WASHINGTON – U.S. Senator Jim Risch (R-Idaho), ranking member of the Senate Foreign Relations Committee, today gave the following opening remarks at a full committee hearing on U.S. economic security: addressing economic coercion and increasing competitiveness. Witnesses included The Honorable Jose Fernandez, under secretary for economic growth, energy, and the environment at the Department of State, and The Honorable Jay Shambaugh, under secretary for international affairs at the Department of the Treasury.
Ranking Member Risch gave the following remarks:
“Thank you very much, Mr. Chairman.
“First of all, I want to associate myself with your remarks about how important economics is to the national security of the United States. I don’t think that can be understated. Indeed, people first look to what their financial situation is when they make decisions about how they’re going to proceed. So, I don’t think we can underestimate the importance of economics in the lane we operate in.
“With an aggressive Russia and a China seeking to rewrite the rules and norms of the international system, our world is rapidly changing. Both seek to use economic coercion to pressure our friends and allies into concessions.
“U.S. policy must account for this rise of coercive economic practices and maintain our competitiveness in order to achieve what’s best for our national interests.
“For years, Russia weaponized energy exports to an energy-dependent and energy-hungry Europe. In the lead-up to Russia’s war against Ukraine, the Biden Administration enabled this dependence by waiving bipartisan congressional sanctions against Nord Stream 2.
“Despite the war and Russia’s throttling of gas supplies to Europe, the U.S. and our allies still struggle to maintain a consistent and strong approach to help the Europeans wean themselves off Russian gas.
“The good news is, Europe now clear recognizes its mistake and will never go back to that situation again.
“Over the past 18 months, Russia has attempted to weaponize world grain supplies to hurt Ukraine. After exiting the Black Sea Grain Deal last week, Russia has bombed Ukrainian grain ports nightly, destroying infrastructure and thousands of tons of food. According to the Financial Times, Russia plans to offer cheap food and fertilizer to grain-consuming countries at this week’s Russia-Africa summit in an attempt to gain support.
“Using a similar strategy but different tactics, and admittedly less ham-handed, China has leveraged its massive economy, global trade, and financial ties to achieve its political goals. We are all aware of instances of Chinese economic coercion against Taiwan, Vietnam, Canada, Australia, Lithuania, and many other countries through tactics like predatory lending or threatening market access.
“And now, China is directing its coercion at the United States. In May, the Chinese Communist Party ordered Chinese operators of critical information infrastructure to stop using Micron products because of unfounded ‘security risks.’
“Make no mistake, this is retaliation for U.S. policies designed to keep advanced technology out of the hands of China’s military.
“Taiwan has long been a testbed for Beijing’s coercive tactics. Xi Jinping is of course willing to use brute force to take Taiwan. But he would rather accomplish that through a combination of economic and political coercion.
“In addition to supporting Taiwan on defense, we must also work to address key economic vulnerabilities China would exploit in a future conflict.
“Understanding how China and Russia use economic coercion is critical to developing appropriate strategies and responses. We – with our friends and allies – must take steps now to reduce supply chains reliance in sectors such as critical minerals and health care necessities.
“We need to grow our resilience by creating new trade and investment opportunities in friendlier countries so we can diversify and hedge against a sudden closing of Chinese markets. And, over the long term, we have to take steps to avoid a world where China dictates economic outcomes.
“Part of a successful strategy to guard against economic coercion hinges on a more robust U.S. trade agenda. Withdrawing from TPP was a huge mistake. Sitting on the sidelines of the follow-on agreement – the CPTPP – continues to be a mistake.
“China is going to push for entry into this agreement. U.S. allies warn me privately that the longer the U.S. stays out of the CPTPP, the harder it will be to keep China at bay. Do we really want another huge Pacific trade bloc to be controlled by China’s interests and not our own? Of course not.
“What we are doing through the Indo-Pacific Economic Framework might help if there is real substance behind it, but it is not a substitute for embedding ourselves more deeply in the region’s trade architecture with market access.
“I hope the Biden Administration is thinking about that. I would like to enter into the record a letter that Senator Cantwell and I wrote to the president on this very issue last year.
“China is trying to force countries to pick a side. We must give countries a choice to counter these efforts. Sitting on the sidelines doesn’t help.
“With our friends and allies, we have a lot of resources to counter economic coercion. The question is whether we can effectively create the resilient architecture and support networks that deter malign behavior? And do we have the focus and the long-term will to use those tools effectively?
“Thank you very much. I think both the chairman and I – as he said in his opening statement – look forward to hearing answers to these questions.”
These remarks have been lightly edited for clarity. Witness testimony is available on foreign.senate.gov.