o sunni political leaders on the future of iraq. the new congressional directory is a handy guide to the 114th congress with colorful photos and bio and contact information and twitter handles. a look at congressional committees, the president's cabinet, federal agencies and state governors. order your copy today. it's 13.95 plus shipping and handling through the c-span online store at c-span.org. capitol hill lawmakers held a hearing today to assess the potential risks and rewards of renewing a nuclear power cooperation deal with china. the voice of america writes here that a new agreement would

permit china the biggest nuclear power market in the world to buy more u.s. reactors and technology to reprocess plutonium from spent fuel. the current 30-year u.s./china deal expires at the end of this year. here's the senate foreign relations committee from today focusing on the commercial political and security implications of extending the new accord. foreign relations committee will come to order. i know we have a vote at 2:45 so we'll try to get through opening comments and your comments and then maybe come back and begin the questioning. today we begin the exercise where statutory responsibility congress requested to review agreements between the united states and foreign relations to nuclear and civil programs. we must examine the political,

economic and security aspects of this agreement weighing the risks and benefits. in doing so, we must big deneat the surface of the agreement to expose and thor rowly expose those issues that engage in such an agreement. we also should consider how this agreement could potentially impact u.s. strategic interests in asia-pacific. the agreement before us represents a continuation of a relationship that originally began in 1985 with the congressional approval of the agreement when the united states and the people's republic of china concerning peaceful uses of nuclear energy. it expires on december 30th 2015, with a new agreement, civil nuclear cooperation. without it this civil nuclear cooperation we have will cease. at the time of submission in the 1985 agreement china was engaged in activities that caused significant concerns related to proliferation, lack of safeguards lack of export

controls and congress in the agreement lacked key assurances to alleviate those concerns. in passing a joint resolution that expresses its approval of the agreement, congress required several certifications to address its concerns prior to the issuewants of export licenses pursuant to the agreement. the challenges in the relationship with china and its actions relevant to the required certifications were such that certifications could not and were not made by the administration until 1998 13 years after the agreement originally entered force. some of those concerns still exist. maybe to lesser degrees but they still exist the the agreement before us now continues civil nuclear cooperation for another 30 years. i'm glad the administration chose to hear the concerns ratesed by this committee last year that extended in

perpetuity, including a termination of this agreement after 30 years. thank you for that. it is right that agreements of this consequence should be periodically reviewed by congress to ensure that they continue to be in the national interest. notably, and not present in the current agreement, the u.s. provides advanced consent to enrich u.s. supply of uranium, up to 20% to year 2035 and to reprocess u.s. obligated material. i'm sure i'm not alone in questioning this change of relationship. i hope that the administration can adequately explain why it is in the u.s. interests to allow for this type of activity using u.s. supplied or obligated material. the president's transmission letter to congress states that this agreement is based on mutual commitment to nuclear nonproliferation. but i have some misgivings. the commitment may not be so mutual. it will be encouple bent upon

the administration to expediently alay concerns raised by our members. the nonproliferation assessment statement, also known as npas identifies several greater civil military integration. and both elements have the potential to decrease developmental cost to accelerate military modernization. this strategy requires close skut scrutiny of all end users under the proposed agreement. further, china's provision to pakistan of reactors beyond chas ma one and 2 is inconsistent with chinese commitments made when it joined the nuclear suppliers group in 2004. finally, according to npas

china updated its regulations and improved actions in some areas but proliferation involved chinese entities remains of concern. state-owned enterprises and individuals have been sanctioned by the u.s. on several occasions for transferring proliferation sensitive dual use materials and technologies. congress should also consider china's record as it relates to missile proliferation. to 2011, the threat assessment had said that north korea and entities in russia and china continue to sell technologies and components in the middle east and south asia that are dual use and could support weapons of mass destruction and missile programs. the 2014 state department compliance report said in 2013 chinese entities continue to supply missile programs in countries of concern. the united states notes that

china made a public commitment in november 2000 not to assist in any way any country in the development of ballistic missiles that can be used to deliver nuclear weapons. concerns persist about chinese willingness and ability to detect and prevent illicit transfers. i would like the administration to specifically address why congress should feel confident that china will prevent illicit transfers going forward. concerns aside the u.s. has realized benefits from the current agreement. economic benefits include an $8 billion sale of four nuclear reactors by westinghouse in 2007 still under construction today. we are also gaining valuable insight from lessons learned in the construction of the ap 1,000 reactors that will cause domestic construction to be more efficient and timely and cost

less. china has developed a stronger nonproliferation policies and export control regulations. it will be up to congress to determine if the concerns about the agreement are outweighed by the benefits. if so we should approve the agreement without delay. if not but the concerns can be mitigated, we should work diligently to find grounds upon which we can support the agreement. if the concerns cannot be alleviated, we should disapprove the agreement. all of this is to say we have a difficult task ahead of us but one that i know we can approve seriously and with the best political, economic and security interests with the united states in mind. i thank our witnesses for joining today to begin this examination and look forward to working with them and their colleagues in the weeks ahead. again, thank you for being here. >> mr. chairman, let me thank you for conducting this hearing. it's a very important hearing of the relationship between the united states and china as one

of our most difficult foreign policy challenges. this week, we're holding two hearings in our committee. later this week we'll have a hearing on the territorial disputes in the south china and east china seas. i'm looking forward to that hearing. i think it's a very important subject. today we'll focus on the elements of the u.s./china relation with the recently signed china civilian cooperation agreement. the current agreement, as you pointed out, is set to expire on september 30th of this year. it was signed 30 years ago by president reagan. it's interesting to point out that the implementation of that agreement had to wait for 13 years because of the senate conditions on china's proliferation activities and then because of the aftermath of the tiananmen square massacre. up front, i want to indicate that i'm supportive of a nuclear power. it will reduce our carbon emissions. u.s. nuclear cooperative agreements with other countries

provide the united states and a number of important benefits. first and foremost, the 1, 2 3 agreement can help achieve our nonproliferation agreements because we seek the highest nonproliferation standards in these agreements, including ensuring that nuclear technology is never misused for military purposes. it will be an issue i expect our committee will want to explore. second, it's necessary for maintaining a robust nuclear industry. this represent as major opportunity for u.s. business and one that they've already taken advantage of. the reactors that the united states is building in china already creating high-paying jobs in the united states including in my home state of maryland. finally, these agreements are an opportunity for the united states assist nations in reducing their carbon emissions.

as part of the joint announcement by the united states and china on climate china committed to get 20% of its energy from clean sources by 2030. nuclear power is a way china can lower its carbon emissions and, in turn, foster global action to address climate change. so these are important reasons to move ahead with 1-2-3 agreements and i fully understand that but despite the benefits of this agreement, there are a number of concerns that i hope the witnesses will address during this hearing. while progress has been made in china's nonproliferation has been made, china's nonproliferation remains problematic. chinese companies and individuals continued export dual use goods relevant to nuclear and developed weapons and missile programs in and around north korea. year after year these individuals have been sanctioned related to their efforts to

proliferate weapons of mass destruction. i would like to hear whether china's nonproliferation record was addressed during these negotiations. to me this agreement presents us with a golden opportunity to place pressure on china to holt these dangerous activities. my second set of concerns focuses on chinese plans to export nuclear power plant based upon technology provided them by westinghouse. under a deal signed in 2007, westinghouse agreed to transfer it is reactor technology to china. this allows chinese firms to increase their share with the ultimate goal of he can porting reactors themselves. we know china has an aggressive move into the markets that the united states used to have the leading share. the transfer of the most advanced u.s. technologies may provide china the keys for dominating the world nuclear power industry. that could cost us jobs.

i'd be interested in the witnesses' analysis as to what the future holds with the u.s. ability to dominate the international market on reactors. relating to this issue is china's decision to continue building power reactors in pakistan. pakistan does not have safeguard inspections by the international atomic energy agency and has not been approved as a recipient state by the nuclear suppliers group. china argues its contracts with pakistan were in place before it agreed to abide by the rules of the nuclear supplier group. however, as china makes plans to export nuclear reactors reactors based upon u.s. technology to other countries, one has to wonder about its commitment to nonproliferation standards it has signed up to. i'll ask concerns about safety. safety in the chinese nuclear plants. i know we have worked extensively with china on the regulatory and safety regimes but i am concerned that nothing in this agreement squarely addresses the issue at the next

fukashima or chernobil from happening in china. it's an authoritarian country with a history of problems with regulatory structure. although we can never make nuclear power 100% safe, we should strive to make them resilient as possible to natural vulnerabilities and national security threats. these are all issues that i think need to be addressed so we can weigh the pluses and minuses -- the pluses of an agreement but the risk factors of entering into such an agreement with china and i look forward to hearing from our witnesses. >> senator cardin, thank you for your leadership. last night we had an extensive classified briefing but i know we still want to hear the comments that will be made. why don't we just adjourn, sprint to the votes come back and start. i know we have to finish for our 4:00 briefing on another issue. i think that would be best. if y'all don't object, i'm sorry we started a few minutes late

but i think that's best for you. okay? thank you.

secretary of state for security and nonproliferation. he leads the bureau at the head of the u.s. effort to prevent the spread of nuclear chemical and biological weapons, their related materials and delivery systems. we appreciate your many appearances with us here and on the phone and other places. the second witness is lieutenant frank klotz, u.s. air force retired. he currently serves as undersecretary of energy for nuclear security and administrator of the national nuclear security administration. in this capacity, he's responsible for the imaginement and operation of nnsa as well as matters across the department of energy and nnsa enterprise in support of president obama's nuclear security agenda. prior to his service as the department of energy, general klotz served nearly 38 years in uniform in a variety of

positions relevant to today's discussion. i want to theang you both for being here and sharing your thoughts and remind you that your full statements will be entered into the record without objection. so be as brief as you wish and we look forward to answering -- you answering our question and, again, appreciate you being here. >> chairman corker ranking member cardin members of the committee, thank you for the opportunity to continue today in open session the briefings and consultations we have had with members and staff since these negotiations began continuing through the initialling right up to the signature and submission of this agreement to the senate. this agreement advances the primary goal we have in every 1-2-3 agreement, which is strengthening the long-standing nonproliferation policy of successive administrations.

it also has important commercial and diplomatic benefits that i'll talk to only briefly since you have my prepared statement. the u.s. relationship with china is one of the most important and complex relationships in the world. this administration's approach to china combines building high-quality cooperation on a range of bilateral, regional and global issues and constructively managing our differences. peaceful nuclear cooperation is a key example of that type of cooperation. and this agreement is in the best interest of the united states. this agreement is not a favor that we give to china or that china gives to us. it is in the mutual interests of both countries. like all 1-2-3 agreements, it is a framework within which decisions on export of technology and materials are made. the agreement contains all the u.s. nonproliferation agreement

guarantees acquired by the atomic energy act, safeguards peaceful use assurances, physical protection assurances u.s. consent rights on storage retransfer enrichment and reprocessing of u.s.-obligated material. it contains enhanced features beyond those contained in the current u.s./china 1-2-3 agreement. china's nonproliferation agreement has improved markedly since the 1985 1-2-3 agreements. it can do better and we expect it to do better in the nonproliferation field. implementing this agreement will better position the united states to continue to influence the chinese government in a positive direction on nonproliferation objectives. the current agreement has allowed and this agreement will continue to facilitate deepened cooperation on threat reduction export control, border security,

nuclear safety and nuclear security norms. this agreement also has economic benefits. china has the fastest growing nuclear energy program in the world. it constitutes one-third of the global market in civilian nuclear energy. american nuclear suppliers are there now and they are keen to play an even larger role in the chinese market. these opportunities could support tens of thousands of high-paying american jobs and the u.s. nuclear industry strongly supports this agreement. as senator cardin noted the agreement can also help both of us to deploy nonfossil-based energy sources to address global climate change. last year, president obama and president xi announced our post 2020 targets. china believe's the large-scale development of civilian nuclear power is key to meeting these

targets and their commitments reinforce opportunities for u.s. suppliers in the chinese market. on the other hand, if civil nuclear cooperation with china lapses, our influence on chinese practices in nonproliferation and other fields will be placed in serious jeopardy. we will lose insight into china's civil program. the vacuum of cooperation with cheen na would be filled by other nuclear suppliers who do not have the same approach as the united states to nonproliferation and technology transfer concerns. and china would view such a lapse as evidence that the u.s. is less willing to engage china at a high level on important commercial, energy and security-related issues. in sum, we believe that the strategic nonproliferation, economic and environmental benefits of this agreement prove

that continuing nuclear cooperation with china is in our best interests. we have no illusions about the challenges of working with china in nuclear energy or in any other field. but we must remain engaged. we must constructively manage our difference and work collaboratively to advance the numerous objectives we have in common. the passage of this agreement is the best way to continue to influence and to benefit from the world's largest nuclear market. thank you, mr. chairman. >> general? >> chairman corker, ranking member cardin and distinguished members of this committee, thank you for the opportunity to testify on behalf of the department of energy on the proposed u.s./china agreement for peaceful nuclear cooperation. i'm very pleased to join my colleague from the state department, tom countryman. i, too, have provided a written statement so i will be brief in

summarizing what is in that. first, let me note that secretary of energy moniz and i fully share the thoughts expressed by tom countryman this morning and share the view that the proposed agreement provides a comprehensive agreement for nuclear cooperation with china while fully protecting and advancing u.s. interests and policy objectives with respect to nuclear nonproliferation and the peaceful uses of nuclear energy. thus, the department of energy supports entry into force this agreement following the requisite congressional review period. this agreement is fully consistent with the law and incorporates all of the terms required by section 1-2-3 of the atomic energy act. moreover, it reflects important advances over the current agreement, several of which we discussed during classified agreements during both members and staff of this committee. specifically, the successor agreement enhances the provisions under which we would

allow china to enrich and reprocess u.s.-obligated nuclear material by requiring that such enrichment and reprocessing take place only at facilities in china. that fall under their international atomic agency safeguards agreement. it also provides for enhanced controls on the export of nuclear technology to china. and it commits both sides, both the united states and china to deliver export control training to all u.s. and chinese entities under the 1-2-3 agreement. taken together, these elements, not included in the 1985 agreement, provide an unprecedented level of insight into commercial transactions. since the preceding agreement was signed 30 years ago, we've witnessed china make significant strides in its nuclear program. china now has over 20 nuclear power plants in operation over

20 under construction and dozens more plant. in fact, over one-third of nuclear power plants currently under construction in the world are in china. china increasingly seeks services technology and equipment from u.s. and other foreign commercial companies for its civil nuclear program. we believe it is in the best interests of the united states to support u.s. industries' ability to compete in this fast-growing and expanding market. americans companies have numerous joint ventures with china as well as significant assets on the ground there. they are also supplying china with equipment and components as well as a broad range of services, including engineering construction and training. the successor 1-2-3 agreement will facilitate continual cooperation with china subject, of course, to u.s. government review of specific requests to transfer nuclear technology information, material, equipment

and components. on the other hand if the agreement lapses or is not renewed, u.s. industry would essentially be cut off from this market. constituting a potentially serious commercial threat to the overall health and well-being of our civil nuclear industry. u.s. industry would also be precluded from taking advantage of future opportunities in the world's fastest growing civil nuclear energy market. in addition to these economic benefits the successor 1-2-3 agreement will serve as an umbrella for continuing other forms of u.s./china bilateral cooperation in promoting the important u.s. policy objectives with respect to enhancing nuclear safety and nuclear security around the world. an objective which directly supports u.s. national interest as well as those of our allies and partners. u.s./china cooperation such as under the 1998 peaceful uses of

nuclear technology agreement has been absolutely invaluable in this regard. and, in fact, just last week, senior u.s. officials met with their chinese counterparts under the auspices of the joint coordinating committee. they discussed many issues that the ranking member expressed a concern about including not only nuclear technology but security safeguards environmental concerns, waste management, emergency management and the security of radiological services. they have reported to me that they have unique and unprecedented access to a number of construction, scientific and academic sites in china. this level of interaction and access is only possible because of the value china places on having a 1-2-3 agreement with the united states and the desire to cooperate with the most advanced, safest and most reliable nuclear program in the world. without entry into force of this successor agreement, we will

lose a critical mechanism for china's nonproliferation behavior potential economic advantages and the insight into china's nuclear programs including research and development. again, mr. chairman, thank you for the opportunity to appear before you today. i look forward to answering any questions that you or other members of the committee may have. >> i want to thank you both and i appreciate what you do for our country and i know yesterday evening y'all had mentioned y'all were going to make the public comments as to why this was good for our nation and certainly you didn't disappoint. but let me ask you a question. according to npas and i know we've talked about this in other settings and i quote china's strategy for strengthening its military involves the acquisition of foreign technology as well as a greater civil military integration and both elements have the potential to decrease development costs and accelerate military modern nye sdplags.

i made that in my opening comments. so there's no question going in that what we're doing here the cheen niece, regardless of what they say, are going to be using this to accelerate their military development. is that correct? >> what i would say, sir, is that there's no doubt based on the historical record that china will make every attempt to benefit from technology transfer, whether in the economic or commercial or military field. our job, which only begins with this 1-2-3 agreement but as actually carried out through the licensing procedure is to frustrate that effort. we have every intention of doing so and believe we have the means to do so. >> so now that we've established that, that, in fact, this is going to happen i just -- i wanted to -- you mentioned that our involvement with them would

you know, help cause proliferation not to occur. i'd just like to ask a question. i mean, are they organically interested as a nation -- forget the fact that in doing business with us we champion nonproliferation and other kinds of issues. but organically do you believe that china cares about nonproliferation and nuclear safety? >> the short answer is yes. i do believe that china takes far more seriously than it did 30 years ago or even ten years ago its obligations under the nonproliferation treaty as a member of the nuclear suppliers group and in other fields as well. they take it seriously. i can't say that they yet have the level of political commitment that will enable them to spend the resources you need to effectively control the export from the second biggest

economy in the world, a very high-tech economy, and one that they do not have a long track record in controlling exports as effectively as the u.s. and other nations. i do believe they try and i do believe they need a higher level of political commitment to meet the standards to which they aspire. >> in the past when we've had these types of agreements, we've -- of course, we have the gold standard agreement that we like to stick to. we typically don't give it advanced consent for enrichment and reprocessing. certainly the first agreement we had with them in '85 that wasn't implemented until '98 didn't do that. can you explain to us and to the american people why n. this particular case, we decided to give advanced consent? >> china is a nuclear weapon state under the nuclear nonproliferation treaty.

it already possesses and developed on its own numerous enrichment and reprocessing facilities. there's not a logical reason nor would there be a practical effect to prevent china from enrichment and reprocessing. >> and then under the nuclear supplier group guidelines is china upholding those? i know we've had some issues relative to the nuclear plant in pakistan. could you talk with us a little bit about that and whether they are actually honoring the nsg guidelines? >> when china became a member of the nuclear suppliers group, there was a consensus to grandfather construction of plants in pakistan which china had initiated. however, there was not agreement that that was an open-ended clause. the problem is that china has since announced other power

plants that it intends to build in pakistan and this is not consistent with the rules of the nuclear suppliers group which it joined. we raised this issue both as a bilateral issue and within the context of the nuclear suppliers group. >> so just -- so they are not honoring the nsg guidelines. we have issues there. we know for a fact that they will take -- even though these agreements state that you cannot take this civil nuclear agreement and use it to move along more swiftly, whether through military development, we know they are going to do that. so if you could, just if you'd step back, i know this is a way for a former u.s.-based country -- company and others. i know through the supply chain to enhance their business and obviously create some u.s. jobs.

but could you step back and just talk about why this is in our national interest? >> yes, sir. as i said at the beginning jobs are important. my responsibility is to ensure that we promote the highest standards of nonproliferation policy in the world. that's what successive administrations have done with strong congressional support for decades. we would not have concluded this agreement if i were not satisfied that this was the best way to improve china's record on nonproliferation, to maintain our capability to have influence on that record. that's a very short answer. frank may want to add to this. >> if i could mr. chairman. the fact that we have an agreement like this and hopefully we'll have a successor

agreement, also it allows us to engage in dialogue and discussion with the chinese on a variety of different -- in a variety of different venues and different fronts for instance, we have discussions, as i mentioned earlier in the punt joint coordinating committee, a whole host of safety and security and emergency response issues, we have the opportunity to discuss issues associated with nuclear smuggling detection. we've been involved in the business of educating and training their people on export controls. we've helped them in the development of a center of excellence that will do training in the area of safeguards and security. so it's along these various avenues which we engage them not just the insight that we gain through commercial interactions with them that help move them along on issues associated with nonproliferation and with safety and security and safeguards. >> well, look i know that, you

know, the initial input, as we were walking through this from staff, as y'all were dealing with them as you were moving through, was leaning on the positive side. i do want to say that i understand our desire to continue to be involved with other countries with our supreme nuclear technology. i do think there are important reasons for us to do so. i do hope as we move through this process again we'll realize we're dealing with a country that plans to zap all of our technology and move totally to adigenous methods of doing this as quickly as possible and they are going to use this to develop their military. i know this is the third time i'm going to say it but to develop their military more quickly and that they are not honoring the existing nuclear supply group guidelines.

so i understand you know, again, it's economically driven. i know we have a lot of companies that involve themselves with you towards these agreements. i do hope, as we move through this, we'll take into account all of the liabilities and the benefits that come with it. and again, i thank you very much for your service to our country. with that, our distinguished member senator menendez. >> thank you mr. chairman. secretary countryman, let me ask you, in the last few years, china's nonproliferation policies remain, in my view, problematic. chinese companies and individuals continue to export dual use goods relevant to nuclear and chemical weapons and ballistic missile programs to iran and north korea. numerous chinese individuals and companies have been sanctioned for those activities. were these issues addressed during our negotiations to renew

the 1-2-3 agreement? >> i've addressed these issues constantly in the 3 1/2 years i've been on this job. not in the context of the 1-2-3 negotiations but in the context of a number of regular dialogue. >> i appreciate that. but within the context of the 1-2-3 agreement, they were not addressed? >> no. >> so isn't that an opportunity to press with china to halt these activities? >> as i said, we press for stronger chinese performance at all times, not just when we're in the middle of a negotiation. did this negotiation offer additional leverage? if this were a giveaway program, perhaps. but it's not. it's one that provides mutual benefit to both countries and provides a foundation within which we can cooperate on difficult issues. >> but clearly it is something that china wants as much as we do, or do we want it more than china wants? >> i don't know.

maybe we should ask frank if he wants to comment. do we want it more than china wants it? i think both of us recognize that the failure to renew this agreement would have repercussions throughout the bilateral relationship. i think both countries are fully aware of that. >> let me ask you a different question. if there was certification conditions on licenses for the export of new reactors beyond the four that have already been licensed, to the effect that the government of china is fully and completely cooperating with u.s. request to halt and prosecute the actions by chinese companies to export technology and equipment to iran and north korea, would the administration be able to make such certifications? >> it's the first time i've heard of the idea. i'd have to look at the exact details. i believe the chinese government is making an effort. i don't believe the effort is

yet sufficient. >> well, you said before in your answer to my previous question that you have raised these questions -- these issues a series of times outside of the 1-2-3. so it would seem to me that you would be deeply engaged in the knowledge as to whether or not the administration could go ahead and certify that the u.s. requests to halt and prosecute the actions by chinese companies to export technology and equipment for ballistic missiles to iran and north korea would be able to be made. so from the knowledge that you have, from all of the time that you've raised this with the chinese, do you believe that we've included such a provision that the certification by the administration could be made to that effect? >> again i'd have to look at the exact language. what i could say now is we could certify that there's an improving trend, that the chinese have been responsive to us on a number of cases that

we've raised but i cannot certify 100% satisfaction, no. >> so we have your words, an improving trend but we don't have what we needed. why wouldn't such a certification requirement be useful for the administration's efforts to persuade china to halt these activities? >> it would not be useful if it were absolute. neither china nor a number of other countries with whom we work intensively on such issues are 100% efficient and eefficient in their law enforcement standards and if the standard were absolute, i'm not sure which country would be able to meet it. >> well you know i understand maybe some countries where there is a strong private sector that developed its own technology and pro live proliferates in that respect but china is a pretty command and control country.

it's not like you raise your hand and say i want to go a different way. so it seems to me that this is a real concern. let me ask you this. curtis wright corporation produces the pumps that cool the reactors which propel u.s. naval submarines. they also produce a scaled-up version of this pump for the ap 1,000 reactors westinghouse is selling to china. could china reverse engineer the pumps they are receiving from westinghouse for their own nuclear submarine program? is chinese military seeking to divert these civilian nuclear technologies to it is naval reactor program? do you have any information on that? >> i do. and we discussed it in some detail in last night's briefing sir. >> uh-huh. so you can only respond to that in a classified setting? >> i think that would be wiser, yes, sir. >> it would be wiser or

necessary? >> necessary. >> wiser is one thing and necessary is another. >> i would take it to be not only necessary but wiser to have someone more expert than me on the topic. >> all right. well, okay we'll have to go through that. one last question, then. what measures have been built into the agreement to prevent china from exporting nuclear technology to countries that are proliferation risks because china says it will abide by the nuclear suppliers' group rules for exports but its already violating this with its continuing work on pakistani reactors. >> the agreement prohibits the transfer of u.s.-provided technology to another country without u.s. consent. >> but it is already violating these rules through its continuing work on pakistani

reactors. >> there's, i think a difference between violating nsg rules and, of course, the chinese would say their action is a matter of interpretation rather than violation. there's a difference between violating that and a 1-2-3 agreement particularly when this agreement, unlike the agreement it replaces, has a specific clause that calls for temporary suspension or permanent suspension in case of violation. >> well, you know in your testimony, your written testimony, you talk about advancing our global nuclear nonproliferation objectives and, mr. chairman i'm beginning to wonder what exactly those are and can they be mitigated as we wish them to be instead of having a clear objective. of course i'm concerned about what we are doing with iran but i'm concerned here that we seem to be able to look the other way when we want to. so i'm trying to figure out what

our nuclear nonproliferation objectives are and how much of a standard we are truly setting in the world. i was always an admirer that u.s. policy was about actually stopping nuclear proliferation, not managing it. and increasingly, when i see testimony like this, i get the sense that we are moving away from stopping it preventing it to managing it and that's a whole new world. thank you, mr. chairman. >> you bring an interesting point when we know they are going to violate the civil military piece. are they going to violate this other piece? but senator johnson? >> mr. chairman secretary countryman, i think to the chairman's question, you did say that china was committed to nonproliferation. is that correct? >> that's the short answer. >> and it kind of sounds like not a real accurate one. >> that's how all short answers

are, yes, sir. >> you said that they are not controlling their exports of nuclear technology. is that because they are unable or unwilling? >> well first, i would have to disagree that china's purely a command and control economy. it has a vibrant private sector. it is something of the wild west in terms of being free from government regulation and government control. and, in particular, the high-tech sector does aggressively seek other markets and, in addition, there's a number of chinese businessmen who seek the opportunity to be brokers between north korea or iran and producers in china and elsewhere and there are such brokers in other countries besides china. it's our assessment that the chinese government does not have the bureaucratic enforcement capability and does not yet have all of the legislation it ought to have in order to adequately

control dual use exports. >> so your answer is that they are unable to control the export? >> my answer is that they have not yet committed the resources that would be necessary for an economy of that size and sophistication. >> how difficult would it be for them and how many resources would it take? >> sorry. i don't have a short answer to that one. >> you seem to indicate in your testimony that if we don't move forward, if we don't provide the technology they'll just get it someplace else and we'll lose whatever influence we have. what are the alternative supplies? >> senator, there are number of different countries in this market space. countries that immediately come to mind are russia, france, south korea france, japan all of which are looking for

opportunities to pick up on the growing interest in using nuclear energy to solve energy demands in a number of countries but also, as has been pointed out, to move to cleaner types of energy to deal with, concerns about global climate change. so it is -- we are one of the most sophisticated, one of the most effective in terms of civil nuclear power industry but there are other competitors out there. >> how advance is our technology compared to those other competitors? are we a cut above? >> i would say a cut above but they are very oefsophisticated and the french and russia are succeeding in making sales of not only full reactors but also of important components and services associated with civil nuclear industry around the world. >> are we a cut above

significantly and is that cut above significance, is it significant from the standpoint of military conversion? >> well in terms of military conversion, one of the things that we look very very carefully at under the existing 1-2-3 agreement and one of the things that will be strengthened under the 1-2-3 agreement is to look very carefully at carefully at the information the technology the materials, the components of which we as a government will review before we give approval for that to be transferred to china. one of the other things that comes up in this new successor agreement is the fact that both sides will sit down annually and review the inventory of shared u.s. and chinese technologies and determine whether or not that ought to be renewed. so we go into this with eyes wide open understanding the potential risk but also balancing against the potential

benefits of being in this market. >> having been in the private sector for 30 years reviewing evaluating whether we should start an operation in china i witnessed repeatedly chinese companies reverse engineer and take over the manufacturing themselves. i would assume that would be a risk. how quickly do you think china could become self sufficient? >> i don't have a good answer on that, senator. >> my concern obviously -- >> there are a lot of variables involved in the process in terms of moving forward. our assumption is that even if they eventually start to manufacture more and more capable indigenously, there will still be a role for u.s. industry and the industry of

other countries to participate in producing particular components that are necessary and providing particular after sales services both domestically in china and in countries too much china might export reactor technology. >> changing the direction a little bit secretary countryman, can you just tell me a little about what china's attitude is toward advancement of north korea and their nuclear capabilities? >> very briefly china says and i think it is borne out by their actions that they do not support north korea as a nuclear weapon state, and that they wish to see the entire korean peninsula denuclearized. >> how much help has china given north korea in the past years? >> i don't know about long ago history, recent years no indication that china is assisting the north korean

nuclear weapons program. >> okay. i have no further questions. >> senator markey, who is no stranger to this issue. >> thank you mr. chairman very much. thank you for having this hearing. back in 1985, i was chairman of the energy subcommittee in charge of the nuclear regulatory commission and the nuclear regulatory commission department of energy so that i played a role in the construction of that 1985 123 agreement. what i worked for was imposition of two conditions before implementation. the first was the preparation of the report examining chinese proliferation risk and presidential certification that china was following specific nonproliferation policies and practices. during the floor consideration, i argued it carried high risk and that conditions were in fact

not as strong as they could have been, but at least it is at minimum mitigation standards for nonproliferation concerns. the reagan administration's efforts to comply with the agreement's conditions revealed chinese proliferation risk the agreement was shelved until 1997 when the clinton administration certified china was not proliferating nuclear weapons or technology and moved forward to implement the agreement. again, i disagree they brought this proliferation to pakistan and iran at that time, together with a bipartisan group of members of congress, i attempted to prevent that agreement going forward. here we are today as we were in 1985 and '89 '96, '97, '98, i have deep concerns if they're complying with the current 123 agreement and other nonproliferation commitments. concerns have been raised that

china may be diverting u.s. nuclear power technology to its nuclear naval program. would such transfer violate peaceful use provisions of the 1985 nuclear cooperation agreement? >> yes, both the current agreement and successor agreement would be a violation. >> during the 1990s china supplied iran with uranium and the intelligence community and state department expressed continuing concern that chinese government and private entities proliferated technologies concerning and related to nuclear weapons to countries of concern. a glaring example of private sector proliferation is lee fong way, known as carl lee, who has been designated, sanctioned and indicted by the united states as a prolive ray tore of nuclear weapons technology.

china has given repeated assurances that they're investigating but reportedly have not taken enforcement action in this case. my question is can you confirm the united states government, including the state department no longer believe that entities in china are selling dual use technologies or technologies that could assist with nuclear weapons development or delivery systems to north korea or other countries? >> no. >> you cannot. second, in light of the carl lee case do you believe china enforces nonproliferation requirements on public and private chinese actors to the same standard as the u.s. does? >> no. >> in may of 2014 five members of the chinese military were indicted on charges of hacking into u.s. company systems and stealing trade secrets. these steps occurred in 2010,

2011, and included information related to the westinghouse ap 1,000 nuclear reactor during the eye dent cal time frame this was taking place, nuclear regulatory commission authorized dozens of chinese nationals to have access to five u.s. nuclear power plants for two months unescorted access to five u.s. nuclear power plants. i am told by the nuclear regulatory commission that this matter remains under investigation by the department of justice. can you tell me whether any of the chinese nationals who were placed at u.s. nuclear reactors unescorted assisted or attempted to assist the efforts of the members of the chinese military who were indicted? >> i am unable to answer a question on the connection between the two. i do know that in terms of chinese visitors who were allowed access to operating

nuclear power plants in the same way that american experts are allowed access to chinese nuclear power plants, the nrc i believe has corresponded with you several times on this and noted that it is essentially not a matter of nrc approval of such. >> do you know if the investigation has been closed? >> i do not know that. >> so can you give the committee a report on that the status of that investigation and when they intend on closing the investigation? because i think it is directly relevant to the treaty we are now considering. >> i will endeavor to get more information, yes, sir. >> i think it is very, very important. in 2013 dod report to congress states, quote, china is using its computer network exploitation capability to support intelligence collection against the united states diplomatic, economic and defense industrial base sectors that support u.s. national defense

programs. i would like you to tell me whether chinese government entities attempted to hack into either department of energy or department of state. >> as discussed last night we will give you information on that soon. >> general? >> i agree. we will provide you the information we have. >> i think it is very important so that we understand especially whether or not they tried to access nuclear weapons information from the department of energy or other sensitive military information and that would be both energy and state but also defense and other related agencies. so my concern here, mr. chairman is that it is quite clear there are entities within

china who continue to sell materials that could have dual use application into this international nuclear weapons and ballistic missiles marketplace in the same way aq kahne was doing it out of pakistan, the gentleman i referred to and others inside china are continuing to do the same thing today. i think it is preposterous to conclude that the chinese government isn't capable of shutting this down. i think it exists at the sufficient rans of the chinese government. i think it is critical safeguards be put in place to make sure that there are conditions that are attached to this agreement that ensure that there is not a continued recurrence of dangerous activity that will come back to haunt our country and the world because of china's unwillingness to actually police the export of

these dangerous technologies into the hands of those who we know will endanger the world if they gain access to it. i am not confident i can support this agreement. i think it needs additional strengthening if we are going to be confident that the policy that we have now doesn't help china far far more than it is going to harm the long term nuclear and ballistic missile nonproliferation agenda which we put at the highest pinnacle of american public policy. >> we look forward to your input in that regard and it is fascinating that our witnesses clearly state that china is in violation of the existing agreement and yet we are extending that agreement. senator perdue. >> thank you, mr. chairman. and thank you, general, and mrs. for your lifelong dedication and service to this

country. and thank you for your testimony last night in a classified environment. i'm be very brief mr. chairman. i agree with senator markey. i have done business in china. if it was consistent with their strategic initiatives and objectives, i believe they could police this but let me just -- you touched on several proliferation questions already so i won't belabor the point. in '97, china pledged that they would not begin new nuclear projects in iran. 2011 worldwide threat assessment by director of national intelligence listed missile proliferation from chinese industries as a concern at that point. again in 2011, same threat assessment said north korea and entities in russia and china continue to sell technologies and components to the middle east south asia that are dual use and could support wmd and missile programs. the 2015 statement did not include some more language.

general, could you give us again just a highlight of your perception now, your assessment on the current proliferation activity in the region that china is initiating between iran specifically and north korea? >> senator, that's not an area that falls under the purview of what we deal with. i think the issues in terms of chinese activities in other parts of the world more properly falls under the state department and the intelligence community. >> mr. secretary. >> i guess that's me. first to be clear the 1997 agreement was about official chinese government support to activities, research and development activities and construction of facilities in iran that could have contributed to a nuclear weapons program in iran. keeping with the terms of the pledge in 1997, china terminated those activities.

the separate question of every entity and crooked business man in china stopped attempting to sell dual use materials to iran and north korea is a very different question. i agree that it requires both additional resources and additional political will in china in order to put a stop to such activities but it is a separate question from direct chinese government assistance to a nuclear research program in iran. >> in this deal, do you think we could influence them to change their ability to detect that? i understand it takes investment but isn't that the question behind what we are trying to do here? either they're going to do business with us and prolive rate or do business with someone else and prolive rate, engagement is the higher objective, i get that. but before we get to that point is it not possible to influence them to enhance their detection

capabilities? >> well. >> they had an export outreach program that relies on the 123 agreement and the framework i mentioned earlier. it has been working since 2007 in china to train over 100 government officials each year from six different chinese agencies that have various role to play in export control internal compliance responsibilities. we also trained dozens of additional industry personnel on subjects of export control internal compliance, and best practices, and provided this successor 123 agreement comes into force we expect to expand significantly the number of industry officials that are engaged and the trainer approach

to drive home the nondiversion to peaceful and military purposes as outlined under the 123 agreement or issues the chinese have to focus on. again, if we are going to engage, if we are going to continue the journey of bringing the chinese more into what we consider to be the international norman standard related to nonproliferation, related to nuclear security and related to nuclear safety standards, it involves us interacting with them at the level from department of energy's perspective, at the level of the technicians and plant managers and scientists that actually have to carry out this work. we can't do that unless we have the legal framework that allows us to engage in those types of discussions. >> i understand. and i have supported engagement over the last 30 years personally and i agree with you

technically that that's a better way to go if in fact we can influence through that engagement. specifically on a cap 1400 reactor, one that the chinese might reverse engineer off one of our reactors, is there any way to -- would we consider that a u.s. design, even though it was reverse engineered off our design and would that come under the restrictions we have on our product? >> well, without talking about the specifics of that it is ultimately up to industry to decide which of its technology, patents, trademarks it is willing to part with in essentially a commercial business deal. they have to make the business case for what makes the most sense, either in terms of the meet sale or in terms of what they expect to gather from sale

of spare parts or services down the road. what happens at the u.s. government level is all those requests to transfer a type of technology a component material know how has to go through department of energy. we consult with the rest of government to again, eyes wide open, try to understand what the implications of that are from national security nonproliferation perspectives before that goes forward. under this new agreement, any decisions along those lines will be published in the federal register and it will take, you know a waiting period to make sure that we have dotted all of the is and crossed the ts with respect to technology transfer. >> very quickly on that one point, when we detect violations, what can we do to bring them back into compliance, if anything at all.

>> well, within the terms of this new framework agreement we have the right to raise that, either party has the right to raise it with the other party and ultimately suspend the agreement if they're not satisfied with the response. >> ranking member thank you so much. >> i thank you both for not only being here but the important public service that you are providing to people in this country. these are extremely important issues. i'm somewhat troubled by why there was not an effort made in these negotiations to deal with cooperation from china in regards to proliferation to iran and north korea by chinese companies. we all acknowledge there are chinese companies violating the

international norms on transfer of material and equipment to north korea and to iran. we spent a great deal of effort to try to prevent iran becoming a nuclear weapon state. it would seem to me we would want to use every opportunity we could. why wasn't greater effort made to use the 123 agreement which admittedly benefits both sides, don't get me wrong, but to use this as an opportunity to advance an important goal of nonproliferation. >> that's a very good question, senator. let me talk about it first in the past tense, with the current agreement, and then negotiation of the successor agreement. in the 1990s when the 123 was in effect but before any exports were approved as a consequence of the standards that the congress asked us to certify china made a number of specific

commitments on nuclear nonproliferation and export control which they fulfilled and they included joining the nuclear suppliers group and adhering to those standards. it included ending the cooperation that they had initiated with iran. it included ending certain forms of cooperation with pakistan and crucially it included them publishing for the first time the list of both nuclear material and dual use materials that were controlled under their national legislation. prior to that time they had no definition of what it was they were seeking to control. that's an example of the kind of dialogue within the context of a 123 but not in the context of a 123 negotiation that brought about demonstrable improvement

in china's performance. what we seek to do today is the same. so well before my tenure began in 2011 but aggressively under my tenure we have engaged with the chinese not with a general complaint that you've got to do more but with a combination of very specific bits of information upon which we expect them to act as well as concrete offers of cooperation, of training in customs enforcement of training in border security, of discussion of ways to change legislation and to change national control lists to make them more effective and as a consequence we see more and more cases in which chinese authorities have taken action on specific bits of information not only from the united states but that they've developed themselves in order to prevent transfer of dual use material.

more importantly over the last 15 years or 20 years if you prefer, what we have seen is that chinese state owned enterprises are out of the business of proliferating technology to north korea and iran. it is rather a very dynamic very high tech private sector in china which the state has not yet shown the capability and as senator markey i would agree, not yet shown the political will to control adequately. >> but is it your view that the successful completion of the 123 agreement will end up making china more sensitive, more effective in blocking the export of dual use technology? >> yes and i think this hearing will contribute to the same goal. >> thank you. appreciate that. i would like to talk about one of the selling points of the 123 agreement, jobs here in the

united states. a lot of reactor work is done by americans and we have companies that are located here but the technology will be absorbed in china. china is interested in producing reactors for export. and there's some fear that we are accelerating the international competition from china which may end up costing american jobs, knowing the way the chinese use their trade practices in the international marketplace. can you give us any assurances that this agreement, this 123 agreement, will not end up costing us our domestic jobs in this area because of the accelerating the chinese ability to compete internationally using american technology. >> thank you senator. our sense again is the decision as to what specific aspects of

what is u.s. origin technology patented trade marked that u.s. companies decide in their engagement in the chinese market working with the chinese in the export market is a decision -- >> can i cut you off one second. part of the entry to china is very much negotiated with the private companies which could very well effect china's ability to use technology. >> it does. but even if the chinese are engaged building reactors in their company or making export reactors, there's still u.s. content, there's still specialized components that the united states has comparative advantage and technological lead in providing after sales services consulting, engineering. there's a whole range of things which u.s. industry, not just

the major manufacturers of reactors but a whole range of sub vendors will benefit from by being involved in this expanding and growing market. >> makes me a little nervous. i hear what you're saying. let me ask one final question if i might on safety issues which is something we haven't touched on and that is what type of assessment can you give us that use of nuclear power in china will be with the highest safety standards recognizing the uncertainty of climate conditions as well as national security issues. >> for us department of energy safety is paramount in engagements with our own laboratories, plans, and facilities in the states, but also in china.

as i said in opening oral statement, we had meeting under the punt joint coordinating committee in china in which a whole range of safety and security related issues waste management concerns were raised. indeed, this is one of the reasons we think it is important as department of energy and nsa to be involved in the process is to ensure that we communicate with other countries, including china, best practices in the safety and security area. including lessons from the fukushima accident a few years ago. a lot of issues domestically, a lot of things which power plants overseas are implementing that draw from that. again, it gets back to the comment that was made earlier and it is that engagement of the nuclear safety experts, technician, laboratory experts in dealing with very very

complex and technical issues associated with that that helps promote safety and security across the globe. >> thank you. >> thank you very much. senator gardner. >> thank you, mr. chairman, thanks for holding this hearing and thank you to the witnesses for being part of the briefing last night as well. this is obviously very important strategic discussion we are having, securing peaceful cooperation with china to create significant business opportunities for u.s. exporters. china has right now about 26 nuclear reactors is that correct, with an additional 23 reactors under construction and plans to build up to 100 more by 2030. for comparison there are only 99 nuclear reactors currently in the united states. china announced in december of last year that it would spend about $11.2 billion on reactor construction in the next ten years. incredible amount of money to

spend to invest in nuclear technology and for u.s. businesses to plan that activity. you heard concern from others, and i would echo that past proliferation of entities in china and what may happen as they grow. we need ironclad commitment that since u.s. technology will be secure the duration of the agreement and not used for nefarious purposes by the chinese government or third parties. so as we look at the strategic implications of the agreement, we must use it as opportunity to raise with china pressing need to curb north korea's growing nuclear program and stop belligerence toward our allies in the region. seems to be a cooling in beijing towards pyongyang, but fundamental policy remained the same. recently heard from chinese nuclear scientists north korea

has as many as 20 nuclear war heads which could double by next year. that's more than our intelligence community said a sign beijing may have had enough of pyongyang's antics. american diplomats and i hope that we will continue to exploit this opening at every level. to assistant secretary countryman, 2011 as discussed on the panel today director of national intelligence worldwide threat assessment report stated north korean entities sell components in the middle east and south asia dual use and could support wmd programs. as we discussed, 2015 report made no mention of these concerns. i think there's been answers about whether or not chinese entities are engaged in these types of activities. i guess i would ask a specific question of you. i don't think i heard it answered today. which chinese individuals and companies remain under u.s. sanctions related to proliferation of weapons of mass destruction or missile

technology. >> that's a good question. i will get you a list. they are not state owned enterprises but rather individual brokers and technology firms that are not under direct state control. >> you'll get that list to us. >> i shall. >> talking about the terms of the agreement entered into, if we don't enforce terms of the bargain. doesn't that lead to a candidate willingness to ignore the plain letter of the agreement. >> absolutely. that's why we enforce it strictly strictly. >> the message the president sent to congress states this. it does not this is again from the message that the president sent on the announcement of agreement of cooperation. and i quote. it does not permit transfers of any restricted data transfers of sensitive nuclear technology nuclear facilities and major components of such facilities may only occur if the agreement

is amended to cover such transfers. this conversation that we are having today, it sounds like this is not -- this statement is at odds with your testimony. would you agree with that? >> no, senator. sensitive nuclear technology has a particular meaning in the nonproliferation and it is defined elsewhere in the text. it does not refer to major components of a reactor since it is reactors we are selling it could refer to other kinds of technology with noncivilian applications. >> the state department 2014 report on adherence to and compliance with arms control nonproliferation and disarmament agreements and commitment stated and i quote in 2013, chinese entities continued to supply missile programs in countries of concern. in this open setting, can you share more information of the type of missile programs in countries of concern?

>> yes. as has already been mentioned, gentleman named lee fang way who uses the name carl lee as well has been a primary procurement agent for iran's nuclear ballistic missile program and has provided a variety of dual use equipment from china and other destinations to the iranian ballistic missile program. so that would be the number one individual that we would be concerned with in that category. >> any countries including north korea, conversations? >> there are other procurement agents in china who work knowingly or unknowingly on behalf of north korea to acquire technology in china. >> thank you, mr. chairman. >> thank you very much for that question. just to follow up on that, what is china specifically doing, we are all aware of the carl lee situation. what are they specifically doing to get back to some of senator

perdue's questioning to end that. >> we are engaged in an intensive dialogue, wem a long standing dialogue about carl lee that intensified recently in which we are seeking to understand better each other's information and the capabilities in our legal system. for example, why we are able to indict him in the united states and whether the chinese would be able to do something similar in china. i will be happy to come back when it produces meaningful results. >> and again in questioning with senator perdue mention of the agreement being suspended if they violate it is that really real? i sit here and i'm just going to add to that question with another question. first of all y'all been great

witnesses. i think last night and today, you're very transparent, all of the things that, you know even more so last night that we have concerns about obviously in a different setting. but so we have u.s. interests that want to do business. we have a country like china that is not honoring the spirit of the law, they're not honoring previous agreements with the nuclear group. we know they're going to take the information and use it for military purposes even though the agreement says they won't do it. we have companies that want to do business with them. they're u.s. based with superior technology and we also know by the way that they're going to use the technology in ways they shouldn't. so talk to me a little about the

dynamic. so you have westinghouse a division of toshiba, pressing you to do business pressing you to allow this agreement to go forward. we have other companies that want to do business. you also have our national interests, if you will. you have a country that let's face it doesn't honor agreements. talk to us a little about the internal dynamic if you will to give us a flavor of the various pressures you're dealing with because it does feel a little bit like mercantilism is trumping the specifics of agreements being honored relative to nonproliferation. >> sir, let me repeat. i'll ask general klotz if he wants to comment on economic and commercial issues, but my job is to look after the nonproliferation policy of the u.s. that's been consistent across administrations,

supported by congresses and that's why negotiation of these treaties falls within my bureau. and i repeat, we would still be negotiating if i weren't satisfied this is in the best interest of promoting our strong nonproliferation policy. jobs are important. relationship with china is important. but my job entrusted when confirmed by the senate is to look after nonproliferation policy, and as we briefed a year ago on our general 123 policy that is the primary topic in all our negotiations. >> i guess, senator, i would look at it this way, is that our well-being as a nation rests on a number of different pillars off foundation, rests on national security and defense capabilities also rests on our economic strength as a country both domestically and in the international markets and it

depends upon our scientific technical engineering infrastructure that underlies that. so the difficult challenge we face as decision makers, whether in executive or legislative branch is to strike the right balance between those competing interests. i think what this agreement does, it sets up a mechanism by which licensing goes through the nuclear regulatory commission, approval to transfer various incendiary information and components goes to department of energy in consultation with the rest of the government. i know for a fact having spent 38 years in the military and the defense department that our colleagues over there will look very carefully and very closely as will the intelligence community when the issues of licenses and issues of approval for transfer come up and as they are reviewed, as they will under this new agreement on an annual basis in terms of what has been transferred and what's on the

inventory list. >> senator. >> yes, sir. thank you, mr. chairman very much. little bit on carl lee. carl lee is wanted by department of justice as a principle contributor of iranian ballistic missile programs. recent u.s. sanctions have confiscated $8.6 million in funds from chinese bank accounts. linked to manufacturing and exporting missile guidance components. extensive network of shell companies inside and outside of china to hide his activity. what they have done over time is every time we catch him, they change the name of the firm. so he's had a relationship with 12 to 26 firms many of which were just shell companies.

and again, sending ballistic missile technology to iran he had 16 aliases multiple bank accounts. but he's kind of running this nuclear ebay out of china selling into countries in the world we do not want to have access to these materials. we have a $5 million reward for information leading to his arrest. in april of 2014, he was charged with conspiring to commit fraud and bank -- wire fraud bank fraud, money laundering in manhattan. has a large network of industrial companies based in eastern china. so the chinese government says they can't figure this out. they can't figure out how to shut him down or guys like him. but the good news is they can figure out other things in china. they figured out how to arrest

five women who belong to a feminist organization last year. they figured out how to jail 44 journalists last year. they figured out how to put 27,000 muslim minorities in prison last year. they could figure that out. that they can do. but they can't figure out carl lee. just too hard for them. maybe it is too much evidence. too many shell companies. too many times. on the other hand, maybe china has just subcontracted this out to the private sector, huh? to america for cost cutting reasons, maybe china did this to protect the guilty, a chinese government, the people's liberation army you know so their fingers aren't on it yet they can do the favors for iran or pakistan or other countries. that's what i think is going on. i think it is pretty clear what's going on. when they want to crackdown, they know how to crackdown.

they want to crackdown on facebook or twitter they do it. it is shut down overnight. shut that site down. they move in. they've got military all over these other areas of chinese life that they believe are threats to their regime. but when it comes to threats to a nuclear nonproliferation regime, they shrug their shoulders. they can't figure it out. just too hard. and the reason it is too hard is that they've subcontracted to carl lee. he would be in prison right now. he would be paying a big price. pakistanis couldn't figure it out for like 25 years. we know why. we know why he is living in a nice private residence in pakistan, not under arrest. he was a hero, not a felon in the eyes of the establishment. that's how we're going to get in trouble here. china gets a lot out of this.

china in nuclear power is a lot like the japanese were in the automotive industry in the 1950s. we were laughing at them. i had the honor, few of us can say this i had the honor of bailing out chrysler twice with votes in congress. 1979 and again in 2009. japanese just kept coming rest of the world just kept coming. so they want this technology. they want to reverse engineer it, want to be the marketer of nuclear power plants, use the guise of their concern about climate change and we're going to pay a big price in the long term. so we have to start now where we want to wind up in the long run because it will be prettier that way from a policy perspective much prettier if we insist on very tough standards now on the chinese before we finalize anything with them. they have to prove to us that

they're serious about this that people who violate nuclear nonproliferation policy ballistic missile policy pay a price. if we pretend they can't do it if we pretend that they don't have an authoritarian government if we pretend that they're a capitalist, not a communist nation which they are, with state control over everything at a certain level, then we're just going to pretend away on nuclear nonproliferation policy, so this is a big moment for us. we have to attach conditions to this that don't allow them to derive commercial long term benefits of having access to our top of the line nuclear technology while simultaneously turning a blind eye to what we know is a simultaneous geopolitical agenda which they have, and which is a constant throughout the last four or five decades in pakistan iran, and

other places so i guess what i would say to you is that from my perspective we have a big responsibility here to condition this in the tightest possible way, to expect action from china and not words to not allow the short term diplomatic commercial interests of any administration to trump the long term nonproliferation goals which we all say are at the highest level. we are here today because we -- that's why you had to do a great job on this iran resolution. we turned a blind eye to it. we were selling six nuclear power plants to the shah of iran in 1977 '78, '79. thank god we didn't transfer it before it fell. that was jimmy carter policy.

in each iteration we kind of dodged the big bullet but each year that goes by every compromise of the policy, especially when dealing with pakistan and iran we are running a big risk, so all i can say here is i'm going to work very hard to make sure the conditions that are attached to this reflect the seriousness with which we should take the lack of seriousness to the chinese government has in their nuclear nonproliferation policy and thank you, mr. chairman. >> thank you. and ranking member, i cherish the input that we have from all our members. i think we have an outstanding committee, and it is interesting on different topics the different input that members weigh in with. and i really appreciate senator markey's contribution as i do everyone's here today. i see your light on. >> i wanted to point out this is

the second day of hearings first day was in a closed session, and i think the information we received will be very helpful to us, i appreciate the participation of all members, particularly senator markey's history and work you did when you were in the house of representatives. >> just to follow up on his question before we close this out, on the carl lee issue with china do you think it is a lack of capacity or lack of desire to end that particular situation. >> i think it is a little bit of both. i think the quibbles i have with senator markey's description is first, he's not a nuclear ebay he's more a primary agent for the iranian ballistic missile program rather than all kinds of programs and all kinds of places, he has a primary sponsor. second point i don't think it is so much a question of

subcontracting government functions to a private facility, you're right that happens in a lot of countries. i think it's a different problem that again is not unique to china. mr. lee has money and lawyers and the weegers and ngos and others do not. >> my sense is that as we move ahead there may be a series of conditions the senate may want to place on this particular agreement. i would encourage members and staffs to work with us to see if that's the case. again, want to thank you both for transparency always answering questions the way you do. thank you for being here. the information the record will be open until thursday afternoon, so if you receive additional questions answer them properly. thank you