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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 

COMMITTEE ON ENERGY AND COMMERCE 

JOHN D. DINGELL, Michigan, Chairman 

HENRY A. WAXMAN, California 

EDWARD J. MARKEY, Massachusetts 

RICK BOUCHER, Virginia 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

ELIOT L. ENGEL, New York 

ALBERT R. WYNN, Maryland 

GENE GREEN, Texas 

DIANA DeGETTE, Colorado 

Vice Chair 

LOIS CAPPS, California 

MIKE DOYLE, Pennsylvania 

JANE HARMAN, California 

TOM ALLEN, Maine 

JAN SCHAKOWSKY, Illinois 

HILDA L. SOLIS, California 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

DARLENE HOOLEY, Oregon 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

CHARLIE MELANCON, Louisiana 

JOHN BARROW, Georgia 

BARON P. HILL, Indiana 

JOE BARTON, Texas 

Ranking Member 

RALPH M. HALL, Texas 

J. DENNIS HASTERT, Illinois 

FRED UPTON, Michigan 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

ED WHITFIELD, Kentucky 

BARBARA CUBIN, Wyoming 

JOHN SHIMKUS, Illinois 

HEATHER WILSON, New Mexico 

JOHN B. SHADEGG, Arizona 

CHARLES W. ‘‘CHIP’’ PICKERING, 

Mississippi 

VITO FOSSELLA, New York 

ROY BLUNT, Missouri 

STEVE BUYER, Indiana 

GEORGE RADANOVICH, California 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE FERGUSON, New Jersey 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

PROFESSIONAL STAFF

DENNIS B. FITZGIBBONS, Chief of Staff 

GREGG A. ROTHSCHILD, Chief Counsel 

SHARON E. DAVIS, Chief Clerk 

BUD ALBRIGHT, Minority Staff Director 

(II) 

(III) 

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 ................................................................... 1Secretary Gutierrez of the Department of Commerce did not submit a prepared statement. 2Secretary Gutierrez of the Department of Commerce did not answer submitted questions for the record. 

(1) 

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, someVerDate Nov 24 2008 14:59 Oct 07, 2010 Jkt 037690 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\HEARINGS\110-94 SCOM1 PsN: JIMC
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thing 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; 

3 

• 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 talVerDate Nov 24 2008 14:59 Oct 07, 2010 Jkt 037690 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\HEARINGS\110-94 SCOM1 PsN: JIMC
4 

ent 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. 

5 

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 

6 

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 nonprofit 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. 

7 

[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 antidumping 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. 

8 

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 

9 

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. 

10 

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 

11 

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. 

12 

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 

13 

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 specVerDate Nov 24 2008 14:59 Oct 07, 2010 Jkt 037690 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\HEARINGS\110-94 SCOM1 PsN: JIMC
14 

trum 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, 

15 

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 fund- ing 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 

16 

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. 

17 

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. 

18 

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 

19 

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. 

20 

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 enVerDate Nov 24 2008 14:59 Oct 07, 2010 Jkt 037690 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\HEARINGS\110-94 SCOM1 PsN: JIMC
21 

ergy 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-toone 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 

22 

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. 

23 

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 instore 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 

24 

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 

25 

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. 

26 

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 

27 

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 

28 

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? 

29 

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 PartnerVerDate Nov 24 2008 14:59 Oct 07, 2010 Jkt 037690 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\HEARINGS\110-94 SCOM1 PsN: JIMC
30 

ship, 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. 

31 

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 re- quests 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 

32 

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. 

33 

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 

34 

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-ahalf 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 

35 

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, 

36 

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 overthe-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. 

37 

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. 

38 

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? 

39 

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:] 

40 

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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