educate the public about the 
transition to digital TV, which is now less than one year away 
on February 17, 2009.
    The good news is that the word is getting out. More than 15 
federal agencies are working with the Department of Commerce, 
the Federal Communications Commission, and our industry and 
non-profit partners to inform the public about the transition 
and the coupon program.
    To complement the general public awareness campaign, we are 
proactively working to reach and address specific concerns of 
consumers most likely to be impacted by the transition. The 
NTIA-administered coupon program launched on January 1 is 
providing consumers with coupons worth $40 toward the purchase 
of converter boxes. Nearly two million coupons were requested 
in the first week. Since then, demand for coupons continues to 
be strong with more than seven million coupons requested to 
date, and coupons are being mailed to households across the 
nation.
    We look forward to keeping the committee apprised on the 
progress of this important event. These are just a few of the 
ongoing efforts at the Commerce Department. Let me close by 
noting that the department's 38,000 public servants work daily 
on many other important efforts and initiatives I did not have 
time to mention today. Each deserves praise for their 
commitment to the public good.
    All of us at the Commerce Department will continue to work 
with the committee to keep our nation's economy growing and 
strong and to promote technological advancement and 
environmental stewardship.
    I thank you, Mr. Chairman, for the opportunity to come 
before you today. Thanks to all the committee members, and I 
look forward to your questions. Thank you.
    [Mr. Gutierrez did not submit a prepared statement.]
    Mr. Dingell. Mr. Secretary, thank you for your very helpful 
statement. The Chair is going to recognize himself first.
    Mr. Secretary, the Chair is very much concerned by the 
Administration's request for flatlining funding for a number of 
important and key trade enforcement programs conducted by your 
department. The department's budget proposes $42.9 million for 
the International Trades Administration's Market Access and 
Compliant office. That is the MAC office. The request 
represents, I note, a reduction in funding in comparison to the 
appropriations for fiscal years 2005, 2006, and 2007.
    Now, what does this do to the marketing access programs and 
compliance cases brought by MAC on behalf of U.S. firms? This 
has got to result in a significant reduction in those 
activities, does it not?
    Secretary Gutierrez. Mr. Chairman, what we have tried to 
prioritize with our MAC funds is putting more focus on 
countries where we are either increasing our exports or we have 
special programs going on or we have a free trade agreement but 
try to be more selective as opposed to just broad base, 
focusing on all countries around the world. We do have a list 
of countries.
    Mr. Dingell. So you are going to do that, but you are going 
to do it with less money?
    Secretary Gutierrez. We need to do that with a smaller 
budget, but by no means putting at risk our ability to bring 
forward anti-dumping cases and CBD cases. In fact, we have 
actually increased the budget for counter-relief.
    Mr. Dingell. Would you, Mr. Secretary, please list the 
priority countries for the record and perhaps give us an 
explanation of how you could increase your efforts by reducing 
your financial support?
    Now, Mr. Secretary, in the light of free trade agreements 
pending before the Congress and the importance of ensuring 
market access in each of these countries, how does the 
Administration budget request funding for overseas MAC offices, 
especially in South Korea? I note that you are cutting off 
funding in South Korea for this office and will close the 
office. Is that right?
    Secretary Gutierrez. Yes, I believe that is part of the----
    Mr. Dingell. Well, we are in a country where we have major 
problems with discrimination, unfair trade practices, and 
things of that kind, you are eliminating funding for that 
agency in that area.
    Now, I note that the Administration has requested reduction 
in funding for the trade promotion and U.S. foreign and 
commercial service of $3 million again purportedly to 
streamline operations. So again you are streamlining 
operations, Mr. Secretary, by reducing or eliminating funding. 
How can you assure this committee that the decrease in funding 
will not result in a loss of foreign commercial service 
officers? And how will it expand and prove the services that 
this very important agency gives to American business around 
the world?
    Secretary Gutierrez. Yes, thank you, Mr. Chairman. What we 
have found is that in very large developed economies, say 
Canada or the U.K. or even France, there isn't a lot of need 
for commercial service officers as there was say 20 years ago 
to help companies access that market.
    However we do find need in developing markets and smaller, 
emerging markets. So what we have done essentially is shifted 
resources to those markets that do require help. I would be 
glad to get back to you with a list of where the funding came 
from from a country standpoint and to what countries the 
funding was shifted. But we believe that we have put it on 
those countries that will require our focus in the next 5 or 10 
years as opposed to those that required it in the past.
    Mr. Dingell. The Chair, Mr. Secretary, will be submitting 
to you some written questions in a letter to follow your 
appearance here in which the Chair is going to ask that you 
amplify on that, and we will see that that is in your hands so 
we may have a more complete record.
    Now, Mr. Secretary, I note again the budget proposes of 
$42.9 million for the International Trade Administration's 
Market Access and Compliance Office, your MAC office. This 
represents a reduction in funding in comparison to 
appropriations for 2005, 2006, and 2007. Again we have a 
funding reduction. I must assume that this will decrease the 
number of market access and compliance cases by MAC on behalf 
of U.S. firms. Can you deny that statement, Mr. Secretary?
    Secretary Gutierrez. It will force us to be more 
disciplined about priorities. I will say, Mr. Chairman, that 
since we started to use countervailing duties or duties against 
subsidies for China, we have actually added $3 million into the 
budget for that. So we have been very selective about where we 
believe we need to spend our time and our resources. And I 
would be glad to provide you more detail on that as well.
    Mr. Dingell. Now, Mr. Secretary, again the Administration 
has requested a reduction in funding for the trade promotion 
and U.S. foreign commercial service of $3 million again to 
streamline domestic operations.
    Voice. You have already asked that question.
    Mr. Dingell. We will have some additional questions and 
comments on that one because that question has already been 
asked. Now, Mr. Secretary, GAO, the Bureau of Industries and 
Securities Dual Use Export System to its government wide high 
risk list because the Department of Commerce was unable to 
identify weaknesses in the system or implement corrective 
measures. Is the validated end-user program the only measure 
taken by the Department of Commerce to address these concerns, 
yes or no?
    Secretary Gutierrez. It is one of the more important ones 
that we are starting this year with China.
    Mr. Dingell. Mr. Secretary, would you please provide 
details concerning other measures and the funding that they 
will receive under the administration budget? Chair will follow 
up with a letter on this, and Chair notes that my time has 
expired. Chair recognizes now the distinguished gentleman from 
Michigan, Mr. Upton, for 5 minutes.
    Voice. Five minutes plus six.
    Mr. Dingell. Six minutes. Gentleman is correct. Six 
minutes.
    Mr. Upton. Thank you, Mr. Chairman. And, Mr. Secretary, 
welcome back to the committee. And I, for one, want to just 
say, and I know I speak for members on both sides of the aisle 
and members not only in this committee but in the Congress, we 
appreciate your public service to our great land for all the 
work that you have done.
    A couple things that I would like to bring up this morning. 
The first one, I guess, is today's news which I saw in Congress 
Daily this morning. I have a copy right there on the corner of 
the table for you. As it relates to the trade battle on page 11 
with Colombia, the Free Trade Agreement. There are a number of 
different statements in here. It appears as though, reading 
this from this publication that in fact we are trying to get an 
agreement to bring this up before the Congress so that we can 
vote on it this year.
    As I understand it, the House would have to vote on it 
within 60 days once it is submitted. It has not been submitted. 
There is a statement that is referenced here that Speaker 
Pelosi suggested an effort to submit the agreement without 
acquiescence would end badly, but it also says that John 
Veronu, who is the deputy trade rep, says we have done what we 
have been asked to do. Where are we in terms of negotiations 
between the administration and the leadership here in the 
Congress to try and bring this up so that we can vote on it up 
or down and be able to get it done?
    Secretary Gutierrez. We have been working. As I say, we, 
the Administration as a whole, Secretary Paulson, Ambassador 
Schwab, and myself, others, working to address whatever 
concerns leadership has had about Colombia. And we believe that 
we have worked very closely. We have addressed everything that 
has been asked. A lot of it has been addressed by the Colombian 
government. They have some new legislation on labor standards, 
and what we see as the risk is that we just keep talking about 
it but that the clock runs out on us.
    And as the President mentioned yesterday, literally 
everyone in the hemisphere is just watching to see what we do 
and whether we work and treat an ally fairly and give them a 
free trade agreement the same way we have given Peru and Chile 
and others. So we are hoping that the comments in this report 
here are a good sign that we have always wanted to do this in a 
bipartisan way. That continues to be the President's objective.
    We started this out with a May 10 agreement on trade. It 
was a bipartisan agreement. We agreed to use labor and 
environmental standards. It was deemed to be a new era of 
trade, a new bipartisan era of trade. We would like to continue 
to work that way, but we need to get this vote up as soon as 
possible because it just doesn't make sense that we continue to 
delay when an ally is under siege, being undermined by 
terrorist organizations who are trying to literally overthrow a 
democratically elected government. And we know that a free 
trade agreement will help them make significant progress in 
their economy. And as we have learned before, security and 
prosperity go hand in hand.
    Mr. Upton. Would it be your hope that, as you know Congress 
is adjourning at the end of this week until the 1st of April or 
so. Is it your hope that we would see some progress and that 
the trade agreement would be submitted to the House or to the 
Congress before April 10 or April 15?
    Secretary Gutierrez. Well, what the President mentioned in 
the speech yesterday is that he hopes that the Congress will 
address it upon its return from the recess.
    Mr. Upton. OK, you are part, as the secretary of commerce, 
looking out after the economic vitality of our land. And 
clearly as you indicated in your testimony, the economy has 
been slowing down. Some would say that the fall of the dollar 
is partly responsible for that certainly as it relates to the 
price of energy. The price of gasoline which, as you know, hit 
an all-time high yesterday, hit over $111 per barrel.
    Though this might be better sent to the secretary of 
treasury, where do you think we should be going in terms of 
shoring up the dollar and showing that our economy is improving 
rather than degrading. You indicated some good numbers relating 
to the trade deficit, which declined. What other additional 
steps might we see happen as promoted by the Administration?
    Secretary Gutierrez. Thank you. Congressman Upton, if I 
answer the dollar question, I can----
    Mr. Upton. We want to see a big uptake in the market. It 
is--you know----
    Secretary Gutierrez [continuing]. Get myself in serious 
trouble.
    Mr. Upton [continuing]. They have the streamer right there 
on the news. As soon as you say good things, it will jump.
    Secretary Gutierrez. But I will say just, if I can shift 
over to your comment on oil. We just received numbers yesterday 
for our trade deficit for the month of January, and it was 
actually up from December by $300 million.
    Mr. Upton. The trade deficit is up?
    Secretary Gutierrez. Yes, but if you take out the impact of 
oil, it was down close to $3 billion. So there is no question 
to your point that it is oil that is really driving the 
pressure on the trade deficit now and clearly also putting 
pressure on companies to have to look at their prices. So there 
is no question that that right now is a big negative pressure 
on our businesses and our economy and our consumers.
    Mr. Upton. OK, my time has expired. Thank you, Mr. 
Chairman.
    Mr. Dingell. The time of the gentleman has expired. The 
Chair recognizes the gentlewoman from California, Ms. Eshoo, 
for 6 minutes.
    Ms. Eshoo. Thank you, Mr. Chairman. Welcome, Mr. Secretary. 
I want to start out by thanking you for your service to our 
country. I have always enjoyed working with you. You have 
always been a gentleman, and some things we have to push harder 
on in order to get them done, but I appreciate--we all do--your 
service to our country. And I wish you and your family all our 
best.
    Let me start out by bringing up an issue that we have 
worked with you on before. Now it is affecting another part of 
California, and it is the issue of salmon and the effect that, 
you know, what has happened to some of the systems in 
California. The 2000 fall run of salmon in the Sacramento River 
was amongst the lowest on record. I mean since records have 
been kept, it is amongst the lowest. And you know that this is 
a very important natural resource, part of the local economy. 
We are proud of that, and we want to keep it that way.
    Almost 50 Members of Congress, you know, just recently 
wrote to you, sent you a letter regarding this issue and 
requested that you declare a commercial fishing failure as 
quickly as possible so that the fishing industry can get the 
federal aid that they need.
    So I have a two-part question. What steps have you taken to 
declare a commercial fishery failure? And does the department 
have any other plans to address the serious decline in the 
salmon population? That is my first question. I am going to get 
my questions out, and then you can answer them.
    As you know, on another issue, we worked very hard to 
develop what we call the innovation agenda. And that was to 
really rev up America's competitiveness and innovation. If we 
don't innovate, we simply are not going to not only keep our 
edge as a nation but also to make the progress in the future 
that we need to make. And, of course, science and technology 
are at the heart of this effort. It was bipartisan. Certainly 
the President supported it, and that initiative and The America 
COMPETES Act were embraced across the board.
    Now, my question is that NIST obviously is recognized in 
its role in what I just outlined because NIST is a steward of 
several important programs that help the transition of new 
technologies to the marketplace. So my question in this area is 
why is the technology innovation program unfounded? And the 
manufacturing extension partnership only provided funds to 
facilitate the program shutdown? It is really disturbing to me. 
I think we are cutting off our nose in spite of our face on 
this one.
    And my last question is the department's technology 
administration was an important resource on innovation and 
competitive issues for more than 30 years and I think 
successfully so. But it was eliminated last year. So in the 
absence of the TA, what is the department doing to ensure that 
federal labs will have the access to advise and guidance on 
federal technology transfer policy? We have led in the world in 
this area, and so that is why I bring it up. And those are my 
questions. So take it away.
    Secretary Gutierrez. Thank you, Congresswoman. And let me 
just start with the NOAGS. We are well aware on salmon that 
this is a tough time. There is an article this morning in the 
paper on that, and we have received comments from our technical 
committee, which is sort of the way we start the process. My 
understanding is that tomorrow our fisheries counsel will 
provide us with three different options that actually will--
before they provide them to us, they will be vetted and they 
will be able to go through a common period, a public common 
period. And those three options will be sent to us. They will 
make a recommendation. We should have a rule on this by May 1, 
which is when the season starts.
    Ms. Eshoo. We want to work closely with you on this.
    Secretary Gutierrez. OK, thank you.
    Ms. Eshoo. Any other questions?
    Secretary Gutierrez. You mentioned the NIST and the TIP and 
NEP. Actually we have--when the President laid out the American 
Competitiveness Initiative, he wanted to double the R and D 
spending by 2016 across several agencies. One of which was 
NIST, and we actually fell behind a little bit on that budget 
last year. And what we did this year is we set the priority up 
to ensure that we fund NIST so that the basic research in this 
is that we are back on track to double by 2016. That required 
prioritization.
    Within NIST, I can tell you we are focused on new 
technologies. We are focused on emergency projects. We are 
focused on engineering and science capabilities, all the things 
that you are talking about. So we funded that, and it looks 
like we took down a number because of NEP, because we did not 
fund TIP. But the money is in the NIST research projects. TIP, 
we feel is a little bit--and I think we had said this in a 
views letter--that a lot of what TIP is designed to do will be 
done in the NIST programs.
    The NEP is more of an operational manufacturing program. 
Now, what we are doing there is we are keeping the network in 
place, and the part that was funded by the Commerce Department, 
we are asking users of the program to pay for that the way they 
would pay for a consultant. We do about one-third. The state 
does a third. The locals do about a third. But the program 
itself and the network and the offices will continue to 
function, but what we did here is just, because the priority 
was let us get back on our basic research agenda because it is 
about competitiveness. It is about nano-technology and about 
emergency breakthroughs and about engineering and science 
capabilities. Let us fund that first as the number one 
priority, and that is what we have done. I believe there is a 
22 percent increase going to those basic research projects 
within the NIST budget.
    Mr. Dingell. The time has expired. The Chair recognizes now 
the distinguished gentleman from Indiana, Mr. Buyer, for 6 
minutes.
    Mr. Buyer. I thank the Chairman. I have three questions, 
Mr. Secretary. The first question would be for you to explore 
in a little greater detail what are the economic and security 
benefits of Colombia free trade agreement? The other pertains 
to the implementation of the Commercial Spectrum Enhancement 
Act. So in 2006, the FCC auctioned licenses on the AWS 
frequencies, were to coordinate of the 12 government agencies 
to move off that spectrum. Eleven of them have coordinated with 
the purchasers from that auction. The one that isn't going so 
well is DOD.
    Since the NTIA is under your domain, and you are 
responsible for government spectrum and the smooth transition 
off the AWS spectrum, I am hopeful that you can use your good 
offices in working with DOD to coordinate the use of these 
frequencies to meet the timetable of the winning bidders. 
Obviously there is a huge commercial impact to that, and I am 
interested in your comments with regard to why it is taking so 
long.
    We received billions of dollars. I think it is almost $14 
billion the government received from these bidders. And the 
longer we delay, there is a diminished commercial impact, and I 
am interested in your comments.
    The last deals with your IT architecture. Mr. Chairman, in 
the VA, it took me 7 years to centralize the IT architecture of 
the VA. And not until we had the stolen laptops in the VA did 
America get so alarmed. Gee, we really have a problem. Now, in 
the Department of Commerce, you have five undersecretaries. Is 
that correct? You have five?
    Secretary Gutierrez. Right.
    Mr. Buyer. You have five undersecretaries. Now, what 
happens in our government agencies is that the chief 
information officer is almost subservient to all these 
undersecretaries. So they all have their own ideas with 
software development. They all design their own budgets. The 
commerce secretary now has to manage over 300 different 
systems, and what is important is for us to--what we had to do 
in the VA is we had to empower the chief information officer. 
When you empower the CIO with line authority over all the chief 
information officers and you give them budget authority, you 
centralize and it becomes a more efficient operation. It took 7 
years to achieve that.
    So I know this is a subject that I broached with the 
President 2 years ago. OMB also embraced it. The President gave 
me assurances that what we were doing in the VA would be 
replicated in other departments of his. So I would like an 
update on whether or not you are moving your department in a 
manner to centralize your IT architecture to streamline its 
operations and whether or not you agree with what has happened 
in the VA to empower the CIO with line and budget authority. 
And I am interested in your comments.
    Secretary Gutierrez. Thank you, Congressman. On Colombia, 
you were saying the link between prosperity and security----
    Mr. Buyer. I am interested in your comments on what would 
be----
    Secretary Gutierrez. Yes, of course. This is a country 
where we started with Plan Colombia back in the Clinton 
Administration with then President Pastrano. We have actually 
helped them with over $5.5 billion to get control of their 
country, and we have helped them with helicopters to social 
programs.
    And the great thing is that it has been a great success. 
Their economy is growing. Poverty is down. Violence is down. 
Paramilitaries have turned in their weapons. They have come 
back into civil society. I mean it has just been an amazing 
turnaround, and a part of what they have been able to improve 
is that their economy has improved. So that people demobilize, 
and they turn in their weapons. And then they can all go out 
and find a job because the economy is providing jobs.
    What worries us about not getting this free trade agreement 
approved quickly is that not only will we not be helping them, 
but since their neighbors have free trade agreements, they will 
actually go backwards. And one estimate is that they will lose 
400,000 jobs. So everything they have done on the security side 
will be at risk because their economy now will start suffering, 
and they will be under a competitive disadvantage versus Peru 
and Chile and Central America, who do have free trade 
agreements with the U.S. And that would be just a terrible 
shame that after $5.5 billion and all the pain that they have 
gone through that we all of a sudden go back and backtrack on 
this.
    Mr. Buyer. OK, AWS auction?
    Secretary Gutierrez. Yes, we are aware of that, but we are 
aware of the buyer's desire to get on with it because we know 
that this is about, you know, they paid for it. They want to 
get on with it, and we will work with DOD to just, to get that 
through. And I know that there is--for their reasons, they are 
holding this up. And we will go back to them and ensure that we 
can get this spectrum freed up as soon as possible. Because we 
know this is a big----
    Mr. Buyer. Will you be back in touch with myself or the 
committee to let us know about that?
    Secretary Gutierrez. I will be glad to do that. Yes, sir.
    Mr. Buyer. The last is about your IT architecture.
    Secretary Gutierrez. I agree with you 100 percent. I think 
that when you have a decentralized IT operation, and you 
empower people to innovate with their IT infrastructure, what 
you end up with is a very dysfunctional IT network.
    The first sort of test on this has been to give uniform 
email protocols and email standards. And what we told our CIO 
is when it comes to this project, you are a line manager. You 
have authority, and you have to be able to say no. There is 
nothing worse for an organization than a CIO who is constantly 
saying yes because that just means that you are going to get 
different software. People will be trying new things. They get 
used to their own little, you know, their own little advances 
and the little innovations. And then it is hard to get them 
back to a disciplined, centralized approach. We have a new CIO, 
and we believe this is working well. But I couldn't agree more 
that this has to be a central--they have to have authority to 
say no. If not, then we are going to be in trouble three, five 
years down the road.
    Mr. Buyer. You can do that. If you need any further 
authorities from us, let us know.
    Secretary Gutierrez. Thank you.
    Mr. Buyer. Thank you.
    Mr. Dingell. Time of the gentleman has expired. Chair is 
going to turn to my friend from Indiana. Chair has had some 
correspondence with the secretary on these matters. And we will 
be sure that correspondence with him on these matters because I 
share his concern.
    Mr. Buyer. With regard to the spectrum or all issues?
    Mr. Dingell. No, all the gentleman wishes, but I am just 
noting----
    Mr. Buyer. OK.
    Mr. Dingell [continuing]. That with regard to the specific 
questions, the gentleman is referring to----
    Mr. Buyer. Thank you.
    Mr. Dingell [continuing]. That those are important matters 
of interest to the Chairman. We have had some correspondence. 
We will share it with the gentleman, and then if further work 
is needed in this particular, we will be glad to hear the 
gentleman's advice on that matter.
    Mr. Buyer. Thank you very much, Mr. Chairman.
    Mr. Dingell. Thank you. The time of the gentleman has 
expired. The Chair recognizes now Mr. Barrow for 6 minutes. The 
gentleman is recognized.
    Mr. Barrow. Thank you, Mr. Chairman. Mr. Secretary, I want 
to talk economic development administration fund in brief for a 
little bit. EDA has been part of this government since 1965, 
and its mission, as I best can sum up from the materials we 
have, is to generate new employment, help retain existing jobs, 
and stimulate industrial and commercial growth. That is the 
mission of the EDA, and back when it was first started back in 
'65, we needed a lot of economic development in my part of the 
country. But at least things are moving in the right direction. 
We are growing manufacturing jobs in my part of the country, 
but as a result of trade policies and a whole bunch of other 
stuff, we have been doing nothing but bleeding manufacturing 
jobs in my part of the country for years now. And so we need 
the kind of the help that the EDA provides.
    Now, last year, the Administration tried to cut the EDA's 
funding by over one-fourth. They tried to cut $80 million out 
of a $280 million budget or thereabouts. And as a result of the 
omnibus appropriations, we hammered out, both sides, both 
houses with the Administration, we managed to maintain funding 
for the EDA more or less a level amount with the year before 
despite all the changes in priorities and the challenges we had 
fashioning the omnibus.
    Now, the Administration is proposing to cut the EDA funding 
by more than a half. So last year they were proposing more than 
a fourth. That didn't go anywhere. Now we are proposing cutting 
it by more than a half by $141 million, leaving only $132.8 
million left over. And a lot of this is coming at the expense 
of the public works budget.
    Now, my question to you is in my part of the country, we 
benefit a lot from the pump priming that EDA grants do. You 
provide a lot of the seed money for building the facilities, 
the training facilities. And what that does is it leverages 
local support. It gets the economic development resources in 
the area that the Federal Government isn't paying for. It gives 
them a place to coalesce. It is a catalyst for programs, and it 
leverages a whole lot of economic development activity that 
can't be provided directly by the department. And you all are 
proposing to cut--the Administration is proposing to cut EDA's 
funding by more than a half.
    My question is how are you all going to be able to help 
sponsor and maintain and nurture worker training initiatives if 
your budget is going to be cut, if we were to accept the 
Administration's offer to cut the budget for this agency by 
more than a half? What are we going to get for worker training 
if we do that?
    Secretary Gutierrez. Yeah, Congressman Barrow, this was a 
tough one because we believe in EDA, and we have a great group 
of people, and they understand the role. We went into the 
budget knowing that we had three big priorities that we had to 
fund the census. We have some satellites that we are funding, 
and unfortunately we had one project that required a non-
McCurdy special procedure and then the basic research.
    So the only thing I would say about what made us 
comfortable about the EDA cut is that it is the type of program 
that you can turn off and turn on, unlike many others. So you 
can cut it one year, but the next year you can be back with 
grants that are just as high as they were. So we see it as 
hopefully temporary.
    Mr. Barrow. In the limited time we have, I want to engage 
you on that because I have to say that you shut off the support 
for the kinds of things that you are doing that leverages 
support over the long haul, that has a long-term ripple effect. 
Just as you are leveraging state and local resources with the 
seed money you are providing, it is probably the most efficient 
way you can use your money. To cut that off for a year or two 
or three is going to have consequences in outlying years, just 
as the benefits of your investment in capital provides benefits 
in that outlying years.
    So if you are going to cut investments in one year, it is 
going to have a long-term consequence. Just as our policy up 
until now has been to try and reap the benefits of long-term 
investments, investing in things that have long-term payoff. So 
I have to say that I don't accept the rationale that this is an 
area worth cutting.
    I know we have to do that census. We have to do that every 
10 years. We ought to figure out a way of planning for that so 
that when that once-every-10-year expense rolls around, we are 
not bleeding support for things that provide long-term support 
for human infrastructure. We need to grow jobs day in and day 
out, year in and year out. When you do the census every 10 
years, you have a plan to do both and not sacrifice the one, 
throw the one over the side while we try and do our once every 
10 year responsibility.
    I want to ask you personally, Mr. Secretary, do you think 
that accepting--do you personally think that accepting the 
Administration's proposals to cut the EDA funding by more than 
a half is going to help or hurt the EDA do its job? Are you 
here to acknowledge today that it is going to hurt the EDA for 
as long as those cuts are in effect?
    Secretary Gutierrez. Well, I think it is our job to manage 
the budget so that it doesn't cause pain or so that it 
minimizes the pain.
    Mr. Barrow. I just want to focus on the pain that it is 
going to cause. Is the EDA going to get hurt if its funding is 
cut by more than a half?
    Secretary Gutierrez. We have to do our job in a way that we 
absolutely minimize that. I would like to say we are going to 
eliminate it, but there are projects that are better than 
others. There are projects that have higher returns. There are 
projects that perhaps don't merit as much.
    Mr. Barrow. But is it your characterization that this is 
one of those things that you have to do in order to meet the 
budget goals of the Administration and you have to cut 
somewhere? Or are you actually saying that these cuts are 
actually in the best interest of the mission of the EDA? 
Because I can't reconcile those two.
    Secretary Gutierrez. Yeah, I mean if we take EDA on its 
own, I think if we were a department called EDA, then I think 
we may think about it differently. If we look across the 
Commerce Department, if we look across the Federal Government, 
I think this is what prioritization is about, and this is what 
we need to do to manage the overall budget because we have some 
very strict priorities.
    Mr. Barrow. What I am hearing is the Administration's 
budget basically tells my part of the country that growing jobs 
is not a priority, and I cannot accept that. My time has 
expired. Thank you, Mr. Secretary.
    Mr. Dingell. The time of the gentleman has expired. The 
Chair recognizes now the gentleman from Texas, Mr. Barton, for 
6 minutes.
    Mr. Barton. Mr. Chairman, I was the last one here.
    Mr. Dingell. That is all right.
    Mr. Barton. I am more than willing to let Mr. Allen go.
    Mr. Dingell. Chair has recognized that is a good order with 
which to proceed.
    Mr. Barton. OK, fine. Welcome, Mr. Secretary. I had a 
number of discussions with you in person and over the 
telephone. So I don't need too much time for questions. I have 
two issues I would like you to comment on. One is the effort 
that the National Telecommunications and Information 
Administration, or NTIA, is doing to prepare for the digital 
transition. And the other very similar is with the public 
safety interoperable communications program that we have 
created in the DTB legislation last Congress. Could you comment 
on those two programs and how you think they are coming along?
    Secretary Gutierrez. We, of course, are in charge of the 
converter box program as part of the transition. And we believe 
we are off to a good start. I mean this is a complex project, 
so the fact that we are off to a good start doesn't mean that 
we can step back and relax because there is a lot of work to 
do. We want to get it right. There are a lot of people 
involved, and we want everyone to be able to make the 
transition without having to have the TVs turned off. But the 
awareness is high. We have a lot of retailers who are involved. 
We actually have about 60 different companies that are offering 
up a converter box, and that is more than we had expected.
    We have already received over six million requests for 
coupons. So consumers are aware of the program, and it is 
starting. And our curve has moved faster than we expected.
    On the interoperability, we have--as you know, we have 
allocated the funds by state, and we are working closely with 
BHS waiting for the states to come back with plans. So it is 
actually allocating first and then asking for the plans. But 
that is a very important part of this is giving us 
interoperability for emergency services on a nationwide basis. 
And we believe that is also going well, and we are working with 
the states and working very closely with BHS.
    But I think, you know, when we get to February of next year 
and we look back at this plan, this program, we will be so much 
better off as a country from a security standpoint and also 
from an innovation standpoint in terms of freeing up some 
spectrum and as well from a viewership standpoint. I think 
people have access to more channels, better viewing 
characteristics, and I think it will give us an advantage over 
many other countries.
    Mr. Barton. Since I still have 2 minutes, could you comment 
on the National Oceanographic Administration's research program 
on the issue of climate change? Whether you think additional 
funds would be appropriate and just how you see that part of 
your agency going.
    Secretary Gutierrez. As we do a lot of the climate 
research, how climate change impacts the quality of life in 
general terms, we have committed to delivering 21 research 
projects. We have finished five, but our commitment is to have 
these ready by the end of the Administration. And I have 
received that commitment, and we are totally committed to 
delivering each one of those 21 products, which will give us so 
much better understanding of climate change, its impacts, its 
causes. We will know so much more, and that is what Commerce is 
doing.
    The three products that were court directed have been 
accomplished. The others are still pending. We have some of 
them in the interagency process that has to get through, but 
again we are committed to finishing that by the end of the 
Administration.
    Mr. Barton. Thank you, Mr. Secretary, and thank you for 
appearing before the committee.
    Mr. Dingell. Chair thanks the gentleman. Chair recognizes 
now the distinguished gentleman from Maine, Mr. Allen, for 6 
minutes.
    Mr. Allen. Thank you, Mr. Chairman. And thank you, Mr. 
Secretary, for being here. As I am sure you know, the State of 
Maine's coastal economy has two important components. One is 
the ground fish industry, and one is the lobstering industry. 
And as I am sure you know, the National Marine Fishery Service 
has issued a sinking line rule with respect to lobstering that 
would greatly affect lobstermen with, in our view, very little 
proven effect on whale conservation.
    The sinking line rule is a particular burden in those parts 
of the Maine coast, which are most of the Maine coast, where 
you have a very rocky bottom, very rough bottom. The Government 
Accountability Office reviewed the economic analysis of NMFS 
and found that NMFS--and I note these are all quotes--one, 
``cannot determine the overall extent to which the proposed 
gear modifications will reduce the serious injury or mortality 
to whales.'' Two, ``has not resolved challenges associated with 
implementing the proposed fishing gear modifications.'' Three, 
``did not fully assess the impacts of the increased costs on 
effected fishing communities.'' Four, ``has not developed a 
strategy for monitoring the level of industry compliance.''
    So my first question, in light of the uncertainty regarding 
cost, implementation, effectiveness, and enforceability, can 
you provide a rationale for NMFS going forward with this ruling 
other than that the service simply didn't have time to redo the 
analysis?
    Secretary Gutierrez. Thank you, Congressman. I would like 
to get back, if I may, and provide you a written and detailed, 
with the benefit of the fisheries management point of view on 
each of the three points that you mentioned, if I may.
    Mr. Allen. That would be acceptable. Let me add one other 
thing. The second question is whether or not NMFS is currently 
working on a better analysis to attempt to answer the GAO's 
concerns. So if you could cover that as well.
    Second question deals with ground fish. Last October--and I 
take your promise. I hope this works better than it has with 
what I did with respect to ground fish. Last October I sent you 
a letter regarding the determination that the New England 
ground fishery was not declared a disaster, and I still have no 
response. That was in October. In that letter, I asked NMFS to 
provide a clear rationale for the decision not to declare a 
disaster including an explanation of what specific economic 
criteria are required to constitute a disaster.
    I also asked NMFS to explain the decision in the context of 
fishing disasters declared in the past, including the economic 
criteria used in those previous decisions. But I have received 
no response to that letter last October. This last year, 
Maine's ground fish industry suffered a 25 percent decline in 
revenue and a 60 percent decline in stateside landings. We have 
people going to Massachusetts, and we have lost more than 30 
percent of our fishing fleet.
    The question is why isn't this a disaster? Why isn't this a 
disaster for the ground fish and ground fishing industry in 
Maine? And again, you know, what are the criteria? Because 
these are really----
    Secretary Gutierrez. Yeah.
    Mr. Allen [continuing]. Very serious developments in the 
State of Maine's coastal economy.
    Secretary Gutierrez. First of all, I regret that you have 
not received a response to the October letter because you 
should have received a response to that. There are very clear 
criteria for declaring a disaster: Impact on the economy, 
impact on revenues, the cause of the disaster. So that should 
be a very clear explanation as to why it was not done, and we 
should be able to provide you with some facts as to why we did 
not deem it so. And I will check on your letter, and I am 
surprised that you have not received a response.
    Mr. Allen. Yeah, well I would appreciate a very close look 
at this because certainly anyone involved in ground fishing in 
Maine, and not just those involved in the industry itself, but 
also those shoreside facilities that basically provide bait and 
ice and fuel. I mean it sure looks and feels like a disaster in 
Maine right now. So I would certainly appreciate your prompt 
attention to that.
    And with that, Mr. Chairman, I would yield back.
    Mr. Dingell. The time of the gentleman has expired. The 
Chair now recognizes the gentleman from Illinois. I am sorry. 
The Chair apologizes. The gentleman from Pennsylvania, Mr. 
Murphy, for 6 minutes.
    Mr. Murphy. Thank you, Mr. Chairman. And welcome, Mr. 
Secretary. Mr. Secretary, as we look at such things as the 
trade deficit, and I believe we had another month here where it 
said, if I am not mistaken, that the trade deficit, given the 
position of the dollar against the euro, has improved. And also 
the trade deficit with China has been changing as well. Am I 
correct with those numbers that----
    Secretary Gutierrez. Overall trade deficit has improved. 
China, we are still in a continued surplus.
    Mr. Murphy. OK. With that, however, I noted that the 
articles that appeared in November and December and January, 
February say the exception to that is oil. That with regard to 
the--we are still in a climbing, an increasing deficit each 
month with oil imports. And as we look at OPEC basically 
refusing to increase production, we are still in a position 
where we are bowing to them. And as Congress voted a week or so 
ago to eliminate the manufacturers exemption to U.S. 
manufactured gasoline, but we maintained that for the OPEC 
nation of Venezuela. What do you anticipate will happen with 
our continued manufacturing deficit in this nation if we do not 
take some serious action with regard to the oil import issue?
    Secretary Gutierrez. Yes, thank you. I was just given a 
note saying that I told you I was--we were in surplus with 
China. I don't believe I said that. We have a deficit with 
China, OK.
    If you look at the--and you are absolutely right about the 
impact of oil. Yesterday we just got our January numbers, and 
January compared to December, our deficit actually grew by $300 
million. But if you strip out the impact of oil, the deficit 
declined by about $3 billion. So no question about it. Oil is 
having an impact not just on prices but on our trade balance. I 
am sorry, can you----
    Mr. Murphy. Yeah, well my question is, I guess it comes to 
this. I mean Congress has more or less embargoed all oil 
drilling from the Atlantic Coast to the Gulf Coast to the 
Pacific Coast to shale oil in Colorado with two trillion 
barrels there and Alaska. I think we have also done our best to 
block natural gas drilling in the Great Lakes; although, Canada 
can do it across the molecule.
    Do you anticipate that this will have a continued negative 
impact upon our manufacturing base if we don't do something 
about domestic oil?
    Secretary Gutierrez. Yeah, I think that we need to remind 
ourselves that, you know, countries like France are providing 
80 percent of their electricity through nuclear energy. We have 
not been able to come to a consensus on ANWAR for 15 years even 
though we know there is oil there. And everything I have read 
and seen suggests that it is safe and clean. We haven't built 
any refineries for several decades. So yes, if we really want 
to tackle this, while we need to work on new technologies and 
new sources of energy, ethanol, et cetera, renewal sources, we 
need to do some things in the short term. And there are things 
that we can do, and I think your point is--I think you have 
made a very insightful point, that we are probably not behaving 
as if though we are in the emergency that we are in.
    Mr. Murphy. Well, let me add this because you mentioned 
nuclear, and my understanding is we should be doing a lot with 
regard to improved efficiency and improved conservation. And 
this committee has taken some steps to improve that, yet it 
concerns me also that we are not building nuclear power plants 
yet. And there has been cancellations of orders for coal-fired 
power plants. In fact, I think some legislation was recently 
introduced in the Senate and House that would actually block 
more coal plants. And yet my understanding is that we will 
basically increase our energy demands in this country by 50 
percent by the year 2030 and by 100 percent by the year 2050.
    In absence of moving forward on coal plants, moving of 
clean coal technology, do you anticipate--does your department 
have any estimates of what this does to our manufacturing base 
in the United States, given that other countries like China 
have plants with no scrubbers at all and dump cheap products on 
us?
    Secretary Gutierrez. Yeah, with the continued demand, I 
don't have a number for you. But with the continued demand 
coming from China and the projections of world growth, that 
would mean more inflation for our manufacturers. It would mean 
lower competitiveness. It would mean having to lower margins 
potentially or maybe even having to take losses. There is no 
question that we need to do more to get down that price. And we 
can do more.
    Mr. Murphy. Well, that is what I am wondering. Does the 
Department of Commerce prepare any analysis of the impact of 
energy costs in the manufacturing base and being able to remain 
competitive?
    Secretary Gutierrez. We most likely are, and I believe we 
are because we do have--Assistant Secretary Sutton does 
manufacturing analysis. From the standpoint of overall cost, I 
am sure the Energy Department would have something, but I will 
check to see specifically what we have done in our 
manufacturing unit as part of our international trade to see if 
we have something there that looks out well into the future.
    Today the biggest complaint I hear from manufacturers is, 
one, commodities. But within that, it is the price of energy, 
and it just keeps hitting their profit and loss statements to 
the point where you either have to take prices up or have to 
sacrifice profits.
    Mr. Murphy. Mr. Chairman, could I just ask if they do 
complete a report like that, that would be something that could 
be made available to the committee for us on some of that 
analysis of energy and cost of manufacturing?
    Mr. Dingell. Sure.
    Mr. Murphy. Thank you very much.
    Mr. Stupak [presiding]. Thank you, Mr. Murphy. Just to let 
members know, at 10:30 there is going to be a moment of silence 
on the floor. So we are going to continue with that hearing, 
but I just want to let members know when we first go, there 
will be a moment of silence. I know some members expressed 
interest in being there, so I just wanted to give you a heads 
up. We will continue with this hearing.
    Welcome, Mr. Secretary. If I may, I want to commend you and 
your staff on the rollout of the Public Service 
Interoperability Communications or PSIC grants. As you know, 
the committee has put that grant program in your department to 
advance the ball of interoperability, something I have long 
advocated in my time here in the U.S. Congress. And given the 
rather dismal record at DHS concerning interoperability as 
identified by the government accounting officer, I am 
particularly happy that the NTIA is ensuring that these grant 
requests are specifically tied to statewide interoperability 
plans and expenditures are justified and appropriate. In my 
opinion, your department PSIC grant program has advanced this 
country's interoperability significantly down that road to 
achieving interoperability. And I will continue to be an 
advocate for it, and I will continue to do everything I can to 
get more money in there. I think it is a crime that we, as a 
country, still don't have appropriate interoperability.
    One other thing, if I may, you mentioned trade in your 
opening comments, and I want to again compliment the Department 
of Commerce. In 2006, New Page under coated paper brought forth 
a petition. Department of Commerce found it negatively impacted 
our economy as Korea, China, and Indonesia were dumping coated 
paper illegally in this country. You said it had to stop.
    Of course, the appeal went to the International Trade 
Commission. Last fall, International Trade Commission said, on 
a five-to-one vote, while we agree that they are dumping 
illegally, it is not a significant impact on the American 
economy. But you cannot tell that to my district who lost one 
paper mill. In Wisconsin, they are losing another paper line. 
In Maine, they have lost a paper mill on coated paper. And in 
the last two weeks, China once again has lowered its price per 
ton on coated paper because they have excess supply, and they 
are dumping here in this country.
    New Page Corporation is working on a new application, so I 
want to give you a heads-up. I appreciate what the Department 
of Commerce did before. They are trying to look at a model. We 
can't have the ITC saying in this vast U.S. economy this is 
just a small blip because in that industry and those of us who 
depend on those industry, we can't lose the coated paper 
industry.
    So I want to thank you for your work and your leadership in 
there. Because jobs are a great concern in my district and 
throughout this country, I want to talk a little bit about the 
MEP program, Manufacturing Extension Program. It is estimated 
that in fiscal year 2006, MEP created nearly 53,000 jobs, 
generated or retained almost $6.8 billion in sales and 
increased private investment in manufacturing by $1.65 billion. 
Do you agree that discontinuing of funding for this program 
would inhibit U.S. competitive and manufacturing base in this 
country?
    Secretary Gutierrez. Congressman, we tried to--well, we 
have designed the reduction in such a way that the network will 
stay in place. We have taken out the federal component, but 
there is still the state and local component. What we would be 
asking companies, customers of the system is to pay as if 
though they were paying a consultant. But the national network 
will continue to be in place. This is one of those cuts that we 
had to, you know, we had to find money within our budget. We 
had to prioritize, and we felt that because of the operational 
nature, we are focused more on basic research long-term R&D. 
And that was the priority.
    Mr. Stupak. I understand the logic, and I understand the 
Administration's trying to sort of make MEP, Manufacturing 
Extension Program, sort of like an independent program. But can 
you point to any research that would show that MEP centers 
could be self-sustaining? Like my state of Michigan, we have 
been hit heavily with loss of manufacturing jobs. MEP, 
Manufacturing Extension Programs, have been a great value to 
us. So if you are expecting the states who are hurting now in 
their economy to put forth the money. I don't know how that 
model would survive with the budget cuts and without the 
leadership of the Federal Government in this area.
    Secretary Gutierrez. Yeah, I would say it would be a 
combination of the private sector company, the state and local. 
I can go back and see if we have experience on some areas where 
we have applied that, where we may have tested that.
    Mr. Stupak. Well, give us a model if you can. I would like 
to see it because I am already concerned about especially in 
Michigan and throughout this great nation. I only have a couple 
of seconds left.
    Let me ask you about DTV. In fiscal year 2009, FCC asked 
for $20 million for DTV transition, customer education, or in 
other words, basically a dollar over-the-air user. By statute, 
NTIA's coupon customer education funding is $5 million or about 
25 cents per viewer. How will this be enough to prepare 
Americans for the DTV transition on February 17? You mentioned 
the coupons that are out.
    I happened to be at my in-laws. We put in a new, high 
definition TV for them. I had half the neighbors over asking me 
about the coupons, the senior citizens. They are totally 
confused. They have no idea. They don't know what they are 
entitled to. They didn't realize it is worth $40. They sent 
them in. They don't know where they sent it. They don't know 
what the next step is. I am afraid that we have a program here 
that, come February 17, come crashing down, and we are going to 
have troubles.
    Secretary Gutierrez. I think you are right. I mean the $5 
million clearly is not sufficient for a national campaign where 
we are making people aware of something that can be technical 
or for some, somewhat complex. We have been fortunate enough to 
get the private sector to help us out, and we believe we will 
have about $1 billion worth of impact of advertising to get 
consumers aware. And our awareness, last time I heard, was 75 
percent.
    But those people you are mentioning, that is what we have 
to continue to be concerned about is how to target those folks. 
So we have tried to put the advertising on network television, 
which is probably what they are watching. We have tried to do 
some in-store advertising, but that continues to be the 
challenge. Fortunately, we do have about $1 billion of impact.
    Mr. Stupak. Thank you. My time is up, but just on DTV. They 
are aware of it, but they don't know what to do with it. Mr. 
Shimkus for 5 minutes please.
    Mr. Shimkus. Thank you, Mr. Chairman. Welcome, Mr. 
Secretary. Tim Murphy was right on focus. If we are talking 
about commerce, economic development, competitive markets. The 
energy to date in this country is just critical. In fact, 
Chairman Stupak, in talking about being competitive--the 
competitive nature of this country is going to be directly 
related to the energy costs that are involved. And I see no way 
that energy costs are going down. In fact, I have a couple of 
posters here.
    Now, I do know that when the Administration came over--I am 
trying to get the right amount--to Bush, I think crude oil ran 
about $35. We are trying to get the exact number, but when this 
Congress took over, crude oil prices was $58.31. When we used 
this placard initially a couple months ago, it was running at 
$96.65, and today crude oil prices are $110.
    Now, in Mr. Murphy's line of questioning, you mentioned 
refineries in the fact we haven't built any. We continue not to 
do exploration and development. I also use this as one way to 
address that solution. And in your economic development 
portfolio, working with the other federal agencies, we really 
need to look at how we create good paying jobs across this 
country. And one way is to help us incentivize coal-to-liquid 
technologies.
    Now, the premise is basically simple. Under technology 
gasification, you go into the coal field. This is western coal. 
I would rather use Illinois coal. So you go under the ground, 
you bring it up to a refinery, coal gasification facility, turn 
it into natural gas, turn it into liquid fuel, pipe it to the 
transportation arena. Now of course the Department of Defense 
and aviation fuel are very, very critical in that application.
    So I would ask for your help. We have a lot of bills. 
Chairman Boucher and I do a price collar bill. We are working 
with DOD on long-term contracting. But I am telling you if we 
want good paying jobs that are American jobs, and we want to 
have low-cost energy, we have to have a supply of credible fuel 
to run our manufacturing base. And this is a crisis. If we are 
going to expand electricity demand by 30 percent by 2020, you 
just can't do that by windmills and solar panels. The base load 
generation is still going to have to be----
    I just got the price of a barrel of crude oil when Bush 
took over, $23.58. So we are almost getting to a point with a 
Democrat Congress that the increase since they have been in 
charge in the price of a barrel of crude oil is going to 
outstrip any argument they make about this Administration and 
the price of a barrel of crude oil. And that is a message that 
is going to have to be taken up because it is going to cost 
jobs.
    And so this segues into Ranking Member Barton's question on 
your research on climate change, and you mentioned that it 
would be quality of life issues. We know that there are more 
deaths because of cold weather than heat injuries. We know that 
the cost of heating--I don't know this, and I hope you will 
analysis. The real cost of quality of life in a world of global 
climate change versus, you know, what we have been told by 
other folks in this country that is all negative. And I think 
after this winter and people are paying these energy costs 
because--especially in the Northeast who are paying these 
energy costs to heat their homes, that is going to affect their 
quality of life.
    So I hope in these analyses and these 16 other reports that 
they are going to be very, very objective and give us a true 
depiction of the quality of life effects on global climate 
change, both bad, negative, and positive. And there is an 
assumption that it is all negative, and I don't accept that 
assumption.
    Let me go to another area that is one of the sweet spots 
that I have been dealing with that deals with the Commerce 
Department, and that is the telecommunications arena, the 
Enhanced 911 Act that goes through NTIA. Through the E911 bill, 
you know, the authorization, we always know we never fully fund 
authorizations. But we are asking for some funding. We have 
$250 million over five years. We were able to get $5 million in 
a supplemental, at the end of the year. We have had trouble 
getting that money. Technology and innovation, enhanced 911, 
the ability for identification, location of individuals who, 
especially in rural America, who go off the sides of the road, 
the engine lights go off. The first line responders can't find 
them. We have to know where they are at. So can you just 
comment on that briefly?
    Secretary Gutierrez. I believe we are working on the E911--
--
    Mr. Shimkus. I didn't mean to stump you.
    Secretary Gutierrez. That is all right.
    Mr. Shimkus. It is just an important--everybody has their 
own little important segments, and this is one of mine. And 
that is why I asked.
    Secretary Gutierrez. Yeah, I mean we have issued some 
reports, and we are fully engaged in this. I don't know if 
there is any specific----
    Mr. Shimkus. Well, we are not fully engaged because we are 
not--in budgetary spending, we are not providing money to do 
the job. So if you could just have your folks come visit me and 
talk about this aspect, we really want to see some release of 
funds somehow.
    Secretary Gutierrez. OK, because we do have borrowing 
authority that you have given us.
    Mr. Shimkus. Yeah, legislative language, I think, got 
screwed up on that bill, and that was 43 in 2005. We just want 
to see it happen. That is all. So I will yield back, Mr. 
Chairman.
    Mr. Stupak. Thank the gentleman from Illinois. The Pump Act 
lowered the price of oil by $20 to $30 per barrel in this 
country. Called the Pump Act, Prevent Unfair Manipulation of 
Prices. Mr. Inslee for 5 minutes, sir.
    Mr. Inslee. Thank you, Mr. Secretary. Thank you for the 
book. You gave me an interesting book. I have read three pages. 
I will keep going on it. I appreciate that. I want to ask you 
about our relationship with the EEDS Airbus Company in regards 
to this trade case that we have brought. As you know, the U.S. 
government has concluded that at least $5 billion of illegal 
launch aid on the A330 and A340. We have initiated a trade case 
then. We have heard some talk there may be a W20 ruling as 
early as April. And so the U.S. government basically has 
concluded there has been a violation of international trade 
laws as a result of this illegal subsidization.
    I would assume that creates an unfair playing field for our 
domestic companies in competing with Airbus in that it allows 
them to offer lower prices since they are subsidized and then 
compete with our domestic companies including a little, small 
company called Boeing that has just a few employees in my 
district.
    Could you comment on that? Is that true? Does that give 
them the ability to offer lower prices and gives them an 
illegal and unwarranted leg up over our domestic manufacturers?
    Secretary Gutierrez. That is what we have alleged through 
our U.S. trade representative with the WTO, that there are 
subsidies across the Airbus products. And specifically you 
mentioned the A330. I believe the estimate is $4 billion on 
that. They are supposed to come back with their final ruling 
some time in spring/summer of 2008. So we have taken forward 
our information. This is being lead by USTR, and we are waiting 
for the WTO to come back with their findings and ruling.
    Mr. Inslee. So if that is true, if our Federal Government 
has concluded that there has been an illegal subsidy, and if 
that allows Airbus to offer lower prices to undercut our 
potentially bidders of our domestic companies, and if we have 
just issued a contract by the Administration for multiple 
billions of dollars for an absolute, you know, pivotal part of 
our national security structures which are our tankers, rather 
than seeking or obtaining a domestic manufacturer, the 
Administration will have given a giant contract to a company 
that the same Administration has concluded was violating 
international law and allowed this competitor with our domestic 
company to undercut on price. So haven't we turned over part of 
our national security to a company that we have determined was 
acting illegally and gives them a leg up on the contracting? 
And if so, how can we possibly justify that to American 
citizens?
    Secretary Gutierrez. Well, we would have to go back and 
look at the Department of Defense's acquisition guidelines and 
criteria. My understanding is that they are very strict and 
very precise and very clear as to what they can consider and 
what they should not consider. I would recommend that we do 
that because obviously I am not an expert on their guidelines. 
But my understanding is they follow those guidelines.
    Mr. Inslee. As Commerce Secretary, who I assume is diligent 
in jealously guarding our domestic employment situation, would 
you think that in our current policy we should take into 
consideration illegal subsidies of this nature that would have 
an illegal advantage of overseas competitors of this nature? Do 
you think we should consider that?
    Secretary Gutierrez. Well, I don't know when the last time 
we looked at the procurement policies, but to the extent that 
they need to be updated, I don't think it would be a bad thing 
to debate whether we have the considerations there for today's 
world. But again I would hate to speak for the Department of 
Defense on this. As Commerce Secretary, am I worried about 
subsidies? Of course. We spend a lot of time on this. The 
Airbus case has been around for a long time. We focus on this 
every time we go to Europe, and we are great cheerleaders for 
our companies.
    Mr. Inslee. So have you weighed in on this? Have you talked 
to the Department of Defense and suggested it would be unwise 
to issue a contract like this to someone that we concluded was 
illegal and if not, why not?
    Secretary Gutierrez. I am not part of the Department of 
Defense's acquisition process.
    Mr. Inslee. Well, unfortunately, some senators were part of 
that acquisition process and stopped the United States 
government from taking into consideration this illegal subsidy. 
And as a result, we are going to lose tens of thousand of jobs 
on the Boeing Company and all their subsidiaries in the United 
States of America. And we have a senator over there stopping us 
from considering that. I would hope we would have a 
counterweight somewhere in the Administration to push back, and 
it is unfortunate that we didn't because we are losing tens of 
thousands of jobs at the same time we are subsidizing an 
illegally subsidized company.
    And that is just--I got to tell you my constituents are so 
angry about this. Not just the Boeing workers, but the fact 
that we would be chumps to allow this illegal subsidization. We 
have one cop on the beat blowing the whistle on them, and then 
we turn around and give them a $40 billion contract. And I got 
to tell you that is not defensible anywhere in this country, 
and, you know, there is a protest on this. I hope you might 
consider weighing in on an opinion in this regard because 
something is really, really--has an odor about this situation. 
Thank you.
    Mr. Wynn [presiding]. Thank the gentleman. At this time, 
the Chair would recognize Mr. Whitfield for 5 minutes of 
questioning.
    Mr. Whitfield. Thank you, Mr. Chairman. Mr. Secretary, we 
appreciate your taking time to be with us this morning. As we 
are considering these free trade agreements with Colombia and 
Panama and South Korea, it certainly raises this whole issue of 
foreign trade agreements. And it is an issue that is quite 
emotional to a lot of people, and I represent a district that 
67 percent of the registered voters happen to be Democratic. 
And they always, whenever we start talking about these free 
trade agreements, they look back at NAFTA, and they talk about 
the thousands of jobs that were lost as a result of NAFTA.
    And I know that the Department of Commerce has conducted 
some rather in-depth studies of the net impact of a trade 
agreement like NAFTA. But wouldn't you say that there has been 
a net gain of jobs as a result of NAFTA, recognizing there are 
certain sectors that lose jobs? But is it your impression that 
under NAFTA that there really is a net gain of jobs because of 
these free trade agreements?
    Secretary Gutierrez. Yes, Congressman, our numbers show 
that since NAFTA came into effect, we have added 25 million new 
jobs.
    Mr. Whitfield. 25 million?
    Secretary Gutierrez. As a country, yes.
    Mr. Whitfield. OK. Now, another issue that is quite 
emotional to a lot of people is the foreign investment in U.S. 
assets, and we hear a lot today about the sovereign wealth 
funds and the growing concern over lack of transparency in that 
area and so forth. And the knee jerk reaction frequently 
appears to be that we should preclude foreign ownership of U.S. 
assets. What is your position on that issue?
    Secretary Gutierrez. Yeah, I believe that would be a very 
dangerous position to take for our economy. We want to attract 
capital because capital creates jobs. Capital helps our economy 
grow, and the only aspect of foreign investment that we believe 
should be considered when making a decision is whether it 
impacts national security or not. I often recall the debates we 
had in the '80s about Japan buying up so many of our assets. I 
think we got through that, and we are fine. And I believe we 
can continue to grow and prosper and be a very strong sovereign 
nation with the inflow of some sovereign nation funds. I don't 
think we should start discriminating, and I think we should 
continue to tell the world that capital is welcome in the U.S.
    Mr. Whitfield. Well, I certainly agree with you, and I do 
agree that if we took steps to deny that that it would 
certainly be detrimental to our economy. And in your testimony 
you also talked about the increase in U.S. exports and the 
reduction in the trade deficit. To what do you attribute that? 
And I recognize that the value of the dollar is going down. But 
what are some other factors that you----
    Secretary Gutierrez. Well, two things. One is that the 
world economy is growing faster than it has been for a long 
time. Usually you have pockets of countries growing. What we 
are seeing now is growth pretty much broad-based throughout the 
world. That helps our exports. When our partners grow, we can 
sell them more, and that is why our exports have grown at least 
10 percent for the last four years, which is quite an amazing 
feat if you consider that we do $1.6 trillion.
    I also believe the free trade agreements help, and free 
trade--well, the facts show that they help. Every time we have 
a free trade agreement, that enables our exporters to sell 
more. In many cases, if you take the case of Colombia, 
Colombians export to the U.S. duty free, but we pay a duty 
going into Colombia. So why would we do that, and why not just 
give us another market to which we can export without duties?
    So a combination of free trade agreements, the world is 
growing faster. The economy, the world economy is strong, and I 
believe our manufacturers, our farmers, are engaged. Thirty-one 
percent of our farm goods are exported. Twenty percent of our 
manufactured goods are exported. So our businesses are very 
much in the international gain.
    Mr. Whitfield. All right. Now, how concerned are you about 
the falling value of the American dollar?
    Secretary Gutierrez. I was telling someone before you 
arrived, Congressman, if I answer that question, I will be 
hooked out of here.
    Mr. Whitfield. OK.
    Secretary Gutierrez. We try to keep that to the Treasury 
Secretary.
    Mr. Whitfield. OK.
    Secretary Gutierrez. So I apologize for that.
    Mr. Whitfield. My time is up anyway. So thank you, Mr. 
Secretary.
    Mr. Wynn [presiding]. Thank you, Mr. Secretary. Chair 
recognizes himself for questions at this time. Mr. Secretary, 
the Commerce Department inspector general has indicated some 
concern about NOA's leading management role in the 
geostationary operational environmental satellite program. 
Given a recent experience that they had with the--let me get 
this right--National Orbiting Operational Environmental 
Satellite System, including cost overruns, development 
programs, and the reduction in deliverable satellites, what 
steps is your department or NOA taking in order to address 
these concerns, oversight of contractors, managing system 
development progress against cost and schedule goals, 
identifying and mitigating problems, and notifying Congress 
about issues that threaten the timely and cost effective 
completion of the program's critical tasks? And I know that is 
a bit of a mouthful, but if you could.
    Secretary Gutierrez. Thank you. That is a very important 
question because we did have a bad experience with NPOS, as you 
say, which triggered an increase of over 25 percent and a 
reduction in the scope of the project. We are trying to avoid 
that with GOZAR, which is the one you mentioned. At this point, 
we are on track to deliver that by 2015. The one thing we have 
done with GOZAR is that when we have issued our most recent 
number, we have been very careful to have mitigation plans 
inside the analysis in the plans. Very often, we just assume 
that things are going to happen always on time on cost, and we 
are dealing here with technologies that are brand new, that 
have----
    Mr. Wynn. Can you specifically address oversight of 
contracts?
    Secretary Gutierrez. We spend a lot of time with 
contractors, not just RIG. I sometimes meet with contractors, 
but the key thing is to have a process whereby we can monitor 
contractors frequently because what we find is that, you know, 
these are cost plus contracts. They are developing new 
technology.
    Mr. Wynn. Is such a system in place?
    Secretary Gutierrez. Yes, and we learn quite a bit from 
NPOS that we are applying to GOZAR.
    Mr. Wynn. OK, so you are saying that you have an oversight 
program in place. Can you provide the committee with 
information on exactly how that program works and who is 
responsible for that?
    Secretary Gutierrez. Yes, I would. Yes.
    Mr. Wynn. Thank you. The other question I had had to do 
with NBDA. Some very interesting goals have been set in terms 
of increasing cumulative economic impact by $16 billion by 
fiscal year 2010, $23 billion by fiscal year 2015, and $30 
billion by fiscal year 2020. Two quick questions. First, what 
do you mean by cumulative economic impact? And two, how do you 
intend to do this since this budget has been flat funded for 
the last few years and is flat funded in the '09 proposed 
budget?
    Secretary Gutierrez. We have had to be more efficient with 
the way we are working with the money. Mr. Chairman, when you 
mention the $30 billion cumulative, can we just go back to 
that?
    Mr. Wynn. The Commerce Department's submission indicates 
that one of its performance--MBDA's performance goals were 
cumulative economic impact, and I cited a series of goals. I am 
trying to figure----
    Secretary Gutierrez. This is the cumulative impact of 
minority businesses in the country, and we have seen a 
substantial increase in the minority business in the country, 
the revenue that they do, the employment that they generate. So 
in spite of the fact that we have had a level budget, minority 
businesses continue to grow because we are not the only thing 
that makes them grow.
    Mr. Wynn. I was going to say evidently notwithstanding the 
fact that your budget is flat funded. Let me try to get in one 
final question. As we have been discussing cap and trade, the 
issue of trade implications has come up. And the question I 
have is if we were to impose some form of tariff or taxes on 
foreign products coming into this country based on their carbon 
content in excess of U.S. companies' carbon caps, would this be 
subject to WTO challenge? And if so, do you have a strategy to 
respond to this problem?
    Secretary Gutierrez. I would assume the WTO would have a 
point of view; although, I don't know exactly if they have any 
rulings against this. I think what we should do, as opposed to 
starting out by slapping tariffs on countries, is to develop 
the technology first because the technology is not available. 
And we have set some very, very aggressive goals, but we don't 
have technology to achieve that. If we don't have the 
technology, our economy is going to take a very big hit. So 
develop the technology, make that technology available to our 
foreign partners, and bring them into our own quest to reduce 
CO2 emissions. But I don't think a unilateral tariff 
would necessarily solve the problem, and you would probably get 
some retaliation from them on something else that we export.
    Mr. Wynn. Thank you very much. I see my time is up, and I 
would relinquish the chair to the committee chairman and also 
recognize Mr. Dingell for 5 minutes.
    Mr. Dingell. Mr. Chairman, I thank you for your courtesy. 
Mr. Secretary, I would like to turn to NIST scientific and 
technical research services and the Hollings Manufacturing 
Extension Partnership, MEP. I believe that Hollings 
Manufacturing Extension Partnership is an extremely important 
program, especially so for manufacturing revival both 
nationwide and in my home state of Michigan. In fiscal year 
2006, MEP created nearly 53,000 manufacturing jobs and 
generated about $6.8 billion in sales for U.S. manufacturing 
companies.
    Now, we have an economic downturn in this country, and many 
people are calling now a recession. So the program in my view 
is more valuable than ever. But I note that the Administration 
has requested $83 million less than they did last year. How is 
this to be justified, Mr. Secretary?
    Secretary Gutierrez. Yes, Mr. Chairman. Someone brought 
this up. We were saying that the MEP structure of the program 
is divided into three funding sources. One is Department of 
Commerce. There is state, and there is local. What we would 
like to do is keep the network in place, keep all the offices 
in place, and have the private sector customers pay part of the 
cost as if though they were hiring a consultant.
    Mr. Dingell. So the states--you expect to pick that up? 
That is how you----
    Secretary Gutierrez. If the states and locals would 
continue to do what they are doing today, the remaining part 
should be picked up by the private sector.
    Mr. Dingell. Mr. Secretary, I didn't roll off the cabbage 
wagon yesterday, and I have real problems. Everybody from this 
Administration, when we talk about budget, comes up here and 
tells us we are going to do more with less and we are going to 
share the responsibility, share the funding expenditures, all 
that sort of thing, with others. The end result is that the 
projects are constantly cut back even though the noises that 
are made by the Administration are very nice. So with respect 
and affection for you, I have to say, Mr. Secretary, I find 
myself hard to accept this as being anything other than a 
significant cut in the program. And I regret to tell you so.
    Now, Mr. Secretary, as you have indicated that then states 
and private interests are going to have to make up the 
difference in MEP. All right, now, Mr. Secretary, are you aware 
that according to the projections done by the Michigan 
Manufacturing Technology Center, states will have to reduce, if 
not eliminate, support for MEP centers in absence of federal 
funding. Now, that is the State of Michigan's briefing about 
the situation in our state where the economy is in rather 
desperate and where we have been relying most heavily upon 
these MEP centers. Any comment, Mr. Secretary?
    Secretary Gutierrez. Well, having lived in Michigan, that 
is not good news for me either. The way we have thought about 
this, Mr. Chairman, and I know you don't agree with that, but 
strategically what we thought we should do is put our money in 
places where the private sector cannot, such as long-term 
research, basic research 10 years out, 15 years out. The 
private sector doesn't do or doesn't have the money to do or 
doesn't have the competitive environment to be able to do as 
opposed to operational projects such as MEP. That is the way we 
rationalize it from a strategic standpoint. That isn't to say 
that I am trying to convince you that that Michigan problem is 
not a big problem. I understand that.
    Mr. Dingell. Here is your situation, Mr. Secretary. You 
have an economy that is in the tank. You had to pass a very, 
very large economic stimulus package. You have a program which 
has been very successful which has created jobs, created 
manufacturing entities that are contributing to the economic 
success of the country, and you are cutting them. Napoleon on 
military matters always pointed out that you reinforce success. 
Here you are essentially pretty much terminating success of 
programs which have been successful by reducing funding. I do 
not find this to be a comforting thing.
    Now, Mr. Secretary, let us go to the Bureau of Census. The 
inspector general has reported that the census bureau has field 
data correction automation system contract has yet to produce 
handheld computers and related IT systems that can support 
census operations. What is the census department's estimate for 
additional cost of the census as a result of these development 
programs and problems?
    Secretary Gutierrez. Mr. Chairman, we are going through a 
process as we speak because we do have concerns with the 
census, and we are looking at different options that would 
enable us to do the census without using the handhelds to the 
degree to which they were planned at the beginning. We will 
have those options analyzed, costed out, towards the end of 
this month. And I will be in a position to answer your question 
very early April. In fact, in the hearing I had on Tuesday, I 
was asked to come back on April 1 to----
    Mr. Dingell. With all affection and respect, we will be 
sending you a letter on these and other matters because I sense 
that you have a deficiency here, Mr. Secretary, in the 
oversight of the field data correction automation.
    Now, let us go to the inspector general. The inspector 
general requests only an additional $2.8 million in funds and 
plans to hire just 18 extra FTEs. Mr. Secretary, what 
assurances can you give the committee that at this level of 
funding, manpower will be sufficient to monitor the Department 
of Commerce programs in 2009, especially programs and 
operations related to census, which have been plagued by cost 
overruns and problems with projects, development problems, one 
of which was just mentioned in your response.
    Secretary Gutierrez. Yes, I should say that the IG had 
pointed out some problems with census, and so it is not 
something they missed. I believe that it is something that we 
should have taken their word a little bit more seriously at the 
time. We have a new director of IG. He has been on board for 
about 8 months. I believe we have a great leader in charge of 
IG, and I have full confidence that he understands the 
resources he needs. He understands the priorities, and he 
understands the scope of his work.
    Mr. Dingell. Now, Mr. Secretary, I note you have one more 
problem that needs to be discussed this morning. There will be 
a turnover at the position of assistant secretary in charge of 
NTIA. That is the National Telecommunications and Information 
Administration. Now, I note that this turnover is coming in the 
midst of critical transition on digital television, something 
which has been a matter of intense concern to this Committee. 
The committee has to look to you, Mr. Secretary, to see to it 
that the individual who takes this job bear that the particular 
success of that particular position is assured by your personal 
interest and your personal responsibility in this matter 
because with a new hand in that particular job and with the 
lack of skilled hand at the wheel, unless you are tending him, 
I have a feeling that the concerns of this committee will be 
both magnified and realized by the inability of the department 
to address the fact that we are going to have a lot of 
television sets going dark, a lot of people mad about the 
certificates, and anger about the inadequacy of the budget and 
the failure of the educational program to see to it that the 
country is ready for this turnover. What can you do about this 
to assure us that we can be comfortable that the program is 
going to go forward satisfactorily?
    Secretary Gutierrez. Yes, let me just say, Mr. Chairman, 
that I agree that leadership continuity is absolutely critical, 
and in this case, Acting Assistant Secretary Baker was all over 
this providing leadership, and she will be a big loss.
    I will say this. There are about 20 people in that 
department who are all over this project, who own it, who have 
briefed me, actually briefed me quite frequently on the project 
who are doing a great job. So we have people in the department 
who have ownership for this program and have a great deal of 
passion in making sure that it works well.
    Third thing I would say is we do have a nominee for that 
job, and we are hoping we will get him approved soon, and the 
nomination will be approved soon through the Senate.
    And the last thing I will say is that yes, I am very 
involved in this project, and it is extremely important that we 
execute this the right way. And I share your commitment to 
making this as flawless as humanly possible.
    Mr. Dingell. Thank you, Mr. Secretary.
    Secretary Gutierrez. Thank you, sir.
    Mr. Dingell. Mr. Chairman, thank you for your courtesy 
today.
    Mr. Wynn. Certainly. At this time, the Chair would 
recognize--apologize for not calling him in proper order.
    Mr. Burgess. No apology necessary, Mr. Chairman. I accept 
the generous offer of additional time. Mr. Secretary, welcome 
to our committee. I have really three areas that I just wanted 
to touch on. I probably don't have time to get all of them 
adequately addressed, and if it is all right with you, I will 
ask your indulgence to submit some of these issues in writing. 
But I do want to talk a little bit about economic development, 
of course, our trade relationship with our partners in China, 
as well as the National Telecommunications and Information 
Administration, over which you have jurisdiction.
    First, just as far as economic development, just very 
briefly, I just have to address some of the Chairman's remarks. 
Manufacturing extension partnerships, I recognize, are 
important, and I support them. But quite honestly, if the 
taxation regulatory environment in a particular state is so 
pernicious, there is only so much the MEP is going to be able 
to overcome. And I do think that if a state is in that much 
crisis, perhaps they ought to look at some of their own 
internal policies because it is not that way across the 
country.
    And certainly in my own State of Texas, we have what I 
would judge is a very favorable tax and regulatory environment, 
and as a consequence, we have not been hit as hard at least at 
this point from the economic downturn. And I think we are 
fortunate for that, but part of it is because of wise policies 
enacted at the state level, not necessarily at the federal 
level.
    On the issue of spending, we are spending $3 trillion or 
more in this budget, and it is just hard for me to imagine that 
more money is truly the answer. If we need more funds for MEP, 
certainly there are other areas where we can find that money 
that we are not spending it wisely, and that would simply be my 
counsel on that regard.
    In economic development, through the miracle of 
redistricting, I have a district that is blessed with areas of 
just profound economic development. It happens after a 
rainstorm without any effort, but I also have areas of my 
district where economic development has been slow to come, and 
your folks at EDA have been very helpful to us in trying to 
push that along particularly in southeast Fort Worth. But I 
would just like some assurance that even though we have to 
devote more of our resources to the Senate during this next 
year or two, that we won't completely overlook the good things 
that economic development has been able to do to communities 
that have lagged behind.
    Secretary Gutierrez. Yes, we continue to be committed to it 
perhaps with not as many dollars as we had, but if anything, 
what we are going to have to do now is really pick the projects 
that have the highest return and ensure that we not do those 
that don't have it. But there is no question about it. We are 
believers in economic development.
    Mr. Burgess. And I am gratified to hear that, and, of 
course, we will underscore that southeast Fort Worth is one of 
those areas where the return on equity is immense, and I 
appreciate the attention we have had in the past.
    Now, as far as China is concerned--and I know there is a 
limit to the amount of time, and I probably will submit some of 
this in writing. But you had the China Joint Commission on 
Commerce and Trade at the end of last year, and specifically in 
the area on this committee or the subcommittee of this 
committee has spent so much time talking about the active 
ingredients in pharmaceutical agents. And then just this past 3 
or 4 weeks, we have had the terrible story of the Heparin 
manufacturer in China where the FDA didn't even know where the 
lab was. We have got to strengthen that.
    The American public is going to lose confidence in our 
ability to deliver safe and effective pharmaceutical agents. 
And I am just so concerned about the direction that that is 
taking. So I know that yes, a lot of that is under the 
jurisdiction of HHS, but to the extent that your department can 
help us with that, that is--if we lose that marketing battle, 
it will take forever to get that back.
    Secretary Gutierrez. Yes, Congressman. In fact, we did get 
active ingredients into our agreement at JCCT that they will 
allow us to go in and actually have a list of active 
ingredients that we can audit. I think what we need to do, and 
Secretary Leavitt has talked about this, is have a 
certification system that tells us that the manufacturers are 
manufacturing safety into the product and not assume that the 
solution is to inspect it into the product because that is a 
little bit too late. So you are right. It has to happen on the 
ground in China.
    Mr. Burgess. Of course, the concept of equivalency with the 
United States Department of Agriculture has come up with in 
regards to foods that we import that are under the jurisdiction 
of the FDA. And I am just wondering if the concept of 
equivalency, really one of the places we should start where it 
is so critical is in this area of the active ingredients of 
pharmaceuticals. And I will be--my staff will be talking to 
your office about that because that is something about which I 
feel very, very strongly.
    And then finally the jurisdiction that you do have over 
information administration in the country. I have watched for 
five-and-a-half years since coming up here the struggles at the 
federal level to come up with a rational plan to bring 
medicine, to bring health care into the electronic age. And it 
seems to be almost a hill too tough to climb, and yet in the 
private sector, they are going leaps and bounds ahead of us at 
the federal level.
    And I just wonder if there is not a place for, and perhaps 
it is within your administration, for some type of oversight of 
helping the private sector be able to do what it is doing so 
well, whether it is regulatory relief, whether it is relaxation 
of stark laws, some safe harbor on the privacy, some help with 
liability, and ask in return that the large players in the 
private sector give up some of their competitive advantage if 
they are willing to make it a seamless transition for a patient 
and not have enough jealously hold onto that competitive edge 
so much. But if there were an oversight area where that could 
be facilitated, and I almost wonder if your department wouldn't 
be a better place for that than HHS where they have so many 
other things on the table that they just simply cannot 
concentrate on this area. But it is critically important.
    We always hear about the Ram Study in this committee. You 
know, every time I turn around, someone is hitting me over the 
head where they are going to save $80 billion on the Ram Study, 
but that is not for 15 years.
    Ms. Schakowsky [presiding]. Mr. Burgess, if you would just 
wrap up the question and then give him plenty of time to 
answer. We are over time already.
    Mr. Burgess. The key point of the Ram Study you said 
incentives have to be early, they have to be limited in time, 
but they must be significant. And that is the part we are 
missing when we talk about that to HHS in this committee. And I 
just wonder if your committee would not be a place to provide 
some additional oversight and insight into that area.
    Secretary Gutierrez. Well, I hadn't thought about that. I 
know that HHS under Secretary Leavitt has looked at this, and 
they are looking at this. And they see this as a major 
opportunity. If we could get seamless records for every person 
in the country that would be transferable through IT technology 
across hospitals, across doctors, we would save a lot of money 
and be a lot more effective and efficient.
    But as you say, having consistent IT systems in one company 
is a challenge, and what we are saying here is we would like to 
have it across the country. This would have to be a project 
that goes beyond one administration where we are committed to 
making it happen over 5, 10, 15 years because I do believe it 
would take long. Maybe not 15 years, but this is not a 1-year 
project. But I believe it is well worth it because if we get 
this seamlessness in records, you know, it would be--I think 
our health care system would just jump to a totally new level 
of effectiveness of transparency of efficiency which would help 
cost. But it is going to have to happen over across several 
administrations, and I think that would be the challenge for 
the Federal Government.
    Mr. Burgess. It will be, and we will be talking about this 
with the department. It is something that is so important. I do 
think your area has a role to play in this, and going forward, 
I would like to develop that concept a little bit more. Thank 
you for your time this morning.
    Ms. Schakowsky. Thank you, Mr. Secretary. And thank you, 
Mr. Burgess. I think on both sides of the aisle, there is a 
good deal of agreement on this issue. And we would like to see 
the Administration at all levels help us all move forward on 
it. I am grateful to you for coming here and so happy that I 
was able to get here to talk to you. So we very much appreciate 
your being here to answer our questions today.
    I am going to raise a question, I think, that hasn't been 
asked before. I am very concerned about how senior citizens in 
particular will cope with the transition from analog to digital 
television transmission. It is estimated that at least 8 
million older adults rely right now on analog television sets 
and over-the-air television signals. Seniors are more likely to 
be unfamiliar with new technology and to have physical, 
financial, or transportation barriers that would prevent them 
from purchasing and installing a converter box.
    These problems obviously also affect all of those that are 
on the margins, the poor, the disabled. But I am particularly 
worried that these populations will suffer real consequences if 
their TVs go dark on February 17, 2009. Consequences like 
isolation, anxiety, mental or physical decline.
    So I wanted to ask what you are doing to ensure that these 
populations don't suffer as a result of the transition.
    Secretary Gutierrez. Sure, and I agree, Madam Chairman, 
that this is one of the key concerns that we should have and 
one of the key issues. We are working with partnerships 
wherever we can. Partnerships that have access to the elderly, 
who know where they are, who can help them. We have also asked 
retailers to have people on their floors who are selling 
converter boxes to be able to explain how they are hooked up. 
And some retailers have actually gone a step further and said 
yes, we will help. We will actually help some elderly 
consumers. We will go beyond the call of duty.
    The other thing that we are doing is we had originally said 
that we will only give coupons to private homes, and 
unfortunately nursing homes did not fall into private homes.
    Ms. Schakowsky. That is one of my questions. Go ahead.
    Secretary Gutierrez. And we are revisiting that because, as 
you can imagine, nursing homes, that would be a huge problem if 
they lost their transmission. So we are aware of this as a 
potential risk, and we are trying to prevent this from becoming 
a problem every single day. And we are debating it, and the 
nursing home discussion we just had yesterday actually. And the 
folks at NTI have been all over this for about a month.
    Ms. Schakowsky. There are a number of organizations to whom 
seniors and other come for help. For example, the area agencies 
on aging that work with older adults every day, and they are 
very well suited to provide hands-on assistance to this 
population. But right now, only $5 million has been allocated 
by the Federal Government for consumer education and outreach. 
And none of these dollars have been set aside to help those who 
will direct, one-on-one assistance in making the transition, 
and no further money has been requested by the National 
Telecommunications and Information Administration for these 
efforts.
    I think there are some natural places that people are going 
to go, and I am just wondering what programs the NTIA has to 
specifically reach out to vulnerable populations and if there 
is a way to get more support for these assistance 
organizations.
    Secretary Gutierrez. We are getting a lot of support from 
the private sector. In fact, we think we have--our estimate is 
that the impact will be about $1 billion of advertising. 
Partnerships with organizations such as AARP, which we know 
through their magazine, through their mail communications, we 
can access elderly consumers. There are other local 
organizations that we are working with, local partnerships. So 
this is----
    Ms. Schakowsky. When you say working with, what do you 
mean? For example, how much money has the NTIA spent to do 
outreach to populations?
    Secretary Gutierrez. Well, the private sector has committed 
about $1 billion.
    Ms. Schakowsky. OK.
    Secretary Gutierrez. And some of that has been spent. I 
don't have the number right now, but it has been spent on 
network television. We know what programs the elderly watch, so 
we are able to advertise on those programs. Likelihood is they 
will be watching network channels that you get through over-
the-air transmission.
    Ms. Schakowsky. Right.
    Secretary Gutierrez. And our communications have been 
targeted to them. I can get you how much we spent, what kind of 
a media plan we have. I think you will find that it is very 
much targeted toward the elderly because they are the ones that 
use over-the-air transmission and that we are most concerned 
with.
    Ms. Schakowsky. Thank you. And I am so glad that you are 
rethinking the whole nursing home situation. If it is only by 
one address, and there is just one coupon, that is not going to 
make it right. Thank you.
    Secretary Gutierrez. Thank you.
    Ms. Schakowsky. Appreciate it. Mr. Fossella.
    Mr. Fossella. Thank you, Madam Chair. And, Mr. Secretary, 
thank you for coming and thank you for your patience. Thank you 
for the work you are doing. I will just ask three questions and 
then give you the time to answer. And there are three separate 
topics: patent reform, the U.S. Korea Free Trade Agreement, and 
the summer flounder moratorium, the potential for a moratorium.
    First, on patent reform. You know, Mr. Secretary, the House 
passed the Patent Reform Act last fall, and the Senate is 
considering 1145 in the coming weeks, Senate version of the 
bill 1145. We know that the PTO communicator of February 
allotted to Chairman Leahy ``we need a patent reform bill that 
will spur innovation, strengthen intellectual property 
enforcement while also deterring infringement.''
    And we know that the patent system by design, this will be 
a technology neutral agency, and the perception or reality of 
favoring one industry over the other runs the risk of reducing 
competence and therefore investment in what is about a $5 
trillion industry. And we know that there are certain 
provisions of those legislations where there are damages or how 
damages are calculated and who pays, who doesn't pay, and how 
it can really bring down entire businesses, industries.
    And I just wonder if you have any thoughts on how we can 
structure legislation that could get passed without at least 
giving the perception that we are choosing one industry over 
another, one technology over another. To have great minds and 
great people in different industries pitted against one another 
is really not, you know, in our competitive interests. We know 
of companies that are actually picking up and moving to, say, 
Singapore, moving capital and jobs with it. That shouldn't be 
the American way so I am curious to hear your thoughts on that.
    On the Korea Free Trade Agreement, I commend you for 
pushing and advocating the Colombia Free Trade Agreement. I 
have been working for several years on the U.S. South Korea 
Free Trade Agreement, and we know there is an issue with 
respect to beef and others. But can we have some degree of 
assurance that there is going to be a commitment by the end of 
this year on pushing the Korean Free Trade Agreement, a great 
ally of ours?
    And finally very parochial but it affects a lot of people 
is we had news last week about the moratorium on summer 
flounder, and there is still talk about imposing one. There is 
still the option. But I have met with people who feel that the 
science is uncertain. So to start declaring a moratorium on 
uncertain science really would harm many recreational fishing 
communities like on Stap Island, businesses that would have to 
shut down if this fish moratorium were placed.
    So I would just--if you have any information on that. If 
you don't, that is fine. But I urge you to go back and work on 
a sound policy where the science drives the process of striking 
that environmental concern, ecological but also economic as 
well.
    Secretary Gutierrez. Sure.
    Mr. Fossella. Thank you.
    Secretary Gutierrez. Thank you, Congressman. Just on patent 
reform, you are absolutely right that the goal should be how 
can we have a system that incentivizes innovation and not a 
system that makes innovation dangerous because it is so easy to 
sue someone or to use someone's intellectual property and pay 
very low damages. So the damages part of the reform is what 
concerns us, and we have said it in a statement of policy. And 
I think we can find the middle ground.
    If you look at a spectrum, we just think it is a little bit 
too tilted to making it too easy to find damages and making it 
too easy to use someone else's intellectual property without 
really being punished for it. So that is the part that we can 
get, and I think you are absolutely right. We can make it 
industry neutral and find some place in the middle of that 
spectrum.
    On Korea, we are waiting for them to get beef into it, and 
we are hopeful that they will be able to move quickly. But, you 
know, to your point, this would be the biggest agreement we 
have done in 15 years. This is our seventh largest trading 
partner. If there is concern that we have too much invested or 
too much committed with China, that we have too much 
concentration in China, the best way we could do that is to 
spread our business throughout Asia, and Korea would be the 
perfect partner.
    So aside from that, they are a great ally and a great 
economy. And it would be to our benefit to have a free trade 
agreement with Korea.
    And finally just on flounder, my understanding is that we 
would not entertain a moratorium unless we found that the 
fishing was exceeding the quotas, and therefore there was a 
risk of overfishing. And unless that is found, it would be very 
difficult to justify a moratorium.
    Mr. Fossella. Thank you very much, Mr. Secretary. 
Appreciate your time.
    Ms. Schakowsky. Thank you. And now a vote has been called, 
but Mr. Matheson, I believe we will have time to have your 
questions and answers.
    Mr. Matheson. Thank you, Madam Chair. Mr. Secretary, it is 
good to see you. I apologize for being a little late getting to 
this hearing today. The schedule has lots of obligations. I 
also want to thank you for hosting the trip to Colombia a 
couple of weeks ago in which I participated. It was a very 
informative trip, and I also appreciated the way you represent 
this country during that trip. I think it was a very positive 
experience for me.
    Mr. Secretary, I am a supporter of lowering trade barriers 
and encouraging opportunity for businesses in this country. 
Tell me for you what are our most important trade priorities 
for this country at this point?
    Secretary Gutierrez. I would say in a very big picture 
sense, our priority is to grow our exports. We believe that the 
best way to address any imbalances that we have is by growing 
exports, not by limiting imports through protectionist 
policies. Continuing to open up markets for our manufacturers, 
for our farmers. You know 31 percent of our agricultural goods 
are exported. Twenty percent of our manufactured goods are 
exported. So this is important for our economy.
    And continuing to level the playing field. You know we know 
that in some countries we are not treated as well as we treat 
them. And in our meetings and our interventions with those 
countries are always designed to level the playing field for 
our people.
    Mr. Matheson. Do you have a sense that--can you just talk 
briefly about the economic benefits of this country with the 
Colombia Free Trade Agreement?
    Secretary Gutierrez. Yes, of course. And on a specific 
country--and I guess by mentioning it, I would say that the 
specific priority for trade, and the President confirmed this 
yesterday, is Colombia. It is really an irony here that 
Colombia has duty-free access to our country, and they have 
since 1993. So any concern that we are opening up our country 
to Colombian manufacturers, that has already been done, and it 
has been done for a long time. The only difference is that we 
pay duties going in.
    So we buy flowers from Colombia, but the--and the flowers 
come in duty free. But the fertilizer that we sell them to grow 
those flowers pays a duty. So we have a disadvantage, and what 
this agreement would do is give us the same advantage that they 
have. So from a trade standpoint, it couldn't be clearer that 
this would allow our farmers, manufacturers, to export more to 
Colombia.
    One very specific example, very specific risk, if we don't 
have a free trade agreement with Colombia, they are negotiating 
with Canada. That means they will buy their wheat from Canada 
instead of buying it from the U.S., and that would be a shame. 
So thank you for asking.
    Mr. Matheson. And this may be more a State Department 
question than a Commerce Department question, but there are 
also some regional security issues that they got to be put out 
there in the context on this free trade agreement.
    Secretary Gutierrez. Yes, Congressman. And thank you for 
that. We know that Colombia is a big drug producer, big drug 
cartels. So what we would hate to see is that country fall into 
the hands of narco-terrorists who were close about 10 years ago 
to actually overthrowing the government. That is when we put in 
Plan Colombia. That is when we helped them out with 
helicopters, with social programs.
    Today they have broken through. Their economy is growing. 
The violence is down. They have taken down some of the key 
leaders of the FARC in the last few weeks. In fact, when we 
were there, we were exposed to that news, that they took down 
the number two leader. So they are making progress, and they 
need this FTA to continue to make progress.
    The flip side is if they don't have this FTA, they could 
actually lose about 400,000 jobs because their neighbors have 
FTAs. So they would be at a disadvantage. So we know well that 
security and prosperity go hand in hand, and we want them to 
continue to improve on security. In order to do that, 
prosperity has to continue to improve. So that FTA should be a 
priority for all of us, and we should do it quickly and get on 
with it because it is for our best interest.
    Mr. Matheson. OK, I appreciate that.
    Secretary Gutierrez. Thank you.
    Mr. Matheson. I yield back, Madam Chair.
    Ms. Schakowsky. Thank you so much, Mr. Secretary, for 
spending your time with us and answering our questions. Seeing 
no further business before this committee, the committee is 
adjourned. Thank you.
    Secretary Gutierrez. Thank you, Madam Chair.
    [Whereupon, at 11:25 a.m., the committee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                    Statement of Hon. Eliot L. Engel

    Chairman Dingell and Ranking Member Barton, thank you for 
holding this hearing today. Secretary Gutierrez, thank you for 
taking the time out of your busy schedule to appear today. The 
Department of Commerce is trusted with broad range of 
responsibilities and their budget is a reflection of those 
obligations to create jobs, promote economic growth, improve 
standards for consumers, as well as educate them, and to keep 
America competitive in the global marketplace.
    In regards to the President's suggested budget for the 
Department of Commerce, I have serious concerns that the 
elimination of the Public Telecommunications Facilities Program 
(PTFP) and the insufficient funding for the National 
Telecommunications and Information Administration (NTIA) will 
have a detrimental effect public television stations across the 
country and for millions of people.
    The elimination of the PTFP will leave public television 
stations in New York and across the country without funding to 
upgrade their equipment, which is especially serious with the 
digital television transition rapidly approaching. The 
transition is not yet completed and public television stations 
will still need assistance before, during, and after the 
transition less than one year from now on February 17, 2009.
    Consumers need assistance as well with the digital 
television transition. Many are not yet fully educated about 
what the transition is, when it will take place, how to request 
a coupon, and what they have to do in order to continue 
watching their favorite stations when it occurs. Now is not the 
time to further reduce the NTIA budget, when consumers need the 
NTIA programs the most and we are working towards a smooth 
transition to digital television.
    In addition to the education of consumers and ensuring the 
smooth transition to digital television, one of the objectives 
of the Department of Commerce is to open new markets for U.S. 
exporters, protect intellectual property rights, obtain 
compliance with trade agreements, and enforce unfair trade laws
    Recently, Kosovo declared its independence from Serbia, 
which the United States, Europe, and the Balkans have all 
rightly recognized. While the Kosovo commercial sector is not 
yet as robust as it has the potential to be, I feel the United 
States should encourage trade with Kosovo and fully utilize 
this new and expanding market.
    Congress has also recently extended the Andean Trade 
Promotion and Drug Eradication Act (ATPDEA) for ten months for 
Peru, Colombia, Ecuador and Bolivia. A long term extension of 
the ATPDEA is needed to ensure predictability, stability, and 
smoother business planning for US industries. I believe that a 
long-term extension of the Andean trade preferences is crucial 
in promoting development in the economically and politically 
fragile Andean region while also supporting essential U.S. 
geopolitical goals. Positive engagement with the Andean region 
can both improve our image abroad and help us to more 
effectively engage our neighbors.
    Mr. Chairman, I again want to say that I appreciate you and 
Ranking Member Barton holding this hearing, and I look forward 
to working with the both of you and Secretary Gutierrez.

                                 
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