fourth largest trading partner. so what impact do you believe almost with further delays in passing the korean agreement through congress? what do you think they might have on meeting that export initiatives goal, and do you believe as i and many colleagues on both sides of the aisle do that we will lose hundreds of thousands of american jobs if e.u. implements its agreement with korea before we pass ours? and connected with that, we know that china has already increased their exports -- or imports to colombia by over 200%. we're losing market share. if that's true, we're going to the lose thousands of jobs with these two things happening. doesn't the same hold true with kilometer l ya and panama? -- colombia and panama? >> yes. first of all, congressman, thank you for hosting us during the road show with the oz yang ministers, thanks for working

with us on the export council, and in the interest of time, the answer to all of your questions is yes. i would add one thing. when we look at korea, we tend to look at the 70,000 jobs. it is important to note four years ago we were the number one exporter in the korean market. today we're number four. and sinking fast. so there's two ways to look at this. you can look at and say we passed it, we have the opportunity to reap the benefit of those 70,000 jobs. if we don't pass the korea free trade agreement, we put at risk 270,000 jobs that are now tied to all that we export to korea. and i would say to those of you concerned about panama and colombia, i think it's a bit easy to look at korea because it's $10 million. from our administration, i can certainly speak for me, every job's important. so whether panama is a billion dollar market or colombia's a $2 billion market, they represent opportunities for some farmer, some small business, and that's why i think it's important we

find a way to bridge our differences to move forward on those as well. .. procrastination hurts us from prestige, and leverage. time to move forward on this agreement. by contrast to look at columbia our commodities including rights are included in this agreement and we have seen amazing statistics whereby u.s. exports of commodities have plummeted in the past year or two because we

have not moved forward and other countries are moving forward with colombian free trade agreements. i hope we get to the point where we stop hurting our farmers in rural communities and get moving on these because it is going to help us export our commodities going forward. i want to raise an issue. you and the president have talked extensively in the past two years about enforcement. very important part of your trade policy. i have a mid-sized louisiana company that cannot get payments on $3.7 million in business with china. products they sold to china. i believe have a robust bilateral investment treaty is imperative. other countries are doing this. if we are going to regain competitive footing and help small and midsize firms the president has expressed interest in doing we need a robust

dispute settlement mechanism to has list. i think we are falling behind. so what is the delay on the part of the administration in moving forward and getting bilateral investment treaty specifically with china? >> thank you for your comments about agriculture and parenthetically i will tell you this year america's exports were up almost $106 billion according to usda. they forecast that in 2011, could be the highest year ever. it is extremely important to all of america's farmers and workers and families and we will be looking to try to address your concerns. with respect to enforcement we are trying to do two things with china. it would be helpful, we have had

four negotiating rounds and we are moving on parallel tracks. we had already begun a process to review our model because it needed updated. it had not been revised in ten years. we are hopefully at the end stages of that. we had extensive consultation with committees, jurisdiction, business community and a couple issues remain to be resolved. we will try to get that work concluded as soon as possible and go forward not only with concluding our bit with china but india as well. >> thank you. the chair recognizes mr. neil. >> thank you. i want to weigh in as mr. davis did on the issue of japan. it is an important issue to my constituency. we have gone back and forth on that foreign number of years. i hope you will continue to vigorously pursue that issue. let me take us to an issue that

is important here. our friends on the other side suggested repeatedly that there have been delays constructed into these hefty as. in many ways the easiest bilateral was panama. the problem was the complication adopted by the assembly speaker who murdered an american soldier. was alleged to have murdered an american soldier. the bush administration correctly pull back on that bilateral because of that human rights violation. we can say as mr. louis pointed out dismiss certain bad behavior with human rights if it is a republican president and it not to be a consideration if it is a democratic president. that is the point mr. lewis and i were trying to shop with you. give us an update where we are with panama bilateral and what

happened with domestic politics that might ensure an easier path to completion? >> i will try and think you for your comment. you are correct in noting one of the reasons panama stalled was the complication, head of their assembly had been convicted in a court in florida of murdering a u.s. soldier and the bush administration wisely said we will do business with you. after that person was removed from office we began to engage panama on ways we could address the outstanding issues we presented to them. then we had the intervening complication that panama was designated a tax center and we were engaged with the previous administration and we met with them in the summit of the americas. mr. mcdermott was there and others. administration told us that if we are going to put in place tax information exchange agreement we are not going to do this

deal. we were able to progress beyond that. we have a newer administration in place that values this relationship as we do. we have made great progress on a number of issues on labor. they have been working with treasury to address the tax issues. i do understand they have initials the tax informational exchange agreement. there is legislation that needs to be passed to address the corollary issue of relating to shares but frankly we are making good progress with panama and we will be working with them to see if we can address those outstanding issues. >> the point that needs to be raised, this committee's history in the 22 years i have been a member has largely been bipartisan. as we look for a path forward on these issues, these bilaterals hanging out we want to ensure language is offered that makes certain going forward will be a

bipartisan undertaking. >> the chair recognizes mr. heller. >> thank you for being here. appreciate the time and effort and energy in this committee with us. from a state that is struggling, mr. secretary, with almost 15% unemployment we talk about these free trade agreements and the impact and what it would mean to a state like nevada. clearly incredibly important. as you probably well know, trade has helped nevada since its inception in 1864 to 2000 we went from zero trade to $1.5 billion. from 2000 to 2008 it went from $1.5 billion to $6.2 billion, and increase of 266% in just

nine years. the president has changed -- challenge dollars to double exports in five years. the would argue that has already done this. from 2004 to 2008 our exportss jumped 110%. we did this by taking a advantage of fast developing markets, helping nevada companies access these markets like china. in 2000 china was the 24 head just export market. in 2008 it was the third largest. similar examples with india from 28 from 2,000 to 17 to brazil from 26 to 20th. trade is important for a state like nevada and as we move forward with this economy trade will play a big part in picking this state up. rights is important in liana and lining is important in nevada. i would like to share a real

story. we have some miners in the building. some of their concerns are with pending free-trade agreements in panama. they are concerned that they have taken a lead based on encouragement from the government that there will be a free trade agreement in their efforts to mine and do the research and development they are doing. but the corruption in the government of panama makes it difficult for them to make a profit. they share their concern with me. i put it in your lap. how would you address this? if they pay the licensing, they pay the fees but they pay the fines. they have a corrupt government. they have to make under the table payment making it difficult for them and their shareholders to produce or make

a profit. how would you respond to that? in light of a panama free trade agreement coming through, be able to give them some encouragement? >> i will get more specific on that. secondly, i wasn't much of a lawyer but the lawyer i was will tell you that a hypothetical, american companies don't pay because it would be in violation of the foreign corrupt practices act. we won't put anything -- [talking over each other] >> i don't mean to make light of it. we could have a conversation afterward and talk more about that but i will say one of the values of these free trade agreements, why we want russia in the wto is we have them in a legal rules based environment that we can address these issues but i will be happy to follow up

with you. we don't talk enough about travel as a part of our exports. it is one element we are looking at since i was in your great state for the cc council. is refreshing to see the tourism and the dollar's those foreign businesses bring -- >> thank you very much. thanks for being here today. >> i do appreciate president martinalley's efforts to move forward on the business climate. that is welcoming for foreign investment as well. the chair recognizes mr. ross. >> thank you for your time today. earlier you said the administration was going to move forward on a korean free trade agreement in a matter of weeks. it sounds like a processed answer and a lot of thought was given to that. is that a matter of weeks that

can mean months or is that a matter of weeks the common understanding of weeks? less than a month? >> i went to public school in texas. for us weeks mean weeks. >> less than 30 days? >> we're trying to finalize the taxes. we are operating on the trade promotion authority. there is apparently structured process by which we submit to this committee and finance and you began your mock hearings on those. we very much are concerned as you are that we want to get this agreement before congress and passed so that at least we're putting our exporters in a competitive disadvantage. >> just so i am clear. the common understanding of weeks is less than a month and that is what we're looking at. >> yes. >> how about columbia? >> you make it past my

introductory remarks. the president just as it he did last year in directing us to see if we could conclude our negotiations on korea has directed us to intensify our agreement with columbia so we can resolve those issues this year. we had a fairly exhaustive discussion with a sense of urgency and concern for members on both sides and we will try to find some way to find some common ground that will allow us to address those. we will send 18 to colombia next week. the vice president was here, the secretary of state, encouraged with their new leadership. we hear your message and we will move forward as quickly as we can. >> reporter: a corporation in my district was involved in

essentially a nightmare scenario with a joint venture that has gone south and they have not been able to get the legal remedies that they deserve. it is a very serious example of manipulation on the part of some in china that are taking advantage of an incredibly significant manufacturer in the chicago area because time is truncated. i won't be labor the point but i want to highlight it but it is an area where the administration and congress can work forthrightly to advocate and defend american manufacturers who in some cases and in this case a quick reading of this story sounds like a wild west. i know you don't have the benefit of the details but i will follow up and get these to you for your consideration. i yield back. >> as a member who was not here, in fairness would like to

recognize mr. rangel. >> thank you. it is a great pleasure to see you here and even a greater pleasure to hear about the progress that is being made with our dear friends in korea. i went there in 1950 in different circumstances but i cannot believe the tremendous advance and they made economically in democratic principles and quite frankly it is much more difficult to alter agreements that already have been made rather than be involved and you have done a fantastic job and i am so pleased to hear that. you know better than most people that we have reached a point due in part to high unemployment when you say trade people believe you selling out made in the usa you transferred jobs across and republican and

democrat, business or labor, i don't think we do a good job identifying exactly where is the job creation? it seems to me as a former mayor that if you are selling anything, the bottom line is what is in it for me? you selfing that politicians do. so if you were to ask what does this do for americal things thas do. so if you were to ask what does this do for america i feel close to detroit as when you see this type of pain you know what is good for detroit is good for us and you have overcome a big obstacle but what about the rest of the jobs? whether it is services or agriculture? why don't members, republican and democrats, come and say this will help us to have jobs? and i don't hear that type of thing. i hear from the chamber of

commerce, republicans and business people and certainly those who have a concern about making america a great because we have to trade in order to survive. how do you reach out to see what jobs are going to be created? they're not if it is good for the country. i don't get that response. >> forgive me, mr. chairman. thank you for your kind words. thank you for your service to our country. we would love nothing more than to work with you with members to provide you that. we are reasonably small but i can tell you we can get data for every member of every district to what we have collected, what everyone of these free trade agreements means in your community and i can tell you in the case of korea there's not a member here that does not have at least tens of thousands of workers that will be benefited

from our passing this agreement. some may be in manufacturing. some may be in the services and some may be in agriculture. we tend to overlook the fact that many of the beneficiaries of trade are small businesses who are suppliers to either caterpillar or chrysler or ford and they may not realize they are benefiting from trade. we welcome the opportunity to said down with any member and give the best data we have and hopefully you can help educator us on what some of those opportunities are. >> thank you. >> the chair recognizes mr. girl off. >> thank you for testifying today. whenever you talk about trade in pennsylvania first word that comes up is sure in a. everyone is so concerned about the current trade policy or lack of trade policy that we have relative to that growing

economy. we have heard from so many different businesses and entrepreneurs in pennsylvania that currency manipulation problem is one that is greatly impacted and the ability to trade products to china and have a fair price in the united states. in the testimony you shared with the committee, before you started at:00, you have a paragraph saying engagement with china-improving intellectual property rights, the use of legal software, that is wonderful progress and we applaud you for that but no mention of the currency manipulation problem that continues to be such a problem. my question to you is what was the specific discussion between president hu and president

obama and what can you tell me the specific plan of the administration to try to get this currency manipulation problem resolved once and for all? >> i appreciate your concerns about china. it is a complex but long term extraordinary opportunity for american business and exports just as they are trying to move six hundred million people from an agrarian society faa's to one in which they have a need for the product and services produced in this country. we think it is worth the time and effort. my remarks were deliberately drafted to reflect those areas that you sdr can impact. i hope i don't sound evasive. the secretary of the treasury has the responsibility to address the currency issue and i know he has spoken on that so i don't want to say anything that

attracts or detracts from -- what secretary timothy geithner as enumerated on that. i will tell you on every occasion president obama has engaged president. in sao it was a big deal 15 years ago that an american president and retained his chinese counterpart. president obama and president hu have had eight face-to-face meetings. the president does address the issue of china allowing his currency to flow to national norm so we do that. but our work is to make sure we are responsive to those concerned. you have heard other members talk about their concerns about intellectual property rights, piracy, and that is where we can add the most value. currency issue is important but what we hear from small business is their fear of putting the

product in china having stolen it. we hear businesses that are concerned about indigenous innovation policy so we think the timing we spend on those areas can be just as important to your businesses as addressing the currency issue. >> the house last session did pass a bill -- >> time has expired. >> thank you, mr. chairman. thank you, mr. chairman. ambassador, i appreciate you being here today. i share the intensity we talked for a couple minutes, your views on what is doing best for americans and america and american companies, we need to continue to fight for them in terms of trade agreements. i do want to say i applaud the effort you have moved forward on korea. that is very important. let me mention to you as it relates to my district and the state of florida.

14 ports in florida and a port in our area, the closest port of panama canal is something we have been working on for a lot of years or doubling the capacity in terms of panama. i have been down there with the ambassador in our area. we met with the president and we have had delegations down there. they are doubling the capacity spending $5 million in terms of improvements in that area. i am very concerned that these things go on for four years. you have been in business, i have been in business. i have been complicated deals before. not as complicated as this. very concerned when these run on. there's a saying that you can't manage if you can't measure but that is what we are talking about. having some reasonable time frames because it is affecting us in terms of our jobs. we have 20,000 good paying jobs in port.

we think we can double that. we have been waiting six months, nine months, some as long as three years. it seems we can't get the perfect deal because as much as you get done in my experience, 90% and we need to move on. it is imperative that panama and colombia, we get those off the table because it is a lot about politics. if we don't do something now we will run into more politics shortly. we need to get that done. i do share a lot of concern about china and a lot of issues with china. what happens because we can't move forward here we don't get a chance to get the china discussion. it is imperative we get this done in the next six months for the sake of the country, florida, as well as my district. >> panama was started in 2004

and here we are in 2011. after seven years, the law declares you legally dead. we don't want panama to die. we want you to keep going. >> it is always good to see a fellow from austin do so good and do so much important work on the world stage. i appreciate your service. i voted as a member of this committee for most of the trade agreements that have come here and hope to vote for more. if we were looking at it solely in terms of trade impact the three agreements we have been discussing would be so easy to support. the bush/chaney trade proposals are very much at the margins. even the korea agreement, much larger than the other two was described by the international trade commission as having a probable negligible impact on output and employment in the united states as you know in its study. there is much more at stake particularly in panama than just

trade flutes panama has made a name for itself, one of the leading tax havens in the world. if they discriminated against as they would not cooperate on taxes with anyone. as recently as four months ago the 0 eat -- oecd outline deficiencies in panama's framework. the reviews as much as any country in the world to cooperate anywhere on taxes. you have indicated you're getting close to being ready to submit this agreement. can you assure us that before you do so that panama will have provided full compliance in making all the necessary changes to correct these deficiencies-to ensure what they should have done many years ago? >> i can tell you we have worked -- we made it very clear last

year that it was frankly their call to make. if they did not choose to engage us on the issue of addressing the tax question then we would accept that. i would say we -- treasury has taken the lead. i want to be careful. it is a precise question. we have had very good engagement with -- >> i appreciate that. [talking over each other] >> seven years in which you can be declared legally dead. their seven years for panel of to fully implement and make the changes necessary to stop being the tax haven. hasn't done it and that remains a big concern to me in looking at that agreement. you and president obama have spoken eloquently of the need to make significant changes in our trade policy and recognize it is not just about moving widgets' across borders. it is a broader issue that encompasses the environment and working standards. i have some concerns. mr. lewis indicated the

performance has not been quite up to the standards of the speeches. specifically on the question of opening up the process and involving more public representatives and the way our trade policy has developed, you had lisa garcia testified at our committee 20 years ago. she could not identify any example where having public representation on these trade advisory committees had caused harm and some have alleged in trying to block increased public representation. i rub you shortly after that and i gather you and your staff having had almost two years are unable to identify any substantive experience or having the public involved in this process for representation of confinement representatives or health representatives has caused a problem. have you found any such problem in the history of usdr? >> your time is expired. briefly answer. >> if we didn't get it to you

this morning we got your letter and had an answer. president obama is committed not just in trade policy to opening of the advisory process in our government to americans and we have done our best to strike that balance between the statutory mandates we get from congress and the composition of our technical advisory committees but in opening it up to other voices as well. ..

our trading partners are not, and we know that we've got very innovative producers here. can you tell me what ustr is doing to make sure that our trading partners are truly focusing on science-based standards as a regulatory effort, rather than more political results or even effort? >> we have a good story here, mr. smith, and in the interest of time we do two things. one, for the reasons you articulated, one report that you mandate we deliver to you what's called 301 report. we have to tell you how our other partners are complying, say, for example, in intellectual property. i made the decision when we came in the office that was good enough. we now issue a similar report on specifically the sanitary standards. we will be submitting that to use them. that's one thing. but secondly, we have pursued in

every forum compliance with sound scientific standards, and it has helped us. we, for example, settled a long-standing case with the european union are there excluding our beef. where our national shipping 20,000 metric tons, almost $250 million into that market. after we had the h1n1 scare almost 28 economies cut off the u.s. pork. i think all those economies but one. we have dealt with everything from poultry in russia to beat in china. but it is one of our highest priorities. and we welcome your thoughts on how we can perhaps even do better. >> okay. thank you, ambassador. mr. chairman, i do have other questions that i will submit for the record. thank you. >> thank you. mr. schock is recognized. >> thank you, mr. chairman. mr. ambassador thank you for being here and i look forward to working with you on these issues which are important our country and even more so to my district.

the issues of trade. i guess to be very frank with you it's frustrating to hear the talk about these groups that have labor concerns. now that people don't have legitimate labor concerns, but who the groups are and to the administration truly is working with and looking to for sign up on the issues of labor concerns. let me give you an example. i have a very large uaw presence in my district. they manufacture heavy equipment that would benefit, the right now is put at a competitive disadvantage in doing business in latin america. i can assure you those labor workers would support having a level playing field in our country to do business in these countries. when i traveled to panama and colombia a year and a half ago with then majority leader hoyer we met with labor unions in colombia who, interestingly, the

trade groups who i thought would be opposed were actually in support of these agreements, but it was actually the public sector unions, the teachers, the garbage collectors who were opposed to trade not because they were concerned about human rights but were simply for political reasons. there have been significant progress made then, continues to be, president uribe with a line item by line item of the work that he has done. the ilo just last year he moved colombia from its labor watch list. since then for team colombia labor union leaders representing 79,000 of colombia workers have signed off in support of the agreement. the president of the united workers confederation in colombia stated that never in history of colombia have we achieved this much progress and use it as satisfactory. i am looking for specificity on who are we -- were not going to get complete agreement, and many

of the same labor issues that we had with the real were satisfied with the may tend agreement, which is what's in the current panama colombia agreement. and paris was passed with a strong bipartisan support. there were those who opposed it, but it got strong bipartisan support. we have the same labor and environment concerns, the same language in panama and colombia and the administration is saying wait, who are we looking to specifically to sign off? >> first of all i don't know that we're looking for any one group to sign off. we've made a play no one has a veto over the obama administration's trade policy. but we listen to all forces, just as we did on korea. i have met with members of his body that have expressed concern. we had labor advisory committee. we had statutorily mandated technical and public advisory committees.

when i come to illinois and gone to washington, i sit down and meet with the workers themselves. i don't just listen to the representatives in washington. we publish a notice in the federal register. we have all those comments but we take all of that information and then we try to come up with the best decision just as we did in the case of korea is what we want to do here. >> thank you. mr. crowley is recognized. >> thank you, mr. chairman. mr. ambassador, welcome once again. it's good to see you again and thank you for your hard work. i know it sometimes feels as though a thankless job, but you're done some remarkable work as it pertains to the korea free trade agreement and making it a better agreement for the u.s. and i want to thank as well mr. levin as well as mr. camp for the work and engagement with you and your office and making that agreement and better agreement. i know there's work to be done on colombia and panama. as it pertains to human rights

and to the rule of law there, and i know that your engagement over these next months will have an impact in making that agreement a better agreement as well. i look forward to that. but one country, if i could for a moment just to divert for a moment, a collection of india. i assume the chairmanship of the india caucus here and the house, co-chairmanship along with ed royce. and i know that secretary of commerce to gary locke is india right now working on a trade mission, seeking opportunities for u.s. companies to help expand opportunity for exports to india. but one issue which i've been interested in for a very long time is the investment caps in the indian insurance industry. right now american companies can only own up to 26% of the value

of an insurance company within india. even though i've been working to increase that number to 49%, what is the status as you know on that issue, and one more can be done to ensure that our service companies can export their services to india on a more level playing field? >> i appreciate your leadership on the indian committee, and we spent so much time on china sometimes we neglect the opportunities of the growth markets and needs in india and africa as well. as you know, president obama lead and export, a mission as part of his southeast asia trip last year. i will be on us, we've been extraordinarily frustrated at the slow pace of opening that market. we have a number of engagements with india. i lead a trade sort of policy forum in which we raise these

issues of them opening up their economy or more. this would be a case that when we can finish our bbq we are also looking to perhaps get india to sign a bilateral investment treaty which would review -- remove those caps not only an interest but liberalize their markets across the board. there's great opportunity for americans in the retail and agriculture and the manufacturing sector. some others were trying to address if we can get, frankly, the right balance in the doha round, the rest of it we will continue to see if we can't find the right buttons to push in our bilateral engagement. >> as you can see my time has run out, mr. ambassador. i do have other additional questions that i will submit to the ambassador for response, especially as it pertains to ttp. >> mr. lee is recognized. >> thank you, mr. chairman. mr. ambassador, i won't dwell on the subject to long but i think it's worth repeating, that's the issue of jobs. we are sitting on over 9%

employment again. and why i think congress get such a bad name is we don't listen to the american people. i think i heard you pretty loud and clear, and often even ranking member levin when he was in colombia. and climate we made improvements. and your believe all three of these trade agreements will create jobs here in united states yet we have sat for seven years and i know you are trying to move things along, it worries me when we keep saying weeks. i went back and you look at some these timelines. to talk and rhetoric we have i think the american people is tired of it. and it should be a nonpartisan issue. this is about putting people back to work in this country. to shift into another point because i think all three of these are well put -- they will put people back to work. that's our job, to help people in this country.

i came to manufacturing and that's the issue of ip and the issue of surrounding china. we all want to increase our trade their but china has been using indigenous innovation policy for quite a while. it's an opportunity circumvent international trade rules. and basically compel american companies to hand over their ipr. i know from your point just recently we had the meeting of the jcct. i was so easy go into some specific metrics that the administration has put forward to help remedy this situation. >> well, again, i want to make it plain, we're going to have to be constantly vigilant with china, congressman. but one this time is getting them to agree to delink the ipr issue from indigenous innovation. this has been one of the highest concerns to our business community in terms of china's efforts to try to have us

transfer technology in order to bid on that. we were successful between jcct and then the follow-up engagement with president hu and president obama, at least get them to commit that they've they would delink those two. there was also the question china had a very creative application of having to comply with their standards and experience in order to be able to bid on some of the project even though we are american companies that have experience all over the world. we're able to get them to agree to use that experience as well. but i don't want to in any means downplay the challenge ahead of us, but this is one area where we did have some success and will continue to monitor that. >> i thank you, and i would again urge you to try to push these trade agreements forward. it is very difficult to look our constituents in the eye. there are no jobs that we had. we have a solution to a.

thank you. >> ms. jenkins is recognized. >> thank you, mr. chairman, and thank you for holding this important hearing and thank you, ambassador kirk for being here today and for your service. as you briefly touched on in your opening remarks, russia has been seeking to become a member of the world trade organization for more than 16 years. rushes of joining the wto on the right terms would be good for both our countries, strengthening the rule of law in russia and promotes -- promote closer economic ties. last fall our two governments made very encouraging progress in resolving a number of key outstanding bilateral trade issues, and work continues on the multilateral terms of russia's accession to the wto. with that said russia has much work to do on the various long-standing issues of concerns thomas such as ipr enforcement, barriers to u.s. agriculture exports and other nontariff

barriers. such trade concerns combined with a broader foreign policy and human rights concern that congress is going to make it difficult to congress to consider legislation. as russia's deputy oh session to a top administration priority, and if so what exactly is the administration and more specifically what is a ustr doing or planning to do to address such congressional concerns and lay the groundwork to consider such major trade legislation? >> thank you, congresswoman, for your concerns. you partly answered a question in the first part of your recitation of what we have done. the president expressly directed our office to work with our colleagues and russia to address a number of the outstanding bilateral concerns we had. we did work on that successfully over the summer when we met the

presidents september deadline for that. that for the most part we think addressed an overwhelming majority of the bilateral issues. rushes a sentient then moves through the broader committee structure within geneva in which we will continue to engage them on those other concerns. we are frustrated. you mention agriculture and adheres to sound science. and as you know maybe you don't know. we vetted extraordinaire challenge getting our poultry and beef back into the market. but that also makes a case why we want them in the wto so that we have them in a form that we can address many of those concerned. the human rights component of that as you know, the state department takes the lead in addressing those, but we understand and appreciate all your concerns and want to work with you and other members of congress to address those so that we can move forward at the appropriate time. >> thank you, mr. ambassador, and i will yield back. >> thank you. mr. kind is recognized for

three-minute. >> thank you, mr. chairman. thank you for holding this hearing. mr. ambassador, thank you for being here and the work you're doing and trying to advance a pro-active forward-looking trade which is crucial for economic growth and job creation back home, and will look for to working with you on the pending bilaterals. glad to see that president -- and the bilaterals are important in their own right and the real game changer as you know is the multilateral round of discussion, the doha round. i apologize are just about. we had a meeting, i just want to impress upon you i think al gore did us not to give up the ghost yet when it comes to the geneva in the multilateral round. that's looking at the most significant impact not only for global prosperity and growth, but bring the emerging and developing countries into the global trading regime as well. we've had some hurdles there. that -- not which a lease is

agriculture provisions. that's another item that can be teed up in this next session of congress, the next farmboy -- farm bill reauthorization. a bipartisan fashion that we need to move forward on. he got the brazil case hanging over our heads. we've elected out to do with that by subsidizing brazilian cotton producers as opposed to reforming our own domestic cotton program which we should be doing, but also the so-called amber box payments and the work that needs to be done there. given my history with multilateral round and having talked to many in the trade ambassadors that are involved in those ongoing conversations, so many times the roads do come back to our foreign policy both here and the e.u. i know the administrations anticipating engaging the congress when it comes to the next farm bill and the work and some of the changes that we have to be pursuing. in order to assist i think an important trade agenda at the same time your.

so let's not take our eye off the doha round either even though it's been tough the last few years trying to get back on track. i know there are a lot of interested people that will see what we can do to advance that, and we don't all just become all consuming with these bilaterals right now. i can understand why given there in front of his impending. hopefully we can advanced on those later this year, too. thank you again. >> thank you. mr. paulson is recognized. >> thank you, mr. chairman, and thank you for your leadership on this issue. i really do appreciate it if you mention it just really quickly comes you mentioned one of the benefits of the south korea trade agreement is going to be our ability to engage in more services and having a market there. the same thing exists with colombia and panama in particular. 70% of their gdp comes from the service sector and it's important i think to get the u.s. access a market foothold there. i want to ask a question about potential benefits of what you might see with the trans-pacific

partnership and also the timing of that might be. we have participants right now the dpp that included four of our existing trade agreement partners and for new countries which do have trade agreements with us right now. so with respect to our existing trade partners, in what ways do see the dpp would add economic it to our existing trade agreement and with respect or potential new agreement partners, what areas do you think of those talks might offer us the most promise for american jobs and exports in the future? >> thank you for your question. we think the tpp is an extraordinary opportunity for the united states because it is our belief, and part of our rationale reaching the decision to engage with this original group of countries, our hope is obviously that this will effectively become the free trade agreement, at least of those toilet never a pack economies, impressed the architecture for what could be

the largest most dynamic trading area in the world in southeast asia. with respect to our trading partners we want to be -- we are not looking to retreat our existing market share. there are lots of areas that we can further in the industry by looking at regulatory coherence, addressing some of the nontariff barriers. obviously, with the new markets with malaysia, vietnam, those are extraordinary opportunities for american businesses across the board. we have a very ambitious goal. i don't know -- it's sort of our aspirational goal but the thought was start with a small number of like-minded economies. work very aggressively. put everything on the table and let's just see where we are by the time that our leaders need at the apec meeting. at least right now we are on that pace but i will admit this next meeting in chile is the first time we will again to table. so this is where the

negotiations will become a little more challenging. >> then i can just ask. i know the president on economic council urged the goal seeking a conclusion, the tpp agreement by maybe this november when the united states will hold apec i think in the presence home state of hawaii. do you agree that that agreement would be important, concrete deliverable by that timeframe is possible? >> if we could make that goal that would be exceptional but again there are a lot of moving parts that i want to make, right now the spirit of engagement among all of the economies is the right mood. but i'm also, you know, tempering this a bit because i know now we are getting into the guts of it. >> thank you, mr. chairman,. >> thank you. mr. berg is recognized. [inaudible] >> ambassador kirk, thank you for being here today. you and i both know how critical trading for the tranny and for us to recover from our current

situation. i know there's a lot of concern we've heard today just concerned by american public about trade. the national export initiative, the goal of doubling exports is a laudable goal and certain ones that i support. but in order to make that happen we need to get the american people behind this. you've done a tremendous effort going out and speaking on the advantages of trade across this country. i commend you for your efforts in doing that, but it seems to me, maybe you can discuss in more detail, how yourself and the administration is going to get the american people behind more trade, especially the three traded him and we're looking right now. [inaudible] >> i had the same problem. >> thank you for your kind words about our work. i've heard from all of you and i know we have differences may be on panama-colombia but i haven't

heard, refreshingly, for many of you a difference we all understand right now, with the american public care about, it's jobs. it is jobs, was it for me. and we've got to do a better job of articulating to the public how, when we provide opportuniopportunities for americans to sell what we may, grow, produce around the world, that can help create jobs here. for whatever reason we had a political environment that americans are a little more skeptical about. but i think having an honest discussion with the american public and an honest presentation of the reality of what trade does and doesn't do. but i do think it is important and i trust you will not take this as a political statement, keeping faith with the commitment we made to the american public, and i do think renewing trade adjustment assistance is one way to do that to say to those communities that feel that they've gotten in the short end of this, that you have heard us and you are going to honor your commitments. i think making sure that we

honor our commitments to those poorest countries in the world, the work that we do. when i take on china and stand up for american steel workers, we got criticized from one end of this country to the other. but we didn't spark a trade war. and infect everyone of those tire companies, for example, has increased capacity, has added workers, and are making more tires. so i think listen to the american public, being responsive to those who have concerned and honestly addressing those, making sure that we enforce our agreement to make sure we draw a connection between opening of markets around the world and creating jobs here at home your in order we do that with one voice and we stop attacking one another here in congress come a better chance we will have to convince the american public of what we are doing. >> thank you. thank you very much. i want to thank ambassador kirk for his time this morning and for his testimony, and also to all of the members for the thoughtful questions.

let me know for ambassador kirk that members may submit questions for the record and if they do i hope you will provide a prompt and full response. ambassador kirk -- all right. i guess were not quite done. with a few more minutes and we have a member who just came, mr. pascrell. is recognized for three minutes. we have had members have been going back and forth to the budget committee of mayors of the ways and means committee are on that committee also. spent i am flattered by the attendants and the number of members that have stayed for being here. i really appreciate. >> mr. pascrell is recognized for three minutes. >> appreciate that, thank you and thank you, ambassador. we discuss one of our major issues earlier with the committee. right of the bat i want to stress how important it is that the congress passed an extension of our trade adjustment assistance program. i think that's important to everything we worked on the last 14 years. critical. wouldn't you agree?

>> yes, sir. you may have missed my closing remarks. >> i'm disappointed that we're going to bring a bill to the floor. will bring a bill yesterday extending the programs and then, of course, it didn't happen. it was poltergeist on we believe we could accomplish this in a fiscally responsible way without cutting the bilateral worker training programs we're trying to protect. i want to thank you for being here. we been taking some important steps i believe. you have work to do to ensure our trade policy reflects our values and the benefits of trade. i told you this morning what my prison is to look through on every trade deal. i will not back off that. you know where i stand. it's not going to be -- by any stretch of the imagination and i respect your candidates on the matter. the trans-pacific partnership negotiations really represent

the obama administrations best opportunity to reshape our trade policy. it also raises significant challenges. i have two questions regarding the tpb. one of the countries involved in the negotiation, vietnam, is classified by our own government as a non-market economy, quote unquote. they don't have a democratic government and many other major industries are controlled by the state. as you negotiate the trans-pacific partnership, what efforts are you making to ensure that state owned enterprising countries like vietnam, and we had this problem in a lot of countries, which our own or controlled via foreign governments, very serious problems, very serious to our competitiveness and leveling the field. what are you doing -- if this will not be able to end our

market they won't be able to in our market, instead of the companies commercial interest? >> thank you for your candor both now and this morning. i would safety one of the reasons we are excited about the tpb, it is an opportunity to bring a country like vietnam into this global situation. one of the areas that we are frankly looking to expand on in our investment chapter is to take this opportunity to address that challenge of state-owned economies. that's one of the issues that we are specifically looking to engage vietnam on that, as well as with some of the countries, the challenges brought on by some of these indigenous innovation. >> thank you. thank you ken, ambassador kirk. you have spoken to many elements of the administrations agenda and i'm encouraged by your statements on the south korean agreement. i am disappointed that the

administration has not been more forward leaning on plans for colombia and panama trade agreements. as members of this committee, including myself, as it was repeatedly said, american employers, workers, farmers, ranchers, are put at a disadvantage every day that we delay here in washington. so i continue to hope that the administration will let out a clear plan with specific areas of concern, a specific timetable for considering all three of these agreements in short order. and i strongly believe that we should consider all of the agreement, all three of them in the next six months and hope that we can work together to make that happen. again, thank you for your testimony today. up for now the committee is adjourned. [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations]

cia director leon panetta, national counterterrorism center director michael leiter and fbi director robert mueller. live coverage from capitol hill here on c-span2. expected to start any moment now. [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> once again we're standing by for the start of the house select intelligence committee hearing on u.s. national security threats including terrorism. we expect to hear from the director of national intelligence james clapper, said

director leon panetta, national counterterrorism center director michael leiter, and fbi director robert mueller. we will have that for you as soon as it gets underway here on c-span2. the terrorist threat was a topic of the hearing we showed you yesterday morning here on c-span2. homeland security secretary janet napolitano warned the homeland security committee that the terrorist threat is at its highest level since 9/11. she told the committee terrorist danger is evolving to include mostly westerners who are being recruited by terrorist groups. there's no -- also appearing at the hearing focusing on homeland security threats from abroad and at home. that hearing is available to watch on our website, c-span.org. [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] >> we are standing by live on capitol hill for this hearing to get underway on national security threats. we do expect to hear from deny director james clapper, said director leon panetta, or the director of the fbi robert mueller. of the witnesses have arrived just yet. this was expected to start at 10:00. we will have the 40 when it does get underway here on c-span. the house has gaveled in this way. at noon they will take up a role for debate on the patriot act. they are begin to considering resolution to review regulations

that might hinder job creation. vote on that resolution are expected tomorrow. the senate will return today at 4:00 after a two-day break for democrats summit. they are expected to work on trade legislation that could produce benefits for u.s. workers hurt by trade legislation. it appears that some of the witnesses are entering the room. we expect this hearing to start shortly. live coverage on c-span2. [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> we will call the committee

and will come to order. i want to welcome director clapper and our other witnesses morning. they are very busy people and appreciate you all taking the time away from the important work from your agency to participate in today's hearing. please pass along our thanks and appreciation to the men and women in your agency for their commitment and dedication in the defense of the united states. we are eternally grateful for their sacrifices. i also want to welcome dutch ruppersberger as the committee's new ranking member. he is a solid later, dedication and how will serve the committee and country well. dutch is also a friend and i look for to working with him to foster the strong bipartisan energy that we will need to lead this committee to our oversight responsibility, and to keep america safe. and, of course, it never hurts to have a former prosecutor on your side. i'm looking forward to discussion of threats in the witnesses statements this morning, and the questions and

answers that follow. before we get to that i want to talk a moment about where i would like the committee to goat and a new congress and we had the opportunity to talk to each of you about that direction from reasserting oversight to taking a strong evaluation of the 10 years where the budget has grown exponentially and changed significantly. the budget cyber issues, leaks and many others. on reasserting oversight, it's a profound honor and a tremendous responsibility to assume the role for the tips of chairman in such an important juncture in our nation's history. the u.s. intelligence community is vital to defending our nation from many threats that we face. i have no doubt the hard work of our intelligence professionals is one of the primary reasons that has not been a successful major attack in the homeland since 9/11 despite numerous failed and disruptive in al qaeda's unrelenting efforts to attack the united states. our job here in congress is to make sure that our intelligence

agencies had the tools and authorities they need for the important mission and that we never stop working to improve the intelligence community's effectiveness. it will be critical where we need to be. we will be supported when we can be, and we will also take a critical look at the policies of which you are given by policymakers when you are asked to complete a mission. that begins with reasserting the house intelligence committee force for bipartisan oversight was intended to be when it was established in 1977. i plan to do my part to restore the tradition and are going to need the help of every member of this committee to get that job done. i intend to restore the critical function of the committee passing a meaningful annual intelligence authorization bill. we are already working on the fy11 built to be quickly followed by the fiscal year 2012. the 9/11 commission recommended the congressional authorization and appropriation committees work more closely on intelligence matters. i'm happy to announce that the house intelligence committee voted unanimously yesterday to

allow appropriations members to participate in our hearings and briefings, and our goal here again is to close the light between appropriations committee and the budget work we do on the intelligence committee. it might be frustrating for you on vacation, but at the end of the day we will get a much better more significant product for you to do your jobs and complete your missions. the 10th year anniversary of 9/11, the 9/11 attacks transformed our country in a way, in the way we do national security. since that day many threats we face have continued to evolve and grow in complexity. as these threats evolve our response needs to keep pace. in the face of this rapidly changing environment and with the 10th anniversary of the 9/11 attacks coming up this year it is an appropriate time for this committee to take stock of the last 10 years and examine whether the tools and institutions we have created are working and whether they are positioned to face of the threats of the future. congress has made comprehensive

historic changes since 9/11 to update the laws that authorize and govern our intelligence activity. we need to keep working to ensure that those laws keep pace with the new threats and rapid changes in technology your critical provisions of the foreign intelligence surveillance act expire at the end of this month. we need to rapidly reauthorize these provisions while examining other laws like the communications assistance for law enforcement act. that are needed for this modernization. the fisa bill has been vital and has been vital to protecting our nation and we need to work toward making these tools permanent as a part of our arsenal. we must also reinforce legal authorities concerning detainees. one of our best intelligence sources in the war on terror. we need to examine a system for intelligence collection and long-term detention that is flexible and can into her changing circumstances and challenges no matter where the

detainee is picked up off the battlefield in the world. executive orders and other mandates are not good enough. this problem requires legislative action. the recidivism rate amongst released gitmo detainees has reached an alarming rate, 25%, and that's just the ones that we know what. we need to take a hard look at the detainee transfer and release process your we have never had a good debate over the last decade about the institutions we put in place after 9/11 to prevent another attack. particularly the office of the director of national intelligence. the national counterterrorism center in the transforming of the fbi is more of an intelligence driven organization. we need to move beyond the debate about whether the dni staff is to laws. the size of the dni and staff most certainly shrink but the real issue is what we are asking the dni to do. mission should drive the size of

the staff, not an arbitrary number. director clapper communism great ideas about how to better organize odni. you shared them with me and i did other members of this committee and we want you to succeed. the fbi is a unique and vital institution straddling the foreign and domestic threats to our security. as former fbi agent i'm especially interested in the efforts of the fbi to build an intelligence service within a law enforcement agency and better adapted year old culture and practices through a rapidly evolving threat of terrorism. the fbi has made progress since 9/11 and has become much more intelligence driven. but as the fort hood tragedy illustrates we must accelerate the pace of the progress and are looking forward to providing you the assistance to do just that. al qaeda has increased the use of westerners and americans to entry our defenses. of assault with a fort hood tragedy, the threat is further complicated by acts of violence by homegrown and self radicalized american militants. we depend on the fbi's unique role to address these complex

and growing threat. on the budget. our nation is invested heavily in our intelligence capabilities since 9/11 and intelligence budget has grown exponentially in that time. there's no doubt in my mind that we have to reach an understanding about the return on investment in terms of real improvement to our security. history is littered with examples of the consequences of nations that live beyond their means for far too long. not surprisingly the american people have become justifiably concerned about our budget deficit. we must seek greater efficiencies in your existing budgets to either fund new or expanded intelligence programs are returned those savings to the american people. i understand achieving significant efficiencies in your intelligence budgets will require some hard choices and i look forward to having a good discussion with you about the pros and cons of different approaches getting there in the coming months and years. for example, i urge the intelligence community to remain

open-minded about the alternative satellite architectures that could potentially meet current requirements at a much lower cost to the taxpayer. that made up my mind yet but it and study my options carefully and i would suggest you do as well. while for the budget growth is unlikely in this difficult fiscal environment i will hold the line against any cuts that endanger our key intelligence capabilities. intelligence is not a luxury. i want to avoid the mistakes of the 1990s when we cut too deep in important areas of the post-cold war intelligence budget. making sure our troops have the best intelligence and support possible is one of my highest priorities and i intend to focus more on that in the coming years on the military intelligence budget your the hips is the only operating committee with jurisdiction over the national intelligence program and the military program budget. it is in a unique position to ensure that our civilian and military intelligence efforts are fully integrated and coordinator. mr. ferguson, i understand the

reprogramming of funds that is currently before congress has not been provided to this committee. as i'm sure you're aware under house rules we have concurrent jurisdiction with the armed services committee over that budget or does it in something that has been going on for almost three years. i am sure that it's a misunderstanding and it was never the department of defense's intention not to keep the house intelligence committee fully and currently informed of these matters as required by law. i understand you have requested a congress respond to this request by friday. i would appreciate your assistance in quickly getting this problem resolved so there are no unnecessary delays to the reprogramming of these funds. on cyber as the role technology becomes increasing public and are technology defense, the cyberthreat from state and nonstate actors rose at an even faster rate of the creation of a cybercommand at fort hood was a step in the right direction to address the increasingly grave threat but we are going to need some legislative changes to

achieve the necessary unity of effort across the larger united states government as well as to bring more unity effort across the private sector. we have a great deal of talent and when it comes to cyber defense, we just don't have the policies and the legal authorities in place to make your job easier. the speaker of the house assess congressman of this committee to lead efforts on house on this important issue. he will have the full support of the house intelligence committee and the development of cybersecurity legislation. as we move forward with this legislation i believe we need of a good debate of whether and where to down the -- all the boundaries of what the united states, defense and how we can have any critical infrastructure or industry players that are left outside the perimeter of defense to themselves. on police please, the wikileaks fiasco should lead to an increased focus on information sharing within the united states government. we missed critical opportunities to prevent the 9/11 attacks because of the failures to share

information between government agencies. intelligence community has made progress since 9/11 in improving information sharing and we cannot allow the wikileaks disaster to be an excuse to halt or reverse these programs. we need to make sure we learned the right lessons from wikileaks. the right lesson is to redouble our efforts to promote information sharing while protecting security of that information. it like to call it smart access. smart axis is the identity-based information security management system that provides our ability to detect and deter the few bad actors, not an essentially deny access to the sensitive information they need to get their work done. in response to that fiasco, the intelligence community and defense department have put together a good plan to implement smart access tools like auditing controls to detect the misuse of our sensitive data. similar to the systems credit card companies used to detect fraud. is long overdue smart access fixes will not be cheap, but i

believe they are will worth the price and investment by the american people. this committee will monitor the implementation of the sexes and the work to identify any additional steps that are necessary to ensure our sensitive data is secure. with that i look forward to working with you all. i look forward to your questions on the threats that face america. i know there are many. i know the hours are long also. we have had the privilege to meet many of you on weekends and nights indiana congressman of this mission and the hope that is not lost on the american people at the level of effort that is put into keeping the homeland safe. and without i want to thank you. i look forward to the questions and it yield to the ranking member for any statement he would like to make. >> thank you mr. roger. first, congratulations on your chairmanship. also, we commit to work together in a bipartisan way and in this very serious issue that we deal with, intelligence and protection of our national security.

i would first like to recognize our premier panel. we have the best of the best here today. director of national intelligence james clapper. with cia director leon panetta. fbi director robert mueller. director get a role in burgess. principal deputy undersecretary of defense for intelligence department of defense thomas ferguson. director of national counterterrorism center, michael leiter. assistant secretary of state bureau of intelligence and research department of state come ambassador goldberg. and undersecretary of intelligence and analysis department of homeland security caryn wagner. and i would like to point out she used to work with us on this committee. today, thanks for joining us here today. today's annual worldwide threats hearing is a rare opportunity by members of the intelligence community gives an assessment of the threat we are facing around the world in an open unclassified setting. on this committee our highest

priority must be keeping our country and citizens safe. the stakes are high and the challenges are great but our intelligence community has shown that the best and brightest minds of the world. we are committed to giving these professionals the resources, tools and capability they need to counter the numerous threads that america faces. everything from al qaeda in the arabian peninsula to homegrown terrorists living in the united states. at the same time it is the committee's responsibility to conduct comprehensive oversight. we will demand accountability from the intelligence community and expect we will be kept fully informed. our job is not to tear down the agencies but instead build you up to be the strongest most capable you can be. our role is oversight. good intelligence is the best way to prevent terrorism and keep the world safe. since our last threats hearing in february 2010 we have seen situations where intelligence has succeeded in stopping attacks saving countless lives. last october to chicago bound

bonds -- bombs. the plan was disrupted and no entities is a good intelligence and a strong partnership with key allies around the world. in november and somalia born teenager plot to bomb a christmas tree lighting ceremony in oregon but was caught in an undercover sting operation that again because of good intelligence. right here in washington a pakistani born man from virginia was arrested for helping plan simultaneous attacks on several metro stations. he was now before anyone was hurt, again because of good intelligence. but we also know we need to do better, and we can do better. last me a young man trained by the pakistani taliban attack afghan in time square and tried to blow do. a passerby noticed the smoke and called police. no one was injured and the terrorists were sentenced to life in prison but the situation showed a difficult it is to detect low-level operations. you cannot turn on the television or open up a newspaper and not hear about the

unrest brewing in the middle east. mass protest continue to sweep through the region. egyptian president hosni mubarak has agreed to step down in september so a new government can take over, but the protests have not subsided. i believe the moment of him returning to a moment of promise for the egyptian people and for the world. egyptians deserve open and free elections. i know do that for to a future of great freedom and greater opportunity with a government that is fair, just and response. egypt should be an important ally in the region. our goals remain the same time a stable middle east, a partner in the fight against global terrorism and the protection of vital energy supplies. the future government of iraq must support the peace treaty with israel. our intelligence professionals are working diligently to provide the latest intelligence about the situation in egypt. they do not have a crystal ball and cannot predict the future. the protests in egypt are part of unpredictable popular uprising using social media.

we are always pushing him to give us more intelligent. in nearby iraq forces are being drawn down. in afghanistan a 30,000 troop surge is under way. and the security of certain areas is being turned over to local forces. yemen, somalia and pakistan are troublespots when it comes to terrorism. america's gnashes security hinges on the future of civility across the region. we must be vigilant as we work together with our allies and continue our efforts to prevent safe havens for terrorists and their training. the 10th anniversary of 9/11 is approaching this september. this sobering milestone reminds us of our fight against terrorism is far from over. today, i'm with 10 years since the most deadly attack on american soil, our principal challenge is the same. identify terrorist plots and stop them before they harm americans and our way of life. back at home we must also address self radicalization at the threat of terrorism by americans in america. in addition to the oregon case

about a week ago pennsylvania resident, an american citizen jihad jane pled guilty to terrorist charge. these are the people we have caught and i am as you are coming many people in this room we are concerned about the ones still out there that we have not caught. sadly, terrorism is not only challenge facing national security. we must not forget about mexico. the violence in mexico for the war against the cartel is an american issue as violence spilled across the border. police are taking a stand against the drug trade are being threatened and killed. we put so many resources into the middle east. we must also increase our support to mexico because it has a direct effect on american people and citizens. iran and north korea are as steel threats to international security. i remain extremely concerned about iran's nuclear weapons program and the problems it causes for israel. iran continues to stir up things and play a game of cat and

mouse. the prospects for diplomatic dialogues are not going anywhere. china and russia, they pose own national security challenges to a significant buildup of the chinese military and space programs are real issues we must deal with. at the same time we can't ignore the fact that the chinese and other governments and nongovernment groups are engaging in cyber attacks. the united states and other parts of the world. these attacks can cause big problems even though right now they are gathering little national attention. cyberattacks don't just power our cell phones and it has. they keep our electric grid running. protect our water supply and operate our classified military intelligence systems. these systems are disrupted, they could have catastrophic consequences. we've had examples of what is possible. last week it was reported the nasdaq was hacked. tracer not affected by hackers penetrated certain intervals offer. the website wikileaks disclose tens of thousands of classified documents that could put

diplomacy in jeopardy. when mastercard, paypal and amazon prevented and their supporters from making donations, the group calling themselves operation payback attack these websites and shut them down for a period of time. cyber threats are real. the threat from cyber attacks must be addressed. the last issue i would like to discuss is space. we have some of the best satellite systems. america's most powerful country in the world in part because of the fact that we control the skies. satellites are important because they keep us safe. we use satellites and images to track suspected terrorists around the world and stop future attacks. satellites allow us to monitor global development and provide real-time data to our troops on the ground in iraq and afghanistan. when our troops climb a hill on the battlefield they know what is on the other side of that hill because of our technology. we can find that needle in haystack because we have the best technology in satellites in

the work. you may have heard the president in a state of the union mention our sputnik moment. and more than 50 years ago the soviet union rocked our world, the united states, by launching sputnik into space. 12 years later america and the challenge and landed a man on the moon. the space industry in the united states was born. american made massive investment in research and development and deployed the best and the brightest. put unprecedented emphasis on science and education. america made worldwide headlines in just about every kid on earth wanted to be neil armstrong. today america's dominance in space is fragile. we have skyrocketing costs, oversight and failed programs. when it comes to rocket launch capabilities other countries have seen costs drop, but the united states has not. the u.s. is spending more per rocket launcher and having more delays than anywhere else. that is because the united states has committed to a two company outlines to handle all lodges despite the fact that

other u.s. companies are showing promise. we must get costs under control and consider other approaches that satisfy the needs of the intelligence community as well as the warfighter without busting our bottom line. in this area tight budget we must ensure every dollar is used wisely. i think doing and across the board cut is a bad idea. for instance, 5%, 10%. you got a good programs with the bad, in that form the. we must review each program on its own merits. we must identify what is working and get rid of what is not. including redundant programs that cost us too much money. as we embark on this new congress we must do what is right for the american people to keep our families and our communities safe. i agree respect for the men and women of the intelligence community. they live in the shadows in remote locations risking their lives for the country. sometimes i refer to them as the offensive lineman on a football team do you only hear about them when they make a mistake. i would like to acknowledge

these players for their service and sacrifice by giving them the research they need to get the job done for our country. mr. chairman. >> just as administered no. this be the open portion of veering until approximately, we might push that until 1215 time and in close the session. >> can i say one thing? i want to thank you for having this opening. i think it's a wonderful way to start the session. i hope we will consider the opportunity to have more of these because as you said, the american people need to know how our intelligence community is working to keep us safe, and then have a classified hearing afterward if need be. so thank you very much. this is very useful i think for us and for the american people. >> thank you. and without i will turn it over to mr. clapper. >> thank you chairman rogers, ranking member ruppersberger, and distinguished members of the committee for inviting us to present the 2011 annual threat

assessment. i am very pleased, very proud to be joined by my intelligence community colleagues, that ranking member ruppersberger introduce. the reason we're all here together is important both for the optic in the substance. intelligence community is a team. it is a community. i'm very proud to be associated with my colleagues here today who represent literally in tow hundreds of years of public service and involvement in the intelligence profession. i want to particularly comment though on two of the organizations. first, bob mueller to for my money is the best fbi director ever, has led a remarkable transformation of the fbi into an intelligence driven organization. and to my left, leon panetta, i'm very proud to say is a tremendous colleague and friend. and i think we're doing a lot to kind of change the paradigm

about what has been a historical strained relationship between offices of deny and cia. cia is a crown jewel in the intelligence committee and a national treasure. i'm very pleased and proud to be associated with the agency in this capacity and with leon. before i get into marks, my prepared remarks, i would just like to say on behalf of all of us that we appreciate your support. we welcome in fact, we need your oversight support engagement and your partnership. in various past capacities i have been associated with to oversight committees since they were stood up. and what i see happening here is our reversion, if you will, to original spirit of the way of what was intended for these committees to be. so we are all very heartened and

encouraged by the way you have approach to this. particularly want to endorse something that chairman rogers, you said about the importance of the patriot act extension which, as you know, expires at the end of this month. this is critically important to all of us. and, of course, we know this is a matter of discussion and debate in both houses. we would surely favor at least a three-year extension to coincide with extensions of the fisa amendment as you discussed. ..

the first and foremost of these concerns is terrorism. counterterrorism is top priority because job one is to keep americans safe and the homeland secure. intelligence community suffered devastating attacks. most recently the cargo bomb plot this past october. we apprehended numerous dangerous actors throughout the world and much of these capabilities including its operations, training and propaganda. we are deeply engaged with foreign partners to the effect to prevent terrorist actions and remain vigilant despite

degradation of the organization against al qaeda's desire to attack the west. we are especially focused on al qaeda's results for americans for recruitment, and disturbing instances of radicalization among our own citizens. last? talents community health provide information that led to the arrest of extremists in the united states. homegrown terrorists are a small part of the global threat. they have a disproportionate impact because they understand the homeland and have connections and easier access to those facilities. counter-terrorism is central to overseas operations in afghanistan and to defeat al qaeda is often -- we will continue to see success in economic development that will erode the willingness of the afghan people to support the

taliban and their al qaeda allies. but there's no question the people of afghanistan are up against a determined insurgency. corruption including extortion and drug trafficking. pakistan, to destabilize the government and attack its citizens in afghanistan and other nations. although u.s. combat operations have come to close in iraq bombings by terrorists meaning solidifying the security gains remain a high priority. another major concern is proliferation of weapons of mass destruction. proliferation threat environment is a fluid borderless arena that reflects the broader global reality of an increasingly free movement of information. this environment is critical for scientific and economic advances allows material, technology and

know-how related to chemical, biological and radiological nuclear weapons as well as missile delivery systems to be shared with ease. iran is of course a key challenge. in the months following the 2009 iranian elections we saw popular movement challenging the authority of its government. we also saw the iranian government crackdown with harsher authoritarian control. we look forward to discussing iran further with you in closed session particularly its nuclear posture but suffice it to say, we see a disturbing confluence of events. is increasingly rigid and autocratic and dependent on coercion to maintain control and the finance towards the west and and iran that continues to it chance uranium enrichment capability along with what appears to be scientifically turtle technical and industrial capacity to produce nuclear weapons if its leaders choose to do so. north corey's nuclear weapons and missile programs also pose a

serious threat regionally and beyond. pyongyang single the willingness to engage in dialogue but also creates international recognition of power. and a troubling willingness to sell nuclear technology. i want to highlight the major aspect of the work of the intelligence community. we live in an interconnected interdependent world where instability can arise and spread quickly beyond borders as we saw recently and graphically have seen. examples of this include the sudden fall in to nietzsche and a contagious uprising in egypt and lesser demonstrations elsewhere. intelligence community is following these events very closely. recently questions have been raised as to whether the intelligence community has been reporting on these events effectively. the answer, i believe, is yes. we have been aware of instability in the middle east,

north africa and reported those tensions and their implications. specific triggers for how instability would lead to the collapse of various regimes cannot always be known or predicted. would intelligence can do is reduce the uncertainty for decisionmakers but not necessarily eliminate it. whether those decisionsmakers are in white house, but we are not careful and. the intelligence community has provided critical intelligence through the crisis and reporting demographic changes, economic uncertainty and lack of expression for decades. i also want to highlight that in our independent commission to dependent world economic changes cannot be underestimated. from increasing debt to fluctuating growth to china's economic and military rise. we're also extremely focused on cyberthreats as you are and their impact on our national

security and economic prosperity. this threat is increasing in scope and scale and its impact is difficult to overstate. industry estimates the production of malicious software has reached its highest level yet with an average of 60,000 new programs or variations identified each day. some of these are what we define as advanced persistent threat twitter difficult to detect and counter. we're seeing a rise in intellectual property theft. industry estimated the loss of international property in 2008 alone caused business approximately $1 trillion. we believe this trend has only gotten worse. last year some of our largest information technology companies discovered that throughout much of 2009 they had been the targets of systematic efforts to penetrate their networks and acquire proprietary data. the intrusion attempted to gain access to repositories,

underlying software that comprises intellectual crown jewels of many of these companies. along with falling current cyber threats we are analyzing interconnected applications of drug trafficking, emerging diseases, water availability, organized crime, and other issues. the face of these challenges, we must always remain attendant to developments in all parts of the globe and all spheres of activity. that is why in my view we must sustain a robust balanced a ray of intelligence capability to cope with this wide variety and scope of potential threats. i would also like to take a moment to emphasize counterintelligence concerns will continue to worry me. we face a wide range of foreign intelligence threats to our economic, political and military interests at home and abroad. in addition to cyber and other

threats, unauthorized disclosures of sensitive and classified government information also posed substantial challenges. the most blamed example of course is the unauthorized downloading of classified documents subsequently released by wiki leaks as you already addressed. from an intelligence perspective these disclosures have been very damaging. i dedicated my career to protecting information and i want to assure the committee as part of a broader government effort we in the intelligence community are working to better protect our information networks by including audit and access control people increasing our ability to detect insider threats and expand and awareness of foreign intelligence trek across the u.s. government. i believe we can and will respond to the problems of intrusion and weeks but without degrading central intelligence integration and information sharing. the world is more interconnected and intelligence capabilities are as well.

they're better able to understand the vast array of interlocking concerns and trends and whether the head of adversaries because we operate as a community, as an integrated community. before we move to your questions i want to say a few words about the value and sides of the office of the director of national intelligence which has been the subject of extensive debate and discussion this morning. shortly after i became the n i six months ago today i began a thorough review of the organization examining the intelligence reform law and other executive orders and the activities that they direct to execute. upon review a decided to reduce or eliminate functions not required by law or second order that not core missions of the dia -- dni and identify elements that should transfer out of the 0 dni which would transfer to another executive agency on my behalf and carry these out on

behalf of the old dni. we don't need to do everything on the dni staff itself. based on this review the office of dni is being deemphasized in the budget. as you alluded and already discussed, i have asked for your support and look forward to presenting this in greater detail with the rest of the community and seek your support as well. i believe the office of dni can add true value to the intelligence community to ensure intelligence is integrated across disciplines and agencies before being presented to our customer. that is where i personally feel dni can make a difference on a daily basis. we thank you and members of the committee for your support and your dedication to the security of the nation. my colleagues and i look forward to your questions and our discussion. thank you very much. >> thank you, director clapper.

one of the 800 pound gorillas in the room is this point about the lead up of intelligence on egypt. one of the things that struck me into nietzsche, ben ali still believed he would be president. by afternoon he was in a helicopter. that is real time. i want to give those of you an opportunity to directly give your assessment on the intelligence leading up to it. real-time intelligence. cnn and fox are currently reporting that hosni mubarak may step aside today. i want to give you the opportunity for the first time to talk to the american people about your assessment and real-time intelligence where we need to go. >> let me start and i will offer my colleagues that wants to comment on this, as i indicated

in my opening remarks the intelligence community has long identified the conditions that exist in the middle east which in terms of economic concerns, political repression and frustrations that accrue to many people in the middle east and this is a characteristic of many of these countries. when things began to heat up in tunisia with demonstrations in the streets, it was run by an autocrat who had been there for 23 years, appeared to have things under control and security apparatus to cope with it. we obviously need -- hard to tell the impact of a fruit vendor who had his food stolen and self immolated himself and that served as a catalyst for

more widespread uprising. as you alluded, ben ali may very snap decision the day he drove to work. he wasn't thinking about that. he made a sudden decision to leave. that in turn galvanized 1300 miles to the east, what has now become a full-blown uprising in egypt. i have had occasion to go back and review the thousands of reports that were done. open source, extensive reporting particularly on social media. from my part we have done the yeoman's work reporting on this

dynamic, fast-changing situation. but as i said before i think it is important -- as i said before it is important to distinguish between mysteries and secrets. secrets are notable. mysteries in terms of what is going on in someone's head are a little harder to predict. it is our place to lay out conditions, what the potential options are and where we can if we can make some educated forecast. that is all we can do. it is like earthquakes in california. you know the conditions for the tectonic plates and where the fault lines are but actually predicting the onset of the earthquake is more difficult and with that i will turn to leon for additional comments. >> my congratulations to you. ranking member and all the

members, thank you for your leadership and support. i look forward to partnership with all of you. we can't do this job alone. we need you to work with us to protect americans. i think you foank you for that. the purpose of intelligence is to make the best policy decisions. as far as this region of the world we have long provided a series of reports that indicated the nature of the problems in that region. repressive regimes, economic and political instability, stagnation, lack of freedom, the need for political reform.

all of that has been provided in a numerous amount of intelligence reports just last year alone. almost 400 reports were provided that basically described the concerns that we saw in this region that had the potential for disruption. the area where we need to do better collection is when it comes to the triggers that ignite these conditions. and cause the events we have seen take place. there are a number of traders out there that came together. one was this large unmet expectations of the people that are there in this country. two, large numbers of you that are there. any of them are better educated, many of them are unemployed. three is the whole role of the

internet. and the ability to put a demonstration together in quick time. that is something we need to pay more attention to in today's world. lastly, the role of the military has always been revealing than the military ultimately is controlling any demonstration in any regime. the loyalty of the military is now something we have to pay attention to because it is not always one that will respond to what a dictator may or may not want. as a result of these kinds of triggers a think it is important for us to do a lot more collection in those areas. what we have done in a 35 member task force is focus specifically on these elements. what i have asked for from all of my chiefs of stations is

better collection on issues like popular sentiments, issues like the strength of the opposition, issues like what is the role of the internet in that particular country, so we can get better information to the able to provide to our leaders. as jim clapper pointed out i have used the earthquake analogy because people can tell you where the tremors are and the fault lines and the path and even tell you that the threat of something happening is close but they can't tell you exactly when an earthquake is going to take place. our biggest problem is how do we get into the head of somebody? we are trying to get into the head of kim in north korea and the head of the supreme leader in iran. when it came to ben ali everyone

assumed the dictator would crush any kind of demonstration. i don't think he knew he was going to get out of town until he decided to jump on a plane and leave. those of the kinds of things that are obviously very tough for intelligence to predict but our job is to collect as much as we can. because of what happened in tunisia we are in a better place to look at egypt and what was happening in egypt. we provided a number of reports about what was taking place. as you can see, i got the same information you did, versus strong likelihood that hosni mubarak will step down this evening which will be significant in terms of where hopefully the orderly transition in egypt is. >> if you had to give it a grade how would you give real-time intelligence as it is currently unfolding and has unfolded in egypt? intelligence provided to policymakers? >> at least be plus.

and prepared to discuss why in closed session. >> if you could address al qaeda at's intentions to secure radiological or dirty bombs and other weapons we might consider weapons of mass destruction? >> al qaeda senior leadership as you know has been committed to obtaining advanced weapons of mass destruction for some time including its experimentation with anthrax in afghanistan. we assess that al qaeda's senior leadership in pakistan remains committed to obtaining all types of weapons of mass destruction but thanks to some outstanding and effective offensive action against al qaeda senior leadership in pakistan will also assess their ability to do so is greatly diminished since 9/11. with respect to al qaeda's abilities we believe that al qaeda and the arabian peninsula,

where anwar al laki is committed to weapons of mass destruction particularly chemical and biological weapons and we are focused on the availability of precursor elements in the homeland. chemical, biological and radiological materials. >> you would read their intention as i? >> yes. >> that occurred thread that is ongoing? >> the intent remains high in pakistan. >> foster that deep -- end, director mueller clearly involved about the gap in authority and law for the fbi and other national securitythe r the fbi and other national security agencies. talk about that understand our strategy for preventing an al

qaeda attack. >> committee is aware in 1994 a statutes was passed that required communications carriers to be in a position to provide communications to the intelligence community with a court order. since that time communications have changed dramatically. no longer is it a telephone company that carries the communication. it could be google or facebook. it could be microsoft. any number of ways to communicate now. our challenge is to a short with an appropriate court order issued by a court in a criminal case, with that in hand we go to one of these carriers, expanded group of carriers that they have a solution in place to be responsible. to be working with congress in terms of trying to narrow what

we call the going dark gap. were we not to do that we would lose a great deal of insight into the planning, preparation of individuals who were contemplating terrorist acts and individuals involved in organized crime, additional capabilities we had had so this will be an issue that we will be working with the committee to resolve. ..

>> these are the patriot act provisions that are currently up for reauthorization. there are three elements of that. the first is the business record's provisions that allows us with a court order to get certain business records related to national ongoing security in investigations. this has been years over 380 times, and were that to expire without any reup, it would be a substantial detriplet to our abilities to gather what are critical business records and further our investigations. the second element of the legislation is approval for roofing wiretaps that where you designate an individual who is a subject and is communicating and

using a cell phone, itunes, some gaming counsel, we don't have to have a separate order for each communications, but we have a roving wiretap approved by a judge, and that's been used 190 times since its inception back in 2001. to loose -- to lose that, it would undercut our work. lastly is the lone wolf provision. this allows us to identify an individual and understand that that person is a national security risk, but we may not be able to tell that that person is part of a particular group. this was an issue in the 9/11 report with the inability to show one of the individuals there was part of a group that precluded us from getting a fisa, and this is to ensure when we have this evidence, we bring

it to a court and can utilize our tools to go up on communications of a lone wolf. last thing i'll say, the threat this day and age is lone wolf to radicalize domestically. this is essential for our ability to identify terrorists in general, but most importantly, lone wolves. in each of the cases, you talk about the requirement to get a court order. in your mind, it is due process for any united states citizen for any reason lost in the process of the extension of this law. we do not have the unilateral capability of issuing these orders. it has to go through a judge, be approved, and the judge issues the orders in these three instances. >> if this expired, could an fbi

agent go to court and get a roving wiretap on a child pornographer? >> no, they could not. >> more questions, but i'll deal with you in the closed session in interest of other member's time. >> thank you. i'd like to echo what was said about the programming. our committee in previous years has not been fully informed of the matters on the mitt program, and by law, we're required to oversee that, and i think we need to get this resolved, and it's important i think for department of defense and secretary gates that we feel strongly about this issue. we would like to get with you all and matter. >> yes, sir.actuly discussed tht night at senior levels, and we are very willing to take a serious approach to have an exchange with you, your chairman, your staff, and

however you choose. >> it's going to a committee, but that's our role to do this. it's very important to us. secretary mueller, we had the patriot act and it's controversial, arguments from both sides and understand where individuals are coming from relating to this act, and it was defeated just this last week on suspension. i understand those are coming up again for a vote probably this week or next week. if, in fact, this bill fails again, what's that do to your capabilities as the chief law enforcement officer for the united states? how would it affect or -- our national security, and what issues do you feel concern you that you might want to address? >> [inaudible] i'll answer the last part of the question first. the privacy issues of the like are generally raised in this piece of legislation.

fact of the matter is, and i go back to it. this is a judge issuing a court order that requires communications carrier to provide us the information, and so, again, it is going through the judicial system and the orders issue and the communications will be turned over responsive to those court orders. in terms of the impact of our ability, it's not just our ability, but others in the law enforcement community, their ability to do their jobs, obtain the business records that are necessary to per sue the investigations on the one hand, most particularly to assure that there are no gaps in picking up communications when we have a roving wiretap order. if we do not have that order, we have to go back, and there's a delay going from a cell phone to another cell phone to a throw away cell phone to an ipad to another device where the

specific court order has to be on each device opposed to the roving wiretap. that will be exceptionally detreatmental. we have to have our vail lance to identify when a person gets a new hands set. lastly on the issue of the lone wolf provision. it would hand cuff us in those situations where there's substantial information that somebody is contemplating some sort of unilateral terrorist act, but we cannot put that person or individual with a particular organization which would enable us then to get a fisa under the foreign intelligence surveillance act, and consequently, and that's what held us back before 9/11, and it would hold us up again and preclude us for getting authorization for a wiretap to

protect the next attack on that individual. >> i think one the key issues when dealing with civil liberties, some people concerned, but they are all americans, and we have a constitution. i think the checks and balances our fathers created works well. it's important, and it's your position we make sure follow through with those rights and checks and balances. >> one other thing, there is substantial oversight in this process as well. there's an inspector general, our own procedures, and congress. these procedures up for authorization are well reviewed after the piece of legislation passed. >> i gave examples in my opening statement where, in fact, we were able to detour attacks planned by individuals. if, in fact, you would not have the resources of the issues on

the patriot act, do you feel you could have been successful as you were in those situations? >> it's hard to identify an isolated particular piece of an ongoing investigation, but i'm certainly comfortable in saying that the successes we have had would have been much more difficult to come by, absent to tools we have been operating with in the current legislation that's up for reauthorization. >> okay. thank you. my question, again, it relates to the secretary that poll tan know's statement yesterday. the threat statement is high as it was on nufn. this threat is due to home grown terrorism that poses a problem. we have to keep the country safe. that's the number one priority. that why we spend so much to

gather information and use that to protect us. we have to pay attention when talking about american citizen's constitutional rights. i direct that to director mueller or director clapper, can you talk about the threat from home grown terrorism, what we're doing about it, and do you agree with the secretary that our country's threat level is the highest it's been since 9/11? >> maybe i would suggest that mike leiter was present for that, he speak first, and then director mueller. >> congressman, in full context of the remarks, i completely agree with the secretary which is -- [inaudible] >> actually, jim is, so -- but, the full range of threats is the most diverse and most complex

that we have faced. it is not that we are looking at one specific threat now that brings oh threat level to an elevated level. it is that we face a geographicically diverse set of threats which is the greatest diversity in complexity we've faced since seven. with home grown extremists, we have seen both last year and the year before a heightened state of radicalization and mobilization among home grown extremists. we are seeing concerning signs of the beginning of networking of what was previously privately minded home grown extremists. they still lack sophistication of the threat we've previously seen from pakistan and yemen, but as i noted yesterday, fort hood proves that you don't need to be sophisticated to be

deadly. >> do we need to ramp up our resources because of this threat statement? are there anymore resources we need? you run the fusion center, director clapper, you coordinate this. >> congressman, i'll speak and then let the others, but i'll echo director mueller's resource. it is a tool we need. as threats increase, the tools are more, and not less relevant since 9/11. with respect to resources, ntc launched a number of reforms since the attack in yemen. we worked with nhs to combine forces to get efficiencies, but we are watching ranks to try to tease out the very minute pieces of information that are required to identify and disrupt home grown attacks.

>> let me just clarify one thing before i answer your questions, sir, and this was in response to a question of congressman rogers accident if the legislation was not passed, would you not get a roving wiretap on a child pornographer. that's under title iii. that's not affected. if it was a terrorist, we couldn't. if it was a pornographer, we could. >> thank you for clarifying. i should have picked that up. if you're a drug dealer, you're fine, but if you're a terrorist, we can't get it? >> cannot. >> okay. thank you. going back to the question, from our perspective, and this is what the secretary said yesterday, this is a very bad time. it's gone up and down since 9/11, but we're in a period now that reflects changes from our perspective, the threats coming

out of pakistan, afghan, along with that of yemen or right at the top. i think mike would agree with that. then we get down to the home grown extremists who have grown over a period of time because of ease of access to the internet, use of the internet to recruit and organize and the like has grown by leaps and bounds, and that provides a substantial challenge to us. you asked what we do to identify these pockets of radicalization, the 140 joint task forces working closely with state and local law enforcement, working with our capabilities both ours and others in terms of identifying those who are identifying with radicalization whether it's on the internet or in the community or all efforts that we are jointly addressing. i mentioned two other areas of

threat within the united states, one is relating to individuals going to somalia to fight. we are monitoring that situation, as well as threats from al-qaeda in iraq, individuals who may have been resettled here in the united states that have had some association with al-qaeda in iraq. all of these joint terrorism task forces we operate in along with the work with the fusion centers and homeland security that are focusing on identifying those persons who are currently being radicalized. >> also, i want to ask under secretary wagner and director panetta. >> thank you. i'll echo what the secretary said yesterday about the four pillars of the homeland security enterprise, several of which director mueller just

mentioned. the areas mentioned yesterday that are fundamental to addressing this home grown issue are the jtts, which are fbi led, but in which the department and pretty much everyone else participates actively, the fusion centers that are owned by the state and major urban areas in the country to do information sharing and able sis and to support this with terrorist related information, and also the national suspicious reporting initiative that we work very closely with the department of justice and the fbi and the secretary's if you see something, say something campaign. those last two are critical to identifying pieces of information that may be useful in another context for terrorist or criminal activity, and if you see something, say something campaign is critical to allow us to engage the american public as part of the homeland security enterprise because in light of

the difficulty in detouring and disrupting the small lone wolf attacks, we believe the role of the public and local law enforcement is critical in identifying possibly -- >> i'll have to wrap up, but later dates we'll focus on cybersecurity. we have a long way to go, and we need to really educate the public on how serious this issue is. >> thank you. mr. thornberry. >> well, that's a good lead in. director clapper, you had several bullets in your written statement about cybersecurity, and you said in your oral statement, the impact is difficult to overstate. as you know, there's really a difference of opinion about whether we're talking primary by about annoyances with computers that run slower, or dealing with crime or theft of intellectual property and certainly a lot of

money that is stolen, or whether we really are talking about a matter of national security, and so i would appreciate if you and maybe director mueller and director panetta could talk to us about the degree to which cyberthreats to pose a threat to our nation's security because that is relevant to how much money and what kinds of authorities we have to look at to deal with the problem. first, we need to understand whether we're talking primarily about crime or whether we're talking about national security. >> well, the effect can be the same whether it's the source of an attack or an intrusion coming from a criminal be it domestic or organized international ring. from a national security standpoint, i think the threats posed by certain nation states is quite profound.

if, in fact, the capabilities that we ascribe to them were actually exercised, so i think what we see in terms of penetration, some of which i alluded to by way of example and the potential there emphasizes the importance of this whole issue of cyberprotection. i think we're very interested, the administration is, in engaging with congress on the multiple legislative proposals put forth, but it is potentially a huge threat to our security. i think the department of defense is stand up of cybercommand is, you know, the department's clear recognition of this and the importance of having a cyberarm in a war fighting capacity, and similarly, i think that the community as large, the department of homeland security

sees this from a domestic perspective, and the interactions that i participated in with key industry officials, i think, there is a growing awareness of the potential as a vulnerability to this country because of our huge dependence on cyber for a whole range of things. >> without a question of a doubt, it's very large national security issue in a variety of ways. if you look back historically and see what russia did in estonia years ago and exercising its mill tear might -- military might, you have not just intelligence officers, but probes and capabilities of intruding into networks and gathering information that would be beneficial to you that

previous you you would have to recruit somebody inside to obtain that makes it ease fer your those -- easier for those who are trying to steel our secrets. we have the insult ises on infrastructure bringing down pieces of our infrastructure if they are not adequately protected. you have crimes in banks and in robbing banks, millions of dollars overnight by intruding and upping the limits on say atm's. the problem from our perspective is we think of it in particular categories, crime versus government involvement, and at the outset, you don't know if it's a state actor, a group of individuals acting at the behalf of the state actor, or a high school kid across the street. for us, it's coming together as

an entity and bringing our skill sets together before we nominate it as a crime or a probe, and it's working together to identify the intrusion and then decide what course to take in terms of going criminally or taking it as another national security challenge. >> i don't think there's any question that this is a real national security threat that we have to pay attention to. i know there's a lot of aspects to it. the internet, the cyber arena is this vastly growing area of information that can be used and abused in a number of ways, but when it comes to national security, i think this represents the battleground for the future. i've often said that i think the potential for the next peril harbor could be a cyberattack.

if you have a cyberattack that brings down our government systems, cybersystems, you can paralyze this country. that's the real potential. that's what we have to pay attention to. other countries are developing a significant capacity in this area whether it's russia, china, or iran. we are now the subject of literally hundreds of thousands of attacks that come in as an effort to get information. we have to develop not only defenses against that, but put our assets in places where we can provide sufficient warning that these attacks are coming. >> thank you, director. mr. thompson from california. >> thank youing thank you for being here an the work you do regarding our safety and security. i have a couple things i want to touch on. first, there's a lot of discussion about the extension of certain provisions of the patriot act, and i think it's important to note that there's

still some concern about the civil liberty's side of these provisions, and it's a bipartisan concern, and it's a concern, i think, that's reflected across the country, so director mueller, i hope that you are willing to work on improving the patriot act so we can be as safe as we possibly can be without sacrificing the civil liberties of the american people, and i know there's a bill in the senate, and they are working on that. i hope we can come together to achieve both of those goals. general clapper, i've got an issue, and ranking member ruppersberger alluded to it earlier, and that's what's happening with the drug trafficking organizations and this can easily spill over and be an even larger problem for

america. i'll admit that it already is. they are growing dope in the national forests, publicly owned lands throughout the country. it's very prevalent in my area, and there's been a good effort on behalf of local law enforcement to really go after this, but there seems to be somewhat of a disconnect at the national level. i know that i mentioned the relationship between the mexican drug trafficking organizations and what was going on and was corrected by someone today. you know, we have no information that that is the case, but if you talk to state, local, and even federal folks who are on the ground working these issues, they'll tell you it's very much the case, and up in humboldt county last week, there was a big bust on heroin with direct ties to drug trafficking organizations in mexico, so as

we're debating how we're going to handle this, it's quickly spinning out of control to be an even greater problem, so i would certainly hope we can marshall our efforts to come together to fair it out with these guys and stop this horrific problem because it's already an american problem, and it has all kinds of connections to terrorist opportunities that we cannot afford to allow to continue, and i'll just ask one more question, and then take my answers to all off the air, and general clapper, that is, as we continue to meet tough budgetary problems here at the federal level, all levels of government, the need

to provide the best possible intelligence isn't going away, so you're going to be asked to do a lot more to ensure the safety of america and americans and do that with an either shrinking budget or a flat line budget, and the terrorist challenges we face aren't going to be shrinking or flat lining. they're going to be growing. can you give us an idea on how you're able to handle that in >> sir, let me make a first make a brief comment about your well-placed concerns about mexico, and then i'll ask ms. wagner from homeland security to comment as well. this is clearly a very serious problem. we had recently raised this whole issue in terms of its priority and the national

priority framework which is the guiding direction for priorization of issues to category one, which is the highest. we are working with the appropriate mexican officials in support of the president's campaign internally, but there's no question this has huge concerns for us in the united states because of the obvious potential, not only potential, but actual spillover in the border states. with that, i would ask caryn to speak. >> they have actually seized our public lands, creating huge problems, public safety, people can't use the public lands, they are contaminating waters, con tributaries, and it's a spillover effect that goes on and on and on. >> there's an unprecedented

effort along the border in terms of resources and technology and people to do their best to secure the border. i think we're doing a better job than what's been done before. we are concerned about the spillover of the kinds of cartel violence in mexico where they are actively fighting over specific routes into the u.s.. we have not seen that type of systemic cartel violence spillover, but i'm not going to tell you there's not drug related violence on this side of the border. >> there was in my direct last year. ? i understand. we've been working as a department with other departments to focus on the flows of illegal drugs, cashes, and guns that go beyond the border. as far as the border is concerned, we're seeing the staff going in the right direction. we have see sure of drugs and money going up, and captures of

illegal immigrants going down. we're going to continue to work that, and we're concerned about making sure that we plug any potential gaps or holes that could provide an avenue for terrorists across the border as you mentioned. it's a continuing focusment i think we're doing better, but clearly, there is drug remitted violence -- drug-related violence. >> the answer the budget challenges, i've been through this before. i served as director of the intelligence agency in the early 90s, but by fir chew of the -- virtue of the fall of the wall and soviet union, we did. the defense department took big cuts, and then with 9/11, we ramped up again. now the pendulum will swing back

and we'll be in for some bolt tightening. given the funding that we have been given over the last 10 years since 9/11, that is probably appropriate. this is, i think, a case where we absolutely must work as partners. we in the community and you in the congress to help guide this. i personally hope to profit some from stakes made when we did this in the early 90s. i've 4 at least one -- i've had at least one outside community familiar with this and looking at this. they have sent me recommendations on areas we need to consider for examination and there is personnel structure and acquisition. i have not looked at those recommendations yet, and of course, this will be a subject among the ic community and

executive community and leadership, but this is an area where we need to work with you. >> thank you. thank you all for your service, and director mueller, the fbi and the great job you did in south carolina and with daniel patrick boyd who pledged on being a home grown terrorist. director clapper, i wanted to make a statement of concern, and then i have questions to follow, and i'll let you answer them all the if you would please or whoever would wish to. it's regarding the muslim brotherhood. i'm concerned they're using the peaceful protests in egypt as a power grabbed, and we in the government don't seem to grasp that threat on how it concerns me. the brotherhood is not a danger just because their terrorists,

but because they push extremist ideology that causes others to commit acts of terrorism. the brotherhood is actually inside america. this is from the 2008 holyland foundation finance support trial and evidence was introduced by federal prosecutors and under a section understanding the role of the muslim brotherhood in north america, the document says the brotherhood is engaged in and i quote, "a civilization gee haddist process with all the means, the brotherhood must understand their work in america is a grand jihad in eliminating and destroying the western civilization from within. on the last part of the memo lists u.s. of an author who was a member of the brotherhood claims they are involved in this

so-called jihadist process. the danger is not just encouraging terrorism through their ideology, but also trying to take over government, so everyone has to succumb and live under their ideology. a 9/11 report says we must address ideologies to give rise to islamic terrorism. my questions to you. do you consider the muslim brotherhood a threat because of their ideology, and can you speak to the validity of the memorandum that i mentioned, and do you see the muslim brotherhood as a danger to america based on that? do we considered the organizations listed in the memo as front groups here in america? and to your knowledge, do our intelligence agencies interact in any capacity with those organizations that are listed in the memorandum? >> i'll speak briefly to the muslim brotherhood as an

international movement, and then i'll ask director mueller to speak specifically to it here domestically. the reason i do that, of course, is because the muslim brotherhood is prominent in egypt enelsewhere in the -- and elsewhere in the middle east. the term muslim brotherhood is an umbrella term for a variety of movements. in the case of egypt, a very heterogeneous group, largely secular, which issued violence and decried al-qaeda is a version of islam. >> right. >> they pursued social ends, betterment of the political order in egypt, ect., and then the other -- >> it's not the violence side i'm interested in, but the nonviolence side. >> in other countries there's

franchises of the muslim brotherhood, but there's not an overarching agenda in pursuit of violence at least internationally. with that because there are entities associated with the brotherhood in the united states, i'll ask director mueller to speak to that. >> at the outset, leapts here and -- elements here and overseas supported terrorism. >> right. >> to the extent, i can provide more information in closed session, but it would be difficult to do it in open session. >> i appreciate that very much. i also wanted to mention relative to what's going on with al-qaeda, and i know that some of you have brought that up before, but this, in particular, when you talk about the internet and the web inspire which is the 4th edition and what they're doing and encouraging young people in america in a way that

we've never seen before. we've got to pay more attention to that, and i know you're very much aware of it, but really, kahn, the editor of this, started in the basement of his parents home in north carolina, and we go from there. my frustration is, you know, he was allowed to operate here even though we tried to shut him down, and then he moved to yemen, and now look what he's doing. the propaganda side of what they do is frustrates in the sense they are moving in a way we've never seen them move before, and the jihad websites, and you mentioned this, they are doing gaming, ways to pull people in our modern technology, things they innocently get involved in, and they don't realize what they got involved in and what the basis behind it is. i hope we are keeping track of

the websites and keeping up and how this fits in the picture of how home grown terrorism is rising now. i think this is a tremendous theater in a way we've never seen before. >> congresswoman, as we discussed several times before looking in ways people are radicalized and mobilized here is an absolute priority. that have an access to our facilities, understand our people and culture, and it can be used against us. it's not just watching we do in association with others and doing it in a way that republics civil liberties of people who are engaging in perfectly acceptable first amendment speech, but it is also seeking with policy agencies to empower the communities to go out and engage their youth as well, so we can empower mainstream

moderate, the vast majority of people so they understand what they children could be seeing. >> i hope we can work together on a counterradicallization program because that's very, very important in what we're doing and a great interest of mine. thank you, thank you mr. chairman. >> thank you. i know ms. myrick has plans, and i'm sure we'll work together on that. >> i also want more information on the brotherhood in a closed session. i have a quick question for all of you. when president from mexico was here and spoke to a joint session of congress, he said that the -- when the ban on automatic weapons expired that there was a flow from the united states to mexico of automatic weapons. i'm asking if anyone on the panel would state publicly you

state the support of a ban on automatic weapons. anybody? >> [inaudible] >> i honestly will have to take that for the record because i don't actually know. >> okay. i just wondered if anyone was prepared to say yes. regarding egypt, director, they are reporting that it's likely he will step down tonight and there's other reports that he's still saying he's in power, no decisions about the future, but let's assume there is a change. has the intelligence community assessed what impact the change in egypt will have on the reason and particularly on israel? >> we follow that obviously very closely because of the overall regional impact of what's happening in egypt.

it's something that obviously we have to pay attention to. the ingredients i talked about that were present in egypt and tunisia is present in other countries throughout the region, and we have to pay attention how these factors come into play. let me just make it very clear here that i've received reports that possibly mubarak might do that. we are continuing to monitor the situation. we have not gotten specific word that he, in fact, will do that, but -- >> and does that mean the vice president would take over, do we know that? >> i don't know the particulars, but i would assume he would turn over more powers to be able to direct the country, and direct reforms that will take place. if, i mean, i think the key is this. if there is an orderly

transition here, and if egypt as the add -- administration has urged can move to reach out to the elements, all the elements of the opposition and be able to development a timeline for political reforms that lead to hopefully free and open election, if they can move in that kind of orderly process, then i think it could, you know, it could have a positive effect with regards do that area. if, on the other hand, obviously this turns in another direction, then that, too, could affect not only the security of israel, but that of other nations. >> have you done any particular analysis of what the changes would mean to israel? >> yes, we have, and we'd be happy to share that with you in another forum. >> okay. how would you assess the stability of the following

governments, saudi arabia, syria, and jordan? >> again, in open session here, i'm a little concerned about sharing specifics about any of these countries. i think it suffices to say that there are number of countries in the arab world that reflects some of the same concerns, the concern about, you know, the lack of freedoms, the lack of political reform, the lack of truly free and open elections, but the economic stagnation, the impact that is having on unemployment, particularly for the young, and i think all of those factors are at play in a number of nations across that region, all of which means we have to pay a great deal of attention because i think the triggers, the factors that kicked off what happened in egypt could very well impact in

other areas. >> thank you. i want to squeeze in another one. the lebanese parliament selected his candidate. i wonder how you assess the role of the new lebanese prime minister, and if he can make decisions that are independent of hezbollah? >> well, he has at least publicly stated that he intends to be independent, but given the realities of political life in lebanon, that remains to be seen, so obviously, that's something we're watching carefully and perhaps we can discuss this more in closed session. >> thank you. i yield back. thank you. >> mr. miller. >> thank you very much, mr. chairman. mr. clapper, you talked about self-radicalization. could you elaborate a little bit? is it really self-radical decision, or is it just one

person being radicalized by others? >> let me ask director leiter to speak to that. >> congressman, what has changed more recently is that where as several years back there tended to be a need to be some personal contact between individuals to have them become radicalized. with the increasing messaging over media, facebook, youtube, we have seen individuals be inspired on their own to a greater extent. now, i think your point is a good one. it's not really self-radicalization in most cases because there's still aling yag to the outside ideology, and that ideology is pushed through the internet and modern communications. >> anybody else? >> let me, i think it's really important to kind of, you know,

we've talked around it, but to put this in overall context. the reality is and our biggest concern about al-qaeda was they could present 9/11 type attacks in this country. we focused on that. it's a result of the work been done going directly at them. i think we've underminded their ability to conduct those kinds of attacks. having said that, they are now resorting to other ways at com ing to the country. that is using lone wolves, urge people to do whatever they can to do something in a terrorist way someplace, somehow, somewhere. that's the nature of the threats we are now dealing with that concern us and concern all of us in this country, and it's in

that arena where we got the toughest job because while these are less sophisticated, they are tougher to find. >> i would add, sir, maybe a little different per spectsive on this -- perspective on this, and the people that we single out as self-radicallizers, if i can use that term, i think often times have issues of some frustration, this is my own personal view, and then assume the mantle of some radical philosophy to justify or reenforce taking action against these frustrations which may have to do with their upbrings, their environment, lack of employment, economic frustrations, whatever they are, and then they gravitate to a radical ideology, and, of course, this is fed by the use of the media. i think that reenforces it. i'm not so convinced that that

actually is the original instigation of it. i think in the end, it's probably an individual case-by-case basis. >> it was said that, not in this hearing, but at some other time the united states was going to have to reassess its relationship or dealings with the muslim brotherhood, what is this administration's relationship with the muslim brotherhood? >> sir, i think best to take that for the record. i don't know, unless, bob, you have a comment on that? >> no relationship with the brotherhood. to my knowledge, not happening. >> there's no relationship with the muslim brotherhood, period. >> there have been outreaches to the muslim community in general, but i guess we're not aware of any direct outreach to these

particular organizations. that is if you're speaking domestically. >> why hasn't syria, hasad fallen into other disarray of these areas? how has he kept himself away from that? >> i think he believes despite some of the economic difficulties and challenges in syria, that he is connected with the people, and that as a consequence, he doesn't have this concern, so i don't know that that's a wise judgment, but that appears to be the judgment that he has made. it would be very interesting in all these countries again to see the con -- the effect with the advent of

the social media. >> i think the reality is the exercise is tremendous control over what happens in syria and that the result of that is that there isn't the ability to be able to, you know, to proceed to do the kinds of things we saw happen in other countries. now, having said that, i think some of the same ingredients that occurred in these other countries are present in syria, and i think the potential for that is there as well. >> thank you. >> thank you, mr. chairman. i just want to clarify something before i ask a question. earlier, there was a comment made, and i support the lone wolf provision extension. there was a comment made earlier that we can get a wiretap on a child pornographer, but not on a bomber. this is not true. if you have evidence of a crime

in terms of child pore nothing tear, you can get a wiretap under title 18, and sometime with a bomber. the standard is higher, i realize that, but you're comparing apples to oranges, and if you had the same evidence of either crime, you can get a wiretap. i think that was a little misleading. it wasn't intended to be, but it's not accurate to say you can't get a wiretap in a bomb case. my question, though, is on something different. >> can i respond to that? >> yes. >> i didn't attempt to mislead. i thought we were talking about the roving wire statute, not the loan wolf, and that is is -- lone wolf, and it is the fisa context, and if the statute was not reup, we'd lose that in the national security capacity, but still have the capability under

title 18. >> where's it's roving or lone wolf, regardless, if you can get a wiretap under title 18, and if you have the evidence, you can get a wiretap in a bomb case. maybe less effective if they are going phone to phone, and i argue that tab true in a child pore pornography case too, but it's misleading to people who are not versed in this to suggest you can't get a wiretap in a bomb case. you may want to show the difference between an intelligence based investigation and a criminal based investigation. >> i'd be happy to do it as long as it's not on my time. >> i think he should have the opportunity to answer the question. >> i think he did. >> not in any way are we trying to mislead. you can in the house get a number of capabilities we have on the national security side of

the house, and if you do not get it on the national security side of the house, and i think you are saying you can get it on the criminal side of the house with a much enhanced burden of proof, but you can still get did on the criminal side of the house. so isn't it misleading to make that differentiation to which i say i don't believe so because of the standard is different on the national security side of the house than it is on the title 3 side of the house. >> director, again, i have no question, i don't think anyone was trying to mislead, but what i'm saying for the add yen here to -- audience today here to suggest you can get a wiretap on a pornographer and not on a bomber is not true. the report that we received devotes two sentences to egypt

that i thought was striking given the prominence of egypt not only in terms of what's dominated the news, but also in terms of the broader issues we're confronting. this is open session, so we're talking at the 30,000 foot level. i think that two developments i've seen lately, the most discouraging in the last few years, and one most encouraging. on the disparaging side, there was a governor who was assassinated for speaking out against the blasemy law, and the other is being celebrated in pakistan with hundreds of thousands of people demonstrating in support of the asass sin. that's the most discouraging idea i've heard in a long time. on the other hand, the most encouraging thing is what's happening in egypt, and the

potential it has, and i know there's a lot of risks as well, but the potential, i think, is enormous in terms of liberating the arab world from the shackles of authoritarian regimes that have kept their people down and subjected women and resulted in a lack of opportunity and provided fertile ground for terrorism. i wonder in light of these two very significant things whether we're missing the force for the trees? sometimes i think things out in the open we pay less attention to in the intelligence world. we think they are less significant because they are not happening behind closed doors. i think what's happening in egypt has significant ramifications on the war on treasure. -- terror. i'd be interested in getting

your thoughts on how this could shape our intelligence and other priorities. >> i'll briefly comment and ask leon to add to that. you cite a stark contrast with the one in pakistan and the other in egypt. pakistan is a sovereign nation which has certain interests at heart. sometimes our interests converge and beliefs and values converge, and sometimes they don't. with respect to what's going on in egypt, i think this is truly a tech tonic event. in fact, what's happening across the whole middle east, and there are potentially a great opportunity here to come up with a counternarrative to al-qaeda and its franchises and what it is ease --

esspouseing. >> i don't think there's any question, but this provides a tremendous opportunity to try to move egypt in the right direction, and i think the administration and i think the world for that matter hopes that that will be the case. the, you know, the opportunity is there, the opportunity for the leadership to be able to reach out to the opposition, to be able to develop the tewingal changes, -- constitutional changes, the political reforms necessary, and the opportunity to truly develop free and fair elections so that egypt, the people of egypt can exercise the same freedoms that we do in selecting who would lead that country. that's a tremendous opportunity, and it's one that i think we are

taking all the steps possible to try to see what we can do to try to move it in that kind of orderly transition. the problem is, as you know, is that when you have these event take place, it becomes very uncertain, and oftentimes very unpredictable to try to figure out whether or not those in a leadership role will make the right decisions at the right moment, and whether those who are in the opposition in the demonstrations will be able to exercise the kind of leadership that's necessary in order to ensure that this goes in the right direction, but there is no question that what we are seeing happening in egypt will have tremendous impact. if it's done right, it will help us a great deal in trying to promote stability in that part of the world. if it happens wrong, it could create some serious problems for us and for the rest of the world.