chairman of the committees in charge of crafting new financial regulations earlier today. afterwards senate banking committee chairman chris dodd expressed confidence in the effort to pass a bill this year. he's joined by house financial services chairman barney frank. they talked to reporters at the white house for 15 minutes. >> what a nice day. >> good morning. >> well, listen, we had a very good meeting with the president and the secretary of the treasury, larry summers and others who are very interested. obviously a great day yesterday for our -- for the country, the signing of the health care bill and the president wants to move quickly if we can on financial reform and both chairman frank and i have been working for the last year and a half on these matters. .

>> had an implicit agreement from the federal government. there will have the consumer protection agency so people can count on somebody watching out for their interest in mortgages, credit cards, and other financial activities. we want a systemic risk council, a reader system to pick up problems before they challenge to threaten the financial system. will have strong regulations on dealing with exotic things like over-the-counter derivatives and other things that would put our system at risk.

where will work closely together to harmonize, where we can, our proposals, to minimize -- to minimize conflicts where they occur. i think we can get a bill. i think the american people expect us to address the largest and most significant financial crisis since the great depression, caused by a collapse because regulators did not do their job or there were no cops on the beat in unregulated activities that contributed to this mess. i am hopeful, in light of our conversations over the last several days, which can have a strong bill on the floor of the united states senate within the next month, and to work with barney during that process so the president can have a bill signing ceremony before this congress adjourns. >> i agree. one of the things you should know is that if you look at two major pieces -- the house and senate version of a piece of legislation, which are closer on the set of rules than we usually

are. that is not an accident. we've been working, both of us will, with the obama administration, with the financial team. the banks that are too big to fail -- if you go back to aig and lehman brothers. we dealt with those. in 2008, the administration, according to the bush people, felt they only had two choices. they could take all of the debts or none of the debts. you had the opposite reaction with lehman brothers and aig. we have resolved that. they're going to be death panels enacted by congress this year, but they are death panels for large financial institutions that cannot make it. we're going to put them to death and not do much for their errors. will do everything we can to keep this from spiraling into a broader problem. this is within reach. i am committed to an independent consumer agency that cannot be overruled on policy grounds.

and there are some areas where i think the senate could improve on us. i was not fully happy with where we fell on derivatives. i was on the losing side of a couple of votes on the floor. i hope it will be different in the senate. in the house, it became partisan not because we wanted it to be but because the republicans made it that way. with the discipline that the conservative republicans were able to influence, on the boat in the house before pressing the last amendment, every single republican voted to kill every form of reform -- not amend or fix it. that makes it hard to work together. i hope it will get better in the senate. here is the difference that makes me optimistic. when we were doing this bill last year, health care was the number-one issue on the agenda. there were other important issues on the agenda -- whether to send troops to afghanistan. when we come back from recess, the number one issue before the congress will be this bill in

the senate. i look at the bill that senator dodd did, i know what he wants to do. there will be some opposition. there will be some people against it. some republicans are promising they will kill this thing. i believe we will get a good bill out of here, especially -- this is now the number-one issue the american public is going to be focusing on. on every issue in contention, i think we will benefit from that. >> the leader has said he would like to do that. i am careful about setting target dates. my hope would be before then, if possible. let me underscore what barney has said. i have had positive initial conversations with richard shelby, the ranking republican on the banking committee, and barred corker -- and bob corker has wanted to work on this. there are republicans in the senate who want to be part of

this debate and offer constructive ideas to this proposal. i am more optimistic, in light of what happened in health care. the outcome has strengthened our aim in reaching out to people who want to be part of the solution. >> are the republicans outside of your committee who have committed? >> i have not done that, but i am interested in hearing what other republicans and democrats outside of the committee have to suggest, and offering to become part of this effort. what i am determined to do is get a strong bill. we are going to end too big to fail. we're going to have systemic risk, we're going to deal with consumer protection. these are all going to be part of that bill that the president will have on his bill -- have on his desk for a signature. we look and the purchase a patient who want to help craft this. the door has been open in the past and still is. >> a year ago, there was

skepticism we would be able to do anything. when the first notion of a consumer agency came up, some of you wrote premature obituaries. i understood at the time it was pessimistic. this is constantly been moving. we are not talking about whether to regulate more, whether to have a consumer agency, but how. how is still an important set of questions, but it is different than whether. it is no longer an insider game. the product gets better in every specific. >> [unintelligible] >> there may not be any. >> we do not know. the bill has not passed. what are you asking? why you ask me what the weather is going to be like on memorial day? i am not the farmer's almanac. we know what some of the potential issues will be. a lot of this is how you do the

dissolution, how you do the systemic risk. these are important technical issues, but they are not in the logical issues. they are things that can be worked out. it depends what is in the final bill. >> the journal is reporting that jpmorgan is getting a tax break for the purchase of public debt. is that what congress had in mind when it passed tax breaks? >> you have to ask the tax- writing committee. remember, we do not have control over taxation. chris has been doing health care and financial reform. i have been doing financial reform. i know more about financial things and less about anything else in the world than i used to. i do not even know which code that has to deal with. >> senator dodd, you said you need to reach a deal to get this bill to the senate. >> let us not get ahead of ourselves. again, i am dealing now -- we

are out of committee. i am dealing with 99 other senators, not just the 22 in the banking committee. there are more people to work with and listen to on the subject matter. i welcome that and look forward to it. >> senator shelby and senator gregg said that too big to fail is emerging at the top of public concern. there is so much uncertainty. >> any ideas they have to strengthen that -- there is little light between those of us who want to make sure that never happens again. i am interested in hearing any ideas that would make that -- the perception is bankruptcy. the presumption is that if you end up in that situation you are going into receivership. >> let me add up -- we addressed that in -- one of the things we got criticized for from the financial community is that we adopted something that empowers the administration even to

reduce secured creditors. even the secured creditors can be told they're going to get a hair cut. you want to put the investors on notice and the creditors. you want to make them nervous and make them do the thinking before they invest. for example, if we have this 10% reduction possibility for secured creditors -- all these things reinforce each other. >> what about what you call the $50 billion fund of permanent bailout? >> we think that will protect taxpayers so they do not end up writing a check if we get to that situation. that is open to discussion. >> i want to stress -- and paulson said that he had two choices, either to pay nobody or to pay everybody. they tried pay nobody with lehman brothers, and he and bernanke came to us and said the world was going to end. in aig, the fed without congressional input decided to pay everybody. one of the things that is not in discussion is we are giving them

the power to pick and choose. that is a very important piece. the decision that paulson said he faced -- we begin by saying the assumption is we are going to pay only those debts that are necessary to prevent the total spiraling downward. that is where the fund would be used. it is hardly a bailout. there will be no more aig's. if they have to pay off some of the debts of a failed institution, the shareholders are gone. the ceo is gone. everybody is wiped out. it is a different situation than the past. >> is there optimistic -- is their optimism about this issue instead of health care? the bailout started during the bush administration. >> maybe i am a minority of one, but i hope that after yesterday those republicans who i think reluctantly went along with the just say no -- who were against everything -- are going to step up and say that is over with.

we did not get elected to the senate to sit down and say no to everything. this is a major crisis. we want to be part of the solution. if we are told again to say no, we are going to walk. the door is open. the principles have to be very strong on this bill, but i want people to bring good ideas to the table. if they have good ideas to strengthen this bill, i welcome it. >> i unfortunately do not think we can take much comfort from the fact that everything that has happened in america today began with george bush. there was a terrible day, january 21, 2009, in which everything was wrong in america. unemployment started. the deficit started. the war in america went bad. there was a terrible disease outbreak. mass and the judge took hold of my republican colleagues. even those -- mass amnesia took

hold of my republican colleagues. the rejection of everything from the house republicans -- i think the senate republicans are smarter than that. >> if they do not adopt that wise path -- >> we are going to get a bill. >> and it bottles up in the senate somehow, would you rather see something not pass at all or something which is somewhat compromised? quick answer the question before you finish. we are going to get a bill. >> who do you like better -- your mother or your father? [laughter] ho[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

and >> a couple of hearings we are covering tomorrow. at 10:00 a.m. eastern time, the house oversight committee looks at treasury programs intended to prevent home foreclosure. at 2:00 p.m. eastern, the senate appropriations committee holds a hearing on the war supplemental bill. they will hear from secretary of state clinton and defense secretary robert gates. if you can watch these hearings live on c-span 3 and live at c- span.org. >> this , on c-span two's national book critics' awards ceremony. this weekend, look for highlights about the virginia festival of the book. and the entire schedule online

at booktv.org. >> high-level meetings took place between the u.s. and pakistan at the state department. secretary of state hillary clinton and mahmoud koreshi spoke with reporters for a half hour. >> good afternoon. it is such a pleasure, once again, to welcome the foreign minister and his delegation to the state department for this latest round of our meetings and for this beginning of the u.s.- pakistan strategic dialogue, the first ever held at the ministerial level on both sides. that staff, along with the unprecedented for dissipation of senior leaders across both of our governments reflects the

importance we place on this relationship. these meetings are an opportunity to engage directly on the full range of issues that are matters of common concern and shared responsibility and to produce concrete results. today, we discussed our shared goals -- to protect our citizens and our countries from the violent extremism that threatens us both, to see pakistan prosper as a strong democracy and a stable region, to cooperate on issues that improve the daily lives of the pakistan the people, and so much else. we have made it very clear that this strategic dialogue is in pakistan's interest and in the united states's interest. that is why we are doing here today is so critical. i want to think the foreign minister for his candor and his commitment to finding solutions to our common challenges.

we have listened, and we will continue to listen. we want to demonstrate by both word and deed our respect for pakistan's concerns and ideas and share of our own. this is a dialogue that flows in both directions. we recognize that our success will be measured in the results that our citizens at sea in their daily lives. this begins with security. we discussed pakistan's national security priorities, ongoing counterinsurgency operations, and long-term military modernization and recapitalization issues. pakistan is on the frontline of confronting the by want extremism that threatens us all. pakistan's civilian and security forces continue to bear the brunt of that fight. we respect the sacrifices that pakistan has made by combating

terrorists who seek to undermine its ability and undo its progress. we pay tribute to those who have fallen, both those in uniform and the many innocent civilians killed or injured. in our discussion today, i underscored the commitment of the united states to stand with pakistan as it confronts its challenges. the foreign minister and i also reaffirmed our support for the people and government of afghanistan as they continue to rebuild their country after decades of war, and to overcome violence and insurgency. our relationship extends far beyond security, as does the scope of this dialogue. as demonstrated by the landmark legislation which supports pakistan's economic and social development goals with $7.50 billion in assistance over five years, the united states is committed to advancing the long-

term aspirations of the pakistani people for eight more prosperous future. the prime minister and foreign minister deserve our thanks for the work to make the legislation a reality and to make sure it benefits the pakistani people. i also want to give the foreign minister personal credit not just for launching this dialogue but for insuring that we make tangible progress and produce real results on matters of importance. our working groups were hard at work today. first, we are cooperating to boost economic development on a number of tracks. the debt it carries secretary will sign a letter of intent -- the deputy secretary will sign a letter of intent to improve our roads in the northwest. we will help to boost exports

of agricultural products and improve agricultural in the structure. as the foreign minister said today in our opening dialogue, 60% to 70% of the people of pakistan rely on agriculture. therefore, we ignore agriculture at our peril. you cannot have prosperity if you do not go to where the people live and work, how they make an income, how they feed themselves and their families. we are continuing to work for greater market access to our markets for pakistani products. we continue to collaborate on plans for new water projects. we are looking forward to the completion of a transit trade agreement between pakistan and afghanistan but we believe will benefit both countries. as i told the foreign minister, we appreciate pakistan's renewed commitment to sustained economic reform that will provide a foundation for long- term prosperity. we are working together to ensure that pakistani have --

that pakistanis have secure access to clean water and reliable power. we announced a secure energy product, and will sign implementation agreements for three thermal power station rehabilitation projects that will provide more electricity to more people. we also discussed the importance of working on a multi-year basis with regards to resource planning. i was pleased to inform the foreign minister that our goal is a multi-year security assistance package, including foreign military financing based upon identified mutual strategic objectives which would further strengthen our long-term partnership with pakistan. we of course will work closely with congress to further develop this commitment.

the united states also remains committed to social protection efforts such as the benazir bhutto income support program for families in vulnerable areas. we will launch a women in development agenda in our next round of dialogue in islamabad. i am pleased to announce the approval of flight access for pakistan international airlines to its chicago via barcelona, making it easier for businesses and families to strengthen our ties. we covered a lot of ground today, but there is more to be done. we are going to be working hard. our staffs are going to be meeting again tomorrow and over the next month in islamabad. we're going to be working on people to people contacts and programs.

again, i think you for your leadership. -- i thank you for your leadership, for the open discussions we began today. as i did this morning, i want to speak directly to the people of pakistan. i have been privileged to visit your country over the years, including last fall as secretary of state. i have learned from your rich history and culture, and i have experienced firsthand the warmth of your hospitality and the strength of your communities. the dialogue we seek is not only with the government of pakistan, but with you, the pakistani people. it is a dialogue i hope will continue growing richer and broader. we thank you for your attention and your friendship. >> madam secretary, thank you. today, i am a happy man and a

satisfied man. i am satisfied because you have finally agreed to many of the things that we have been sharing over our discussions in the last two years. i suggested to madame secretary that if we want this relationship to become a partnership we have to think differently. you have to act differently and you have to upgrade the level of our engagement. she agreed. i thank you for that. i suggested to her a new format of our engagement when she was in islamabad -- a three tiered structure of engagement on the ministerial level, a policy sharing group to meet my annually to follow through, and

and to expand the sectoral track. the original dialogue we had in 2006, 2007, and 2008. -- madam secretary, on my request, has agreed to expand the tracks from four to 10. why have we expanded these tracks? we have expanded those tracks to make this relationship people to people. i wanted to bring in areas that affect the lives of the ordinary people of pakistan. when i say i am happy today, i am happy because i feel i have contributed in redirecting this relationship in line with the aspirations of the people of pakistan. the people of pakistan expected

a different kind of an approach. the people of pakistan expected a democracy to treat a democracy differently than you have done -- and you have done so. and that is why i am satisfied. that is why i think we are going to move from a relationship to a partnership. we have been talking about the engagements of the past. how is this engagement difference from the past? i think we have done three to four things which are important, and i wanted to register them. one, we have upgraded the dialogue. two, we have given it a new structure, a new format of engagement. we have put in place a mechanism which would ensure follow up.

we can meet. if there is no follow-up, there will be no results. i want this to be a results oriented dialogue. thirdly, we have expanded the sectorial facts, as i have said. fourthly, we have and you have -- your administration has -- provided the resources to implement what we agreed upon. if we could agree, we could have great ideas. but if you do not have the money, those ideas would be dreams. i want these dreams to be converted to reality. i think that is happening. i can see that happening. i also am happy to share with you that we have discussed a number of things. we have discussed issues like market access, and i have

shared with the secretary how important it is for stabilizing pakistan's economy. one of the ways is to expand its through market access. the legislation has been pending. i must thank you and your administration for having agreed to give us priority. i understand the health bill took a lot of your attention and a lot of your time. i think that is behind us and we have to move on. i think the legislation is going to be a priority legislation in the days to come. the csf funding -- at times, and friends -- as friends and allies bickering over dollars and cents, we need to put in a mechanism which is neutrally acceptable, which is fair and balanced, which takes into

account accountability and delivers in time. we agreed in this interaction that the substantial sum will be paid to pakistan by the end of april and the remaining, hopefully, will be settled by the end of june. we have also agreed to work together up with the congress -- congress is important. let me share it with you. but i sought a qualitative difference in -- i saw a qualitative difference in my in data with the congress yesterday. when i came here two years ago, everybody said, "congratulations. surrender." i said wait until we see the results. we have demonstrated the results. the armed forces of pakistan have shown the result,

determination, and commitment. we are going to win in this struggle because defeat is not an option that we are planning for. inshala, we have a clear objective. we have a plan. we have a strategy. that plan is working. today, we have a partnership. hopefully, this partnership will turn the tide in our favor. hopefully, in our mutual favor. >> thank you so much. thank you. >> [unintelligible] >> madam secretary, this is for you. pakistan said this would like -- said it would like to have a real partnership with the united states, with all the perks that come with it. are you prepared to discuss a civilian nuclear deal such as the one india has with pakistan?

prime minister, what is on your wish list to do all you need to do in terms of making the border region more secure with afghanistan? are you looking for drones, helicopters? what could the united states give you that would really help? >> i will go first. we have a broad agenda with many complicated issues like the one you referred to. discussions are continuing through tomorrow. while i will not go into details of our bilateral conversation, we have said we will listen to end in gauge with our pakistani partners on whatever issues the delegation raises. we are committed to helping pakistan meet its real energy needs. i am particularly pleased that we are moving forward with $125 million to pakistan for energy sector projects. it is an assistance program i announced when i was there in

october. as the foreign minister said, we have followed through. we do not just make announcements, forget about them, get the headlines, and move on. this dialogue is helping us build the kind of partnership that can make progress over time on the most complicated of issues. >> ma'am, we have taken a number of steps that have improved the border situation. today, if you look at the force we have along the pakistan- afghanistan border, and compare our force with the force across the border -- if you look at the troops deployed on the western border, it is unprecedented. if you look at the steps taken. if you look at the impact, the

successful military operations have had on the border movement, you would realize what relief they have provided across the border in afghanistan. successful operations in pakistan against the taliban have had a significant impact in afghanistan, and they of knowledge that. president karzai was over in islamabad and had discussions. demolished the contribution that pakistan had made. he is knowledge the contribution the democratic government has made in improving bilateral agreements with afghanistan. we have a trade agreement. we have talked about a military hardware. you have to realize we are operating in a completely different theater -- the western border. the terrain is completely different. i am glad to share we have

agreed to fast track our requests that have been pending for months and years on the transfer of military equipment to pakistan. all these steps, i think, will make a qualitative difference. >> wired news. my news secretary informed me that india and pakistan have strained [unintelligible] perhaps what you have done [unintelligible] how imminent -- how important is it for them if the people of pakistan want to come into this? how imminent is the military future for most countries [unintelligible] >> thank you for asking that

question. that is really at the heart of what we hope to achieve. i agree with you. we have had a relationship that goes back to the very founding of pakistan. we have had many positive experiences. but to be absolutely historically accurate, we have had setbacks and stresses in our relationship. and i believe strongly that it is important for the united states and pakistan to remain connected and working together for the betterment of both of our people. will we have disagreements? of course. we have disagreements with all of our friends from time to time, yet we do not want anything to disrupt or divert our attention from building this relationship into a partnership, as the foreign minister has said -- a partnership that stands the test of time. as part of that, we want to

insure that our communication about our work together, our our reach, extends far beyond our governments. we want our private sectors working together much more closely. we think there are many great opportunities for joint ventures and investments. frankly, we have work to do to explain the opportunities that exist. we want our universities and academic institutions working together. we want to spend time on improving agriculture and health care and so much else. we have an exciting presentation between our two information technology representative about what can be done with greater investment in technology -- and who benefits from that more than the individual pakistani who gets information from a cell phone that helps with mobile banking or provides health-care and information? >> telemedicine.

>> exactly. we are very excited because i think both he and i see this as bettering the lives of people. that is what got me into politics. i know that is what motivates his desires. we really are looking for more and more ways that we can create those interactions and exchanges between our people. that is what this is all about. >> could i respond to what you said? p.j., i was at the hill yesterday. i shared with you as a fellow pakistani -- the mood was completely different. i was at the senate, i was at the house. it is 180 degree difference. you turned the corner. today, there was confidence. there were no question marks. there was no suspicion. there was no "do more." there was recognition of what we

already had done. there was appreciation of what we had already done. that is one. the other thing -- the military relations today in pakistan are excellent. the fact that the army chief is part of the delegation that is here, the fact that he was sitting at the same table, arguing articulately about pakistan's case, was unheard of in the past. thirdly, the secretary mentioned the private sector -- the vibrancy of the private sector. let me share with you that today at the state department we had a conference -- a public-private partnership conference. [laughter]

>> welcome back to washington, mr. foreign minister. this question is for both of you. given that you were speaking about improved relations between pakistan and afghanistan, i would like to ask about reconciliation of the taliban and what kind of roll you envision for pakistan. do you envision a role for them in helping to mediate? what could that do for the security of pakistan? secretary clinton, george mitchell is going to be meeting with prime minister netanyahu. what do you hope to secure from him with regards to commitments for the peace process. >> as far as the reconciliation goes, we have discussed it with president karzai. pakistan is very clear. we want this to be a lead and

zero process. it is their choice. if they feel we can contribute, we will be more than willing to help. but we leave it to afghanistan. we had discussions when the were in islamabad. i have invited the afghan foreign minister to come to islamabad for a detailed discussion on the reconciliation process. he has accepted my invitation and we will talk about it. our aim is very simple. we want a peaceful, stable, friendly afghanistan, period. >> with respect to your question to me, we are engaged in ongoing discussions. senator mitchell, as you pointed out, is very actively part of that. i think that it is very clear

our goal is the resumption of the negotiations -- the launching of the proximity talks -- as soon as possible. >> [unintelligible] >> i agree with what the foreign minister said. >> can you assure the people of afghanistan with your military support and support in related fields? a lot of afghanis feel the real interest is only to contain al qaeda. the involvement of india -- americans seem reluctant to play a real role. how would you assure the people of pakistan that in all security related issues, whether they are related to taliban terrorism or india, america would play its true role? >> i think it is important to

recognize that the united states has positive relationships with both pakistan and india. we certainly encourage the dialogue between india and pakistan. the issues that are part of that dialogue need to be addressed, and resolution of them between the countries would be in everyone's best interest. i want to underscore that our goal in the obama administration is to make clear that we are going to be a partner with pakistan, going forward, on a full range of matters. we cannot dictate pakistani foreign policy or indian foreign policy, but we can encourage, as we do, the in-depth discussion between both countries that we think would benefit the each of

them with respect to security and development. >> can i also respond to you? you see, in the discussions that we have had, we underscored the importance of the bilateral track. the last few years, the bilateral track was subsumed -- understandably so. we have now refocused on the bilateral track. that means that our relationship goes beyond afghanistan. it has been discussed that the long-term u.s. interests lie east of afghanistan. that is to be understood. as far as india is concerned, they are a sovereign country and we respect that.

all we are saying is that those relations should not be at the cost of pakistan. we are very clear, and i think you are very clear, on that. pakistan has been willing to engage, and i am confident, two years down the line, of this relationship. i am confident that india will have to revisit its policies very soon. >> thank you all very much. >> madam secretary, [unintelligible] [laughter] >> tonight on c-span, a federal commission holds a hearing on

china's regulation of the internet. janet yellen, the head of the san francisco federal reserve, discusses the economy. senator dodd and barney frank talk about a proposed financial industry regulations. tomorrow, on "washington journal," a look at potential climate change legislation. will talk to congressman jim jordan about the mortgage modification program, and tomatt matt kelley about the cost of reconstruction. >> c-span -- our public affairs content is available on television, radio, and on line. you can also connect with us on twitter, facebook, and youtube, and sign up for our alert e- mails @ c-span.org.

>> a federal commission that monitors civil rights abuses in china heard from google and go daddy about problems they have had operating in china. both companies have experienced hacking attacks the suspect of originating in china. google recently announced it would no longer comply with chinese government censorship laws. this is one hour 50 minutes. -- one hour and 15 minutes. >> this is a hearing of the congressional executive commission on china. the subject of the hearing is google and internet control in china, the nexus between human rights and trade. let me stipulate at the outset that china is a big part of this world of ours, a big part of the world economy. it will have a significant impact on our country and our future, going forward.

the internet in china is a very interesting subject. today we are told that china has 400 million internet users, the most in the world, and that chinese citizens now have opportunities to shop online and communicate with one another in the outside world. the chinese government, to its credit, has invested heavily on internet in the structure and sought to bridge the digital divide between rich and poor. that is good news. there is some news that is not so good. we hear always that china wishes to be treated as a fall and respected member of the international community. i am all for that. for that.espect for countries but full respect for -- i am all in favor of that. but respective countries do not sensor their own people are locked up their citizens without

trials or rights. respective countries do not hear new ideas. too often, too many are reluctant to talk about what is really happening. there are some good signs in china, i think. there are opportunities in china that did not exist before. there are some good things happening. but not in every area. the truth is, today there are more than 1000 people that are sitting in chinese prisons. this committee has the largest data base of chinese prisoners, human rights prisoners, that exists in the world. we keep the database. it has thousands of names in it, with 1000 confirmed individuals now in chinese prisons, denied the most basic of human rights. the truth is, in china, free political speech is censored. the dispute with google is only the latest in a long history of china trying to control

information that is available to its citizens. information is not to be feared, and ideas are not enemies to be crushed. the truth is that china too often once a one-way relationship with the world. they want to participate in the global marketplace. they want to make export products. the world buys them and sends money back to china. and china enjoys the participation. too often, it wants that to be the entirety of its participation. the truth is the world is made up of more than just products. the world is not just commercial. there is also a marketplace of ideas in the world. that is what is google dispute is really about, and the internet dispute is about. it is what the chinese censors are battling every day. it is why they keep violating the human rights of citizens to think and speak freely. china wants to participate in the marketplace. but to keep the marketplace of

ideas outside of their country. they want to keep it controlled by themselves. respected countries do not pick and choose to participate in only slivers of the world. they do not fear ideas or people or speech. they do not throw their citizens in jail without giving them basic rights. respecting people's rights to speak and think as they whicishe fundamental. this dispute with respect to the internet and with respect to a company called google is a dispute that brings us to a central location with which to discuss what is happening in china. why is it happening? and what responsibilities do we believe the chinese have, with respect to the free flow of the information? only when china respects human rights, only when china allows the free flow of ideas, when

they discontinue throwing people in prison before -- in prison for speaking and thinking freely -- only then will they be treated as a full and respected member of the international community. i know that is a very critical statement of china. i want china to be a country that succeeds in exhibiting greater human rights for the chinese citizens. we have had hearings of this committee in which we have had testimony from relatives of those who have been seized on the streets of china raw, who a and put in prison not to be seen again. -- who have been put in prison not to be seen again. even in the darkest cells, there are present -- there are prisoners who will be heartened by the fact that there are those of us who ask these questions. today, we have this hearing to try to understand what is it about the internet, about china,

about google, about go daddy, about these issues about the free flow of ideas, the marketplace of ideas that moves around the world at the speed of light. i wanted to say at the start of this hearing that we asked the chinese embassy, as we always have, if they would like to send a representative to appear before us today. they declined, as they always have. they did send a statement. i want to move to have that statement included in the hearing record. this is the first time they have done so and i want to include that and without objection will do so. yes? >> [unintelligible] >> it is in your packet. i think we will just include it in the record. i think there will be much of the statement with which will disagree. i want it to be none the less part of the formal hearing record. i also want to include the prisoner list that is in your packet today, and submission of

the testimony for the record by rebecca mckinnon, a visiting fellow of the center for information policy at princeton university. without objection, i will include both of those. we have a brief opening comments by others on the panel. i would be happy to recognize them. >> as ranking member of the commission, i applaud you for holding this important hearing on internet freedom. as we know, reporters without borders documents that in china alone at least 72 people are known to be imprisoned for internet postings. the victims of the assault on internet freedom include the entire chinese people, denied their right to freedom of expression, denied access to information, and often sell censoring out of fear. beyond this, victims include other people tyrannized by governments with which the

government sells or gives its advice on techniques of internet repression. reportedly, these include cuba, vietnam, burma, belarus, and she long cup. we are seeing positive developments. we've seen some companies want to do the right thing. the author who has developed strict policies -- yahoo has develop stricter policies. on the commission on human rights in vietnam have put personally identify all -- personally identifiable information out of the hands of vietnam. even though we remain part of the human rights organization -- we got an e-mail that dr. song, in vietnams, had just had his house invaded after spending four years in prison for posting

on the internet "what is democracy?" translated from the u.s. embassy. for that, he got a jail sentence. yesterday, they raided his home. yahoo has put that personally identifiable information out of the reach of the secret police. in 2006, i chaired the first hearing on internet freedom, called "the internet in china -- a tool for freedom or suppression." da cooperated -- yahoo cooperated in the tracking down of the journalist imprisoned for the mailing -- for e-mailing to the u.s. government orders about what not to say on the anniversary of timman square. cisco and others testified on the hearing, which broke new ground. since then, we have had meetings

with google executives. they have taken actions on their own accord, realizing, i believe, that the view that somehow the internet would transform and open up china when the chinese secret police and the government censors took over, it was doing precisely the opposite. google fulfilled its january commitment to stops answering results on its chinese search engine. -- to stop censoring results on its chinese engine. this is a victory for human rights activists. 11,000 of the most influential people in china have signed onto charter '08, not unlike chart '77 in the czech republic. it is a statement of human rights principles. everyone, and i believe the chinese public, are greatly heartened by what google has

done. despite the fact that they have gotten pushed back from some, especially microsoft -- and we went into this last week in a hearing. they need to get with the program and join with the side of human rights instead of nibbling tierney, which they are doing now. today, godet the, the largest domain registrar, announced in its testimony that it has decided to discontinue new cn domain names at this time, of concern by the new requirement for domain registration. go daddy is the first company to follow gogogle's lead. google fired the shot heard round the world, and the second company has answered to defend the rights of the chinese people. it is a powerful sign that american i.t. companies what to do the right thing in a repressive country.

go daddy and google deserve more than praise for doing the right thing in china. they deserve government support -- not let service but tangible support. we want to see american i.t. companies doing the right thing. we do not want to see them forced to leave china for doing so. that is why i have introduced the global on-line freedom act, a bipartisan bill that would seek to protect non-violent political speech and nonviolent religious speech. it will do so by requiring and those i.t. companies doing business in china to disclose what it is they are censoring. it will ensure that radio free asia and voice of america, and other american broadcasts, are not censored. i was at an internet cafe before the beijing olympics and tried to access, in that khafre, one prohibited word after another, like the dalai lama, the

ouigurs, torture, or the united nations. i got nowhere. i got what was said -- i got what obama said about the mole, but not the people's republic of china. this legislation would hold to account those who, once they have been designated as an internet restricted company -- those companies would have to put information out of reach of the secret police, protecting dissidents, religious believers, and others who want to build a new china that is free and unfettered from the tyranny that currently exists. i would hope that members of this distinguished panel might touch on the global on-line freedom act, but also on china, which is why you are here. we thank you so much for taking the time to give us the benefit of your wisdom.

>> are there others that wish to make statements? >> thank you very much, senator. i normally forgo the opportunity to speak, but i think this is truly a singular moment. let me make it clear that i am not here to criticize any company. i am here to praise google in its singular action, it's unique action in favor of internet freedom and the tremendous example that it sets for others. it is heartening to hear that go daddy has decided to beat no. 2. . .

chinese person and entity ought to obey the laws of the jurisdiction. it is clear to me that google is it is clear to me that google is in full compliance with chinese as far as its council can determine. and there is a difference between compliance and complicity. and one can comply. and at great cost and risk do so in a manner which is consistent with the values of the internet and silicon valley culture. i think that what we need to do, what we need to do is to encourage the better angels of our nature, whether it is in corporate culture or in chinese culture. one of the reasons why i think it's important for me personally to come here is to demonstrate that there is no historic or cultural incapability, and no

genetic incapability in advocating for and living a life of democracy for any particular culture or people. i want to solution google's contribution to this ongoing debate. i want to encourage those in china because it is a large complex society. those in china in favor of both the rule of law and the enlargement of this fear of civic freedom. i want to encourage everyone in the internet culture, which i believe is a very, very open culture that believes in the competition of information and ideas to express themselves so that more and more organizations, businesses, will follow google's example. of course every company is

different and will come to their own conclusions. but i think that in the divide or on the divide between compliance and complicity, history will judge and one should be careful to be on the right side of history. >> mr. chairman, thank you for hosting this bicam ral, bipartisan commission today. it's the first one i've had an opportunity to attend as a new senator. i want to add my voice in thanking google for the great work it's doing. i want to applaud them as well as godaddy we heard about today. i want to say to the government of china, the message has to be with great power comes great responsibility. they have a responsibility to allow their people to live freely. to have the information you need. we know that information, free information, is the beginning of the end of repression.

it's the beginning of the end of tyranny. it is our responsibility, representing the government of this country, to insist upon that, whether it's in venezuela or yesterday at former opposition leader who ran for president, was arrested in the last television network in venezuela is afraid of being shut down, whether it's in cuba where there's no free speech, where today the ladies in white are protesting the arrest of political prisoners in the death of zapata who died. his mother is being arrested for protesting the death of her son. whether it's in china where political prisoners are taken for the simple alleged sin of posting on the internet and the chance to bring new ideas to this huge and important country in the world. with great power comes great responsibility. so i thank you, mr. chairman,

for calling this -- and chairing this hearing today and look forward to the testimony of the witnesses. >> senator, thank you very much. anybody else want to make a statement, a very brief statement? all right. let me begin with allen davidson, a u.s. -- director of u.s. public policy with google, head of policy prior to joining google center for democracy and technology, an adjunct profferer inch technology. trained as a computer scientist, holds degrees in mathematics and computer science from mit and jd degree from yale law school. let me join others on this panel who have complimented google for its decision, a difficult and courageous decision, one that's absolutely direct. thank you for being here. you may proceed. i will say to all the witnesses

your entire statement will be made part of the permanent record and you may summarize. >> thank you, mr. chairman. chairman dorgan and members of the commission, thank you for inviting google here today and thank you for your commitment to a free and open internet. and thank you for your very supportive comments just now. they are very meaningful to our company at this time. haass summer a woman was shot on the seets of tehran during protests during the iranian elections. no film crew witnessed her death. no reporter was there to cover her story. but a bystander with a cell phone captured it on video. that video was posted on youtube, and it was watched by literally tens of millions of people around the world. despite the government crackdown on communications, nada's tragic death became a galvanizing force for international outrage. this is the essence of expression online. unexpected, unpredictable but

capable of capturing the minds and hearts of millions of people around the world. it is for this reason that growing restrictions of speech online demand a commitment from companies, civil societies and governments together to protect internet freedom. i'd like to make three points. first censor ship is a problem not isolated to one country or one region. as secretary clinton recently expressed, the impact on human rights in the global marketplace is profound. at google we've experienced this firsthand. in the last few years more than 25 different governments have blocked youtube and blogger. youtube has been blocked in turkey for over two years because of videos that allegedly insult turkishness. in 2009 during elections in pakistan, government ordered them to block opposition videos on uyoutube, then our experience

in china, immeasurable in china and the internet. that leads me to the second point, the situation in china has led google to implement a new approach there. in mid december we detected a highly sophisticated attack on corporate infrastructure originating in china. while google is frequently a target of attacks, it soon became clear it was not a routine incident. at least 20 companies from a range had been targeted. it was unusually sophisticatedw a principle but unsuccessful goal of accessing gmail accounts. entirely separate from these attacks the accounts of dozens of gmail users, advocates of human rights in china had been compromised through malware and phishing attacks. these led us to announce in

january that we no longer felt comfortable censoring our search results in china. earlier this week we stopped censoring our search site in china. visitors visiting google.cnn, we're offering simple search in chinese designed specifically for users in china. figuring how to make good on our search to stop censoring, we believe it's a sensible solution to the challenges we face. we very much hope the chinese government respects our decision although we're well aware any time its great firewall could prevent users from accessing our services. indeed we've already seen intermittent censorship of search queries on our hong kong site. our third point is that government should do more to protect internet freedom around the world. internet, government, nonprofit groups have a shared responsibility to protect a free

and open internet. we strongly support the global network initiative. unique of investors, internet create standards for engagement of privatesey. more members are needed to reach potential. no single company and no single describe can tackle internet censorship on its own. government action is needed. specifically we believe that internet freedom must become a major plank of our foreign policy. free flowing information should be diplomacy, assistance and engagement on internet rights. internet censorship should be part of our trade agenda as we lay out in our testimony. they should be transparent when they make demands to censor or make demands about users. google supports efforts of congress and the administration to fund technical solutions to counter censorship. in conclusion i want to thank you for your continued leadership in the fight against

censorship online. we look forward to working with you to maximize ideas and promote freedom around the world. thank you. >> mr. davidson, thank you very much. we appreciate your testimony. next we'll hear from christine jones, executive vice president, general council and vice president of the go daddy group. she's responsible for all legal affairs of the go daddy group as well as domain services, network abuse, government regulations, compliance and legal departments. previously an attorney specializing in private commercial litigation and before that worked for the los angeles district attorney's office. in addition to being a lawyer miss jones is a cpa with degrees from auburn and whittier law school. miss jones, welcome. >> thank you, mr. chairman, and members of the commission. for a few years now we've noticed that from time to time it's not possible to access go daddy.com in china. we're not sure why. one could infer it's because we register and host human rights and other websites deemed improper by chinese officials

but we've never actually been told the reason. regardless, every time it happens, millions of chinese nationals who try to visit our website, or the websites of our customers are disappointed to find chinese censorship has kept them from free access to the internet site of their choice. this is frustrating as you might imagine. i'm not going to dwell on that. instead i want to briefly touch on five issues more explained in my written testimony, specifically monitoring and surveillance of internet activities in china. attacks originating in china, spam, payment fraud. and finally what we feel the u.s. government can do to help alleviate some of these issues. then i'd be happy to answer any questions you may have. so first, china's examination of internet activities of its citizens has increased in recent months and i mean very recently. let me give you an example, and this congressman smith places

into what you talked about in the opening statement. we've been offering the domain extension for several years. for instance, chairman dorgan.cn. in the beginning the authority called cnnik required physical address, phone number and internet address, that's it. that's normal with what's required with that kind of domain and extension. in december of last year, announced we'd have to start collecting a photo id in color from head to shoulders, a business idea, and a physically signed registration paper for all new do the-cn registration. in february they announced we had to provide increased documentation for all current dot-cn registrations. we would have to retroactively

provide those rules. if we failed to provide it, the domain names would stop working. some had been fully functioning websites for as long as six years. we were immediately concerned, of course, about the motives behind the increased level of registration verify case required by cn nik. didn't make sense to us the procedures in place since 2005 were no longer sufficient from china's standpoint. and no convincing rational for the increasing documentation was provided to us. we were also concerned by the nature of the requirement. in other words, at the time the affected chinese nationals registered their domain names, they weren't required to provide the photo id or business identification or other identification now required by

it appeared to us that the new procedures was based on a desire by the chinese authorities to express increase control over the subject matter of sites registered by chinese nationals. godaddy has been registering domain names since the year 2000. we have served as a registrar and we have 40 million domain names under management, by far the most of any company in the history of the internet. this is the first time any registry has asked us to collect retroactive information of a person who has registered to our company. we are concerned for the security of the individuals affected by the cnnic requirements. we are also concerned about the chilling effect we believe the

requirement could have on new domain name registrations, and the free exchange of ideas on the internet. istrations and therefore the free exchange of ideas on the internet. for these reasons, as you mentioned, congressman, we decided to discontinue offering cn domain names at this time. well, however, continue to manage dot-cn domain names for our customers, those people whose identifications are in the process of being revealed to chinese officials. second, i want to touch on attacks first mentioned by google. we've repelled dozens of extremely serious attacks on systems that host our customer's websites. attacks that existed in china.

that includes the number we had to get involved in. that doesn't include the attack where our systems automatically averted the attack. the recent cyber attacks on go daddy and google are troubling but they are not new. they reflect a situation that do daddy has been combating for many years. third, on the spam issue we found an overwhelming majority of websites hosted in spam in china, service providers choose to ignore complaints of spam and other types of illegal activity. we see no assistance from chinese officials to combat this problem. in fact, it seems to be the opposite. the force of the chinese government appears to be used to justify the activities as those who engage in spam as a business model as opposed to stopping it. fourth, on payment fraud, there is significant payment fraud originating in china. the payment fraud trend associated with china-based

users include white space used of compromise u.s. and uk credit cards, for example, as well as gift cards, other online payment forms like ali pay, the chinese version of paypal. substantial payment fraud originating in china. again, no action by chinese officials to help us combat that problem. fifth and finally we want to talk about what we think the u.s. government can do to help us. our primary mission at go daddy is to promote secure, easy access to internet people around the world and we wholeheartedly agree on that principle. we're also committed to ending the improper use of the internet, including for the invasion of personal privacy or limit freedom of expression. it's a big problem. we hope the u.s. government will use its influence with authorities in china to increase chinese enforcement activities

related to internet abuse while encouraging free exchange of ideas, information and trade. this would include the retraction of china's recent policies relating to dot-cn domain names. we were encouraged there was a briefing to discuss internet global freedom caucus which will promote freedom in china and other countries. we're following closely congressman smith's online freedom legislation which purports to put u.s. government on the side of u.s. companies and human rights activists as they deal with government. we applaud you for that of course we're sincerely grateful to this commission's attention to these important issues. we understand there's no silver bullet but we are proud to be part of the process. thank you. of. >> miss jones, thank you very much. next we'll hear from the chairman of human rights in china and chairman of university

school of law. she's testified on a variety of human rights issue before congress and eu government body. she's led human rights in china, organization in consultations with companies doing business in investing in china. in 2007, "the wall street journal" named her as one of the 50 women to watch for their impact on business. welcome, and you may proceed. >> thank you, mr. chairman. and i want to thank the members of the commission for your solidarity, your leadership and support for a very difficult struggle and challenges to promote free expression in china. i would like to request the spire written statement to be entered into the record and i'd like to use the written time to first comment on some of the responses that the chinese government officials have made over while we were sleeping last night echoed in some statements. first i'd like to focus on a

case and then open for discussion and welcome your questions. as the comprehensive and strong report and state department country report for china and recent u.n. human rights review of china absolutely demonstrates, the human rights violations in china are serious, systematic and widespread. and on top of the economic and political and increasing soft power leverage of china, china is exerting enormous control over expression on the internet through this state of the arts technology. its state secrets and security system to the police and security apparatus and the resulting self-censorship. all of this has been extensively mapped, inventoried in these reports. rebecca's submitted testimony does a good map-out of the

technology, so i won't take any time on that. the chinese responses on google's decision -- and this is obviously a story still in progress as attested to the headlines this morning and it's a very complex story, so i think this is ongoing. but there are three things that the official response says. after an initial effort to accuse google of being a cia operative, that didn't last very long, the responses have essentially been a combination of an effort to retorically repackage the google decision. and secondly, stating the obvious, asserting they are acting in accordance with law. and thirdly making some ludicrous statements like there is no censorship in china and the internet is fully opened, et cetera, saying there's no impact on china's international image or u.s. china relations of this

very important development. clearly google as a major economic player is very important and has an impact not only on internet, which is global but also has an impact on the development of the i.t. sector on innovation and security in china so it's extremely important for the region. so what's at issue here, in addition to the role of the marketplace of ideas, it is really about whether china is really ready and willing to be immature, responsible member of the international community, one that respects its international obligations, including human rights obligations as well as its under the w.t.o. and other trade obligations. it's unclear from the vagueness of the chinese answers to date to the key question whether google's actions are in compliance with chinese law actually goes hand in hand with

the mantra that any foreign company doing business in china has to comply with local chinese law. ironically google's decision does comply with chinese law, particularly chinese law and the constitution that protects human rights and constitution provisions that protect freedom of expression and freedom of privacy. so i think that is important to keep in mind that, nfc, what chinese law i'll be talking about when we say companies have to comply with chinese law. chinese law is also quite complex. the cross border impacts referred to by representative smith, i just wanted to add to that that the experience of hic's own staff, our own staff illustrate that the chinese authorities' repressive attacks at home both low tech and high-tech extend to chinese nationals and human rights offenders abroad. such tactics include blacklisting, surveillance, and even inhumane denials of

permission to return to china for family funerals. this is neither part of a harmonious society and it is not chinese. additionally the chinese authorities have been very active, and increasingly so, in preventing independent human rights groups from succeeding to apply for u.n. accreditation, so we welcome the u.s. government's renewed commitment to engage with the human rights system at the u.n. my written testimony outlines some of the ways in which human rights in china is focusing on supporting chinese lawyers, activists, journalists, writers, other defenders specifically through our technology initiatives. one of them we distribute 200,000 electronic news letters every two weeks into china that publishes chinese writers, news, censored news and discussion. essentially we get in about 75 to will 0%, that's the

censorship plateau. there's other youtube and twitter references are successful even though youtube is blocked, 26 to 30,000 poem reach youtube and some protest videos posted on our youtube station have gotten thousands of hits. let me move quickly to the case that is an example of the frontline for struggle of freedom of expression. we welcome the list. this is extremely important that features and lists individuals who because of their internet activities are paying a heavy price. he's a prominent intellectual, a longtime advocate of political reform and democracy and human rights and an outspoken critic of the chinese communist regime and key drafters and organizers of charter '08. in front of the fults full glare

of international attention outside the courtroom on christmas day a court convicted him of inciting power and sentenced him to prison and deprivation of political rights. what was this for? six essays in addition to charter '08 that he had published online between 2005 and 2007. now, our publication, which we brought here for members of the commission, took the six articles and all of the legal documents and translated and asked the question, so what does constitute inciting subversion of state power in china. these were the six essays. the dictatorial -- they said this is a fallacious concept.

posted on epic times with five links. the many articles, he describes the post mao regime. unlike totalitarianism, this regime is more skillful in pragmatic flexible control to maintain stability but it's a loyalty that's bought by the promise of a comfortable life, has a soul that's rotten to the core. third article, can it be that the chinese people deserve only party-led democracy? not only challenges a critique to the party but actually raises a challenge to the people, chinese people ourselves and said that no totalitarian or authoritarian states stayed in power because of the ruler, it's call people kneeled.

child slavery exposes extreme government corruption that continues to exist for thousands of children kidnapped and used as slaves. what is important the case, the verdict sentencing him in fact cites the number they got. each ranged from 57 to 506. that means,000. inciting subversion roughly between 57 to 5,000 clicks on websites that can't china, he h convicted for 11 years. so this says a great testament about the insecurity let me quickly say three things. the political prisoner databases

important and we would urge the commission link your advocacy work with decisions reached by international expert bodies. one person in prison received a decision back in 2006, determining that his detention is arbitrary and in violation of human rights. we would urge you to press for his release for the fact that this was an independent body. we would urge the already areas of technology, expanding on censored platforms, developing more prevention tools, and safely disseminating it, and expanding social networking tools. in terms of the company, to provide and promote more encouraging companies to join into these initiatives, and we

especially appreciate a letter from senator durbin urging them to join the global network initiative which is one of the founding participants. the global network initiative of which human rights in china was one of the founding participants. the google decision this week really illustrates the possibility of moving beyond an either/or entality. and of thinking that the choices are stay and censor or leave the country. because technically it hasn't left the country. this is a -- we don't know if this one country, two-systems move will actually work. but technically google is still in china and google has been able to act in a principle way. whether this will work is uncertain. as sergei brin has stated, the future is a long time. >> thank you for your testimony. next we'll hear from mr. edward black the president and ceo of computer and communications industry association. he's been president and ceo of that organization since 1995. he serves on and previously

chaired the state department's advisory committee on international communications and information policy. also served in the office of secretary of both the commerce department and the state department. holds a ba from newlandburg college and a jd from the washington college of law. mr. black, good to see you. you may proceed. >> thank you, mr. chairman, and the members of the commission. it's an honor to be here today. i have a chance to deftify on this very important subject of internet freedom in china. for too long, the u.s. business community has had insufficient support from the u.s. government in responding to other nations' efforts to censor or spy on their citizens and to interfere with the reasonable flow of services, products and information. companies are on the front lines in the battle for internet freedom, but when they are confronted with foreign government demands, the governments that represent these companies must lead in the defense of internet freedom and free trade. our nation founded the internet.

our government should have been and now needs to be out there promoting multilateral international understanding in order to maximize freedom of the internet. totalitarian regimes depend on controlling the flow of information. the internet is no exception, and it is a tempting target to turn into a tool of state control. we must protect internet openness from those who want to use it for repression and for many seemingly noble, well-meaning efforts to control specific content or monitor internet traffic that also may chip away at its openness. my testimony today is designed to focus on human rights aspects of censorship, on the trade aspects and the underlying principle of internet freedom. the internet can be the greatest tool in history for people to gather information, communicate and do many other things that's

the human race has tried hard to improve over the years. or the internet can be among the greatest tools for political repressi repression. depending on how it is used, if we fail to take actions, others may pervert the internet and finally bring about the orwellian future we thought we had avoided. one win which governments perpetually spy, surveil, censor and control and say they are doing it for our own good. the u.s. government midwest consistently treat internet freedom as a priority human rights issue in its dealings and communications with foreign governments. we're here today partly because of the high-profile battle of google in china. but the number of companies and countries impacted are far greater. there are few easy answers for companies as they try to bring their technology services and communication tools into nations that have different rules about free speech and freedom of expression. without the backing of their own government, companies often are

faced with the unappealing decision to follow local laws or else exit the market. staying and engaging can in some cases, offer appealing choices to citizens in a request of country so the choices are not always simple or easy. as a trade issue, censorship has been ignored. the united states is an information economy. the u.s. companies are leading vendors of information products and services. filtering american content and services has the effect of filtering american competition and combatting it should also be on the much to our trade agenda. restrictions of internet traffic affect trade in a number of ways. they -- such restrictions may constitute a nontariff barrier. may be an unfair rule of origin. may be a violation of the principle of national treatment. the violation of the wto very strong rules on transparency and access and administrative review

of regulations has had no impact in the world of internet review and regulation. there must be a trade remedy when a country blocks access to a u.s. website and the advertising on those sites is also being blocked and a trade in the products and services advertised are interfered with. the european union, by the way, should be praised at this point because in 2008, they passed overwhelmingly a resolution recognizing internet censorship as a trade barrier. the vote was 571-38. there needs to be further implementation of that resolution but it was an important step in the right direction. some steps that we think can be taken to promote internet freedom. first of all, the u.s. government should, on an ongoing basis, investigate cases when internet censorship is brought

to their attention. the ustr, the state department and the commerce department all have responsibility to raise internet restrictions in the dealings they have with countries on many issues around the world on an ongoing basis. our nation has missed the opportunity to use existing trade agreements to constrain internet restrictions, censorship and surveillance. the ustr should be highlighting internet censorship in its trade reports. in 2006, the ustr issued a report billed as a top to bottom review of u.s./china trade relations. the report discussed simple infringement of intellectual property, which we don't support, yet did not mention internet censorship policies. the ustr has a very important annual -- special 301 review process focuses on identifying intellectual property problems around the world. i think we should replicate that process for internet freedom. and violation thereof. the ustr should review foreign

government restrictions on the internet, taken in the name and censorship or otherwise and seek ways to take appropriate action. we need to negotiate provisions that promote internet commerce, openness and freedom in our trade agreements and in other agreements. i will not go into details of supporting gni but it's a great initiative and we do actively support it. i want to make another point. the internet freedom begins at home as well. the u.s. must lead by example. we need to encourage censorship and surveillance ourselves. we need to restrict intrusive such as depack and inspection and think twice before attempting to block content which we perceive as unsavory. once openness erhodess, it's very hard to get it back. and when we go abroad advocating these principles, we cannot go with dirty hands. our credibility is critical if we are to be an articulate advocate in the international community. if our government leads a fight for international freedom by

example, at home and negotiations around the world, it can support u.s. companies who are trying to ethically compete in challenging markets. in conclusion, let me just say that china's policy of coerce censorship has become a matter of global public concern. if the u.s. government does not push internet freedom to the top of our priority list now, foreign governments all over the globe will conclude that they are free to pick off individual companies, intimidate them into submissi submission. we need to elevate this issue to the much to our diplomatic and trade agenda. we must be consistent with our own internet freedom policies and fight for internet freedom as a common principle so other nations understand our commitment to curbing censorship of the internet and threats to internet freedom in whatever form they manifest. thank you. >> mr. black, thank you very much. finally, we will hear from ambassador mark palmer. ambassador palmer served in the u.s. state department from 1964 to 1990 and was formally deputy

soviet of state for the soviet union. he was instrumentinal the establishment of the national endowment for democracy and currently is president of capital development company llc and vice chairman of the center for communications health and the environment. a graduate of yale and a widely cited author. mr. ambassador, welcome. >> thank you, senator. french diplomats actually try to speak last in the hope that they will be remembered best, so i am glad to be speaking last. my written testimony emphasizes in the outset my optimism about china. i think having served and lived in communist countries a good part of my life that we often underestimate what's going on among elites, and we know what's going on among the public. 400 million of whom are on the internet. even hu jintao brags he's on the internet. i think it's a mistake for us to

assume that this very strong reaction to the admirable actions of google or go daddy now, that that's the end of the story. i think there's a lot going on in china that we should be optimistic about. but i want to focus in my oral remarks today on a story. i want to tell a story. some of the students who were present on tiananmen square during 1989 came to the united states and earned doctoral degrees from leading american yes universities. they realized the potential of this the internet in china and were urged by chinese still in china to use their computer skills. they have developed a system of software and servers which over the past decade has grown to be the world's largest circumvention system, providing for roughly 90% of anti-censorship traffic in china and worldwide.

about a million chinese today and hundreds of thousands of iranians are using this system. it works through the distribution of encrypted, secure free software and by constantly switching ip addresses, up to 10,000 times per hour on dedicated servers located across the world. they have built and staffed this system with volunteer labor and virtually no financial support from anyone else. the major limitation on this global internet freedom consortium's ability to serve even much larger numbers of users and to bring down the firewall altogether is simply money. they have had to make hard choices between serving a surge in iranian users last summer and fall and reducing their availability to chinese users as their servers were crashing. gift needs to buying many more servers and finally to be able to serve full-time staff, competing with and staying ahead

of over 50,000 heavily financed engineers and censors in china requires a dedicated and properly financed team. we spend, mr. chairman, $800 million a year on voa and rfa and other old media, and we spend $1.7 billion on usaid's democracy programs. surely we can and should spend $50 million to $100 million a year on a system or systems to circumvent internet censorship and bring down this firewall. realizing the enormous success of this global internet freedom consortium and its potential, a bipartisan group of your colleagues, of senators and congressmen, appropriated $15 million in 2008 to begin to scale up the system and any others which could demonstrate proven ability to circumvent internet censorship in china, iran and elsewhere. and in 2010, as you know, another $30 million was

i have never been more convinced of the power of any innovation to help those still living in one of the world's 43 remaining dictatorships, half of them chinese, to liberate themselves. i have also never been more appalled at the state report -- the state department's refusal to do what is so clearly in the national interest of the united states. in flagrant and now repeated violation to congressional legislation, the state department has refused to use the appropriated funds to scale up an existing successful circumvention system. state dammar -- state department officials have made a mockery first of secretary rice is and now secretary clinton's frequently voiced and sincere commitments to help ensure freedom of the internet. let us take just one dimension of american national interest false understanding of the google-chinese issue, as if

google must lose its china market because it no longer accepts google.cn censorship. if the united states acts in a manner we seek and people in china can access google, you can sell your baidu shop -- your baidu stock short. and watch google pick up support from iran, syria, and elsewhere. it should also be working with the the state department and working with gif. if it does so, its franchise throughout the world will be enhanced by orders of magnitude for not merely being a wounded victim but being the provider of enhanced closed society access to the internet. fortunately five of your members in the congress wrote in the strongest possible terms that enough is enough to the state department.

have to begin to fund the existing circumvention systems and senator brownback placed holds on four senior state department nominations and took it off when some agreed to talk. they were willing to put the holds back on if within a week we don't get a serious indication they are engaging and are going to respect the wifl this congress on this critical national issue. let me just conclude by urging this commission, which does such wonderful work that you join your colleagues in urging the state department to do what we all agree with, which is to circumvent this censorship. thank you, mr. chairman. >> ambassador palmer, thank you very much. and we will do just that. we appreciate your testimony and your appearance. i'm told there are four votes

that have just begun in the u.s. house. and what i'd like to do with the consent of my colleagues is to recognize the three house members for a series of lightning round questions before they have to rush out of here. i do want to have them have the opportunity. >> thank you very much, mr. chairman. i really appreciate it. miss hom you mentioned the outrageousness of the chinese government saying that there was no censorship on the internet when tien was near town during the clinton administration, made the same statement that no one died at tiananmen square. we put together a hearing like you, mr. chairman, invited the chinese to testify. he was a no-show. we even had a people's daily editor say how he saw and witnessed people dying. hopefully it's so laughable and so embarrassing to the beijing leadership that such outrageous statements will cease. the universal periodic review last done on february 9th of '09 on china, it only takes, as you know, one-third -- one-third of the member states on the u.n. human rights council to call for

a hearing on any country. the u.s. government should call for that, vis-a-vis china to look at this. it can be done. it would bring the great spotlight on what they are doing on the internet and other human rights abuses. your thoughts on that and i have so many questions, but i'll -- we don't have time. so i'll just leave it at the one. >> thank you, mr. chairman. i just want to ask one question of the witnesses. and that is for each of you, whether it's google or go daddy or the organizations that you represent if you have one, two or three things that we could do that the federal government could do in an operational way, i'd very -- to help you in each of your respective efforts, different efforts, i would be very interested in hearing your responses. i suspect ambassador that i know

what your top one will be. but i'll look forward to hearing. and i just want to take one moment to say that i couldn't help but notice that four out of our five witnesses are legally trained. and there's a lot of criticism at times about the litigious nature of america's society. and i just want to say that my response to that has been in the international context, show me a society where there are more attorneys than generals and that's probably going to be a democracy. show me the reverse and the story is not so good. so everything has its price. mr. chairman? >> thank you. and i can think of a country that's been led by a teacher. they haven't had the need for military since they started. so on behalf of teachers, i think that we can all learn. i guess my mother says it best.

you got two eyes, two ears and one mouth. use them accordingly. and my question would be mr. smith's question to mr. edward black and to ambassador martin palmer. in closing, i would like to thank for a nice well-balanced presentation for us to be able to listen, learn and act. thank you. >> just very briefly. the chinese statement submitted for the record cites international norms that they feel we ought to -- they ought to and you as like google and go daddy ought to live up to. and your views on the global online freedom act if you could provide us with that. i'd appreciate it. >> let me thank my colleagues from the house. they're active participants in this commission and we're sorry they have to go to vote. but appreciate your being here. mr. davidson, can you tell us a little about how this works with the chinese coming to an

american company saying we need your cooperation in censoring certain things. what types of information have authorities asked be censored? how do they instruct? how do they deliver the information of what they want censored? can you give us some organic notion of how this works? >> let me try and give a general notion because in some ways actually we are not actually permitted to talk about all of the requests that we get. and they are given to our employees in china. >> prevented by the chinese? >> right. i'd be happy to characterize it. >> are you permitted to do it outside of china? >> we actually don't share a lot of information outside of china about what's happening. and so it's a very -- it puts us, and i think that gets to the heart of it in a very difficult position which is there's not very much transparency at all

about what's being requested and whether it's being requested of everybody. whether there are special requests or not. and i think -- and that places us in a terribly difficult position. i'd say outside observers have been able to derive quite a bit about the kinds of requests that come. and i think you can see that they are far ranging, political in nature and quite different from the kinds of results. we've had other hearings that have shown the differences in the results that one gets from a censored version of the large search engines, including ours, and the uncensored versions. and so i think that's part of why we ultimately felt that we  needed to make this change is because, you know, the lack of transparency particularly makes it extremely difficult. >> well, i admire the judgment. i've indicated that to you. what i'm trying to send when you go to china to do business, is there someone in china that says, all right. you're here now. you're on chinese soil.

we do business the chinese way. and here's a set of written instructions. and by the way, in order to do business here, you'll follow them to the letter. is it -- is there something in write something place that describes to your company what your obligations are under what they perceive to be chinese law? >> you know, we operate under a license in china. and i think in part the problem that i think we have all -- the companies that operate there are trying to address in things like the gni is dealing with the fact that the requests can be brought and that the -- there isn't always -- they don't always appear to be operating through the rule of law. and so it's not like getting a court order from a u.s. judge. and so i think that part of the concern is that we would like there to be more transparency and a clearer process than there

has been. so, you know, i could leave it to others that have had this experience as well to try and chime in. >> you indicated there was substantial increased chinese government activities, december of last year and february of this year. was there any discussion by the chinese authorities about what -- why they were doing this or, in fact, admission that they were increasing activities or just chinese say, all right. here are the new rules? >> no, in fact, if i could briefly respond to your question earlier, we wish there was a rule book. we wish there was the book that you could sit on the table and say, here's what you have to do. but to our knowledge, that doesn't exist. we just from time to time get a directive. in this case, two days before the new rule came out, we got a communication that said, oh, by the way, we're going to change the rules. we're not really sure what the rules are going to be yet but we're going to change them. two days later we got the new rules and we were supposed to

implement them a few days after that. so there's not really a build-up. there's not any indication. as i said earlier, when our website gets shut down in china, we never get told why. we'd love to know why. we'd like for them to tell us what the rules are, but it's impossible to find out because they simply won't answer the question. >> have you had intellectual property stolen? i think google has. you indicated that attacks have been made on your system repeatedly. have you had intellectual property stolen? >> well, i'm not exactly sure what you mean by intellectual property. it could be a broadly defined term. we do know that a lot of the ip that's stolen comes from websites that are hosted in china. but most of the attacks on our system are designed to disable websites of our customers. those tend to be human rights sites, tiananmen square anniversary sites, website blogs that discuss tibetan monks.

any of the things that the chinese government deems inappropriate. they rarely ask us to shut down counterfeit goods, for example, or other ip violations because, frankly, i think they support that. now have we had software or other information in our system stolen? not yet. >> thank you. ambassador palmer, why do you think the state department is so delinquent in addressing this issue of the circumvental systems that, you know, for some funding exists but the state department seems to have little interest? what's your sense of the motives? i mean you works down there for how many -- 16 years you worked in the state department? >> 26. >> 26. i'm sorry. what could explain the state department's behavior at this point? >> one state department official was quoted in "the washington post" saying that the chinese authorities in beijing would

be -- would to be use my previous word appalled, would be outraged if the global internet freedom consortiums systems were financed by the state department. so it's clear from talking to my friends, both in the state department and in the white house, that one of the concerns that's led to this is concern about the chinese reaction. >> so this is an old story, isn't it? don't offend them. we see this -- we see this routinely in trade negotiations. but it's an old story. and now surfaces with respect to this issue. >> and then there's another issue, i believe. and that is that the department didn't ask for this money, didn't want this priority. it feels put upon. it still doesn't recognize that we have this long-term challenge in front of us that's going to require year after year major resources of financing and human talent. and they are just not into that yet.

they haven't made that transition conceptually. >> ms. hom, you, at least with respect to one chinese citizen, put a human face on the victims here. the request of go daddy to describe who these people are, names, photographs, et cetera, i assume that what the chinese are attempting to do with that is to intimidate and to track down certain dissidents in china who are behaving in ways the chinese government finds inappropriate. but can you tell me -- what's your sense of how many citizens in china have been tracked down by their government, apprehended, tried, sent to prison for internet transgressions? do you have a sense of that? >> well, i think that related to the overall lack of transparency about numbers in the criminal justice system or in the extra

judicial systems like rtl and all the camps, it's very difficult because you don't have the information being reported in that way. however, if you just look, as we have looks recently, with an eye towards relationship to the internet activities, if you look at a list of individuals that are in prison and in detention and have been convicted for incite wantment to subvert state power or for subversion or leaking state secrets it will be quite clear that a great majority of them will have engaged in these activities on the internet. and the revised state secrets law that was released in june but not passed made it perfectly clear that the state's secrets law provisions applies to the internet. so the proposed revisions to the state secrets law is more restrictive but makes it quite clear that activities of disseminating, acquiring information on the internet will be covered by the state secrets

>> mr. black, you are in bold and an amount of commercial transactions. i was wondering if censorship and regulation of the internet in china has an impact on companies that wish to sell goods to china. >> we're concerned that this is an important avenue to pursue, because existing trade agreements and future trade agreements would be able to deal with some of these issues in an already established legal framework. one example is any web site that is blocked, it has a variety of companies, automobile companies, procter and gamble, who advertise their and they are

unable to adequately reach an audience if they are blocked. . to adequately reach an audience if they are blocked. there could be, if you have a magazine article, if you go to a businessweek site and there's an article in "businessweek" that is politically untenable. all of the advertisers in "businessweek," all those companies would in fact, have their ability to do commerce affected. we think the reality is you have electronic commerce is a multi -- many, many multi -- many, many multibillion perhaps in the trillion-dollar business, i believe. so if you have a significant impact on the communication of data and information to products and services, you are going to be having a significant impact on trade, yes. >> mr. black, is there a tension for you to come and speak here on these issues. there some are in the business community. not all, but there some are who

think, you know what? it's a whole lot better for us to kind of tone it down a little bit, be quiet, hope things improve, don't be critical because the fact is china is a big market and the chinese government can do just like that and change your opportunity to access that market. so is there a tension for you to come out and speak out. talking about a tension with respect to your constituency and your foundation or your association, rather? >> well, i think it's clear that within the private sector there are many companies which also internally are divided on how to deal with doing business in regimes where local laws conflict with our values. but i think there's -- >> but overtime, if i might interrupt you there have been many occasions in this country where we say, business is business. the rest, deal with later. business is business and human rights is separate. >> i think these issues are way beyond internet and technology issue and affect all business. but i guess i'd probably put a good word in for the technology

and internet world that i really do think the culture of our sector of the industry is one of openness and freedom, and i think there's a greater willingness, therefore, to say that is what we are about. we are not just about selling something. but we are about bringing the -- this tremendous, great industry to advance people's well-being. but, yes. you are absolutely correct. there are certainly a constant pressure. not necessarily on me, but internally in the dialogue about how to deal with this, with the reality that it can have a significant impact on stockholders, on the ability of a company to survive. >> i want to ask the question of google. and perhaps go daddy as well. you both now announce that you are changing the way you operate there. and what are the -- i'm going to ask google a couple of things. number one, i assume some think you are just daft, right? what are you thinking about?

you are there. you do business. you don't like it, but you follow the local customs. tough luck. so to stop crying and stop moving and you are setting a bad example for those who decide business is business. you are messing things up for us within the chinese market. is there some of that? >> well, i think every company has to make its own decisions about how to operate. this has been -- i we think made no secret this has been a difficult decision and process for google. and we went into the market originally hoping that we could make a big difference. we were pleased, i think, initially, about some of the changes we were able to bring to the market and ultimately over time, as we described in our testimony, we came to a different conclusion about what was right for our business. our hope -- we've gotten some good feedback, and our hope is that this is a process where other companies will also get vivi involved. we need more help in the gni. our long-term hope is the same

hope we've had that we can offer our services in china. >> tell me how you think this plays out at this point. you are an executive at the big, successful, growing, worldwide company. and we read the news at the moment, right up to as ms. hom indicated, right up to the moment. so we know what has happened so far. we know about the discussion on the move to hong kong. tell me how you see this playing out in the end stage. >> we've been very clear also. we don't know how it will play out. we have moved our servers to hong kong. >> can you give me the best and worst case? >> sure. i think one of the better case scenarios is that people in china are able to access our uncensored search engine based in hong kong and have access to all the information that it provides. i think a bad case scenario would certainly be that that search engine is blocked outright and other services are as well. and that others rush in to fill the void with censored products that don't provide a lot of

information to chinese users. and our hope is that over time it will be more of the former. >> all right. one final question. i'm going to call on senator lemieux. ms. jones, the decision go daddy has made, that's a very recent decision, i assume, announced today. tell me the judgment that went into that. is it related to google? tell me the jmtudgment. you've talked about the attacks. you've talked about the increasing demands by the chinese government. all of that has happened recently, so this puts you to a decision-making point here? >> with all due respect to google it didn't really have anything to do with them. this was a decision we made in our own right based on our experience of having to contact chinese nationals, collect their personal information and grudgingly return it back to chinese officials. we just made a decision that we didn't want to act as an agent of the chinese government. and that's really why we stopped

offering the dotcn domain name. we wish there were a better way to negotiate -- in fact, i read a book once called "take this job and ship it." and i remember there was a discussion in it about unequal playing field in negotiations between the united states and other countries. and i think we ought to revisit that discussion because we can't let them be strong and us be weak all the time. we just have to stop it. and then we'll start offering dotcns again. >> are you recommending people read that book? >> sure. >> full disclosure. that's a book i wrote, but it is, i think, it does raise the questions of the kind of negotiations that should exist. senator limiux, let me ask you to inquire. >> i think we all should read that book. it's a great idea. again, i want to commend you, mr. davidson and ms. jones, your companies for the work you're

doing. it occurs to me that if there were attacks on the bricks and mortars of these businesses and we believed that a government was behind them, we'd be acting a lot differently. and we need to be cognizant of the fact that this is not just something out in the ether. it is the way that you do business. and we treat it differently when it's in the ether than we do if it was bricks and mortars. mr. davidson, i want to ask you about these cyberattacks in mid-december of 2009. and learn more from you about what happened and where you think those attacks were directed from. >> well, sure. we've tried to lay it out a little bit in our public statements and in our testimony. i'd be happy to amplify it further afterwards if it's helpful for you and your office. and i guess i would best characterize it as quite sophisticated and very unusual. and as we try to explain and as

ms. jones has explained, companies like ours are attacked all the time but this was quite different because of the sophistication, because of the fact that we discovered that other companies had been targets, and that we also knew that part of the target -- part of the target seemed to be the ability to access gmail accounts and we knew gmail accounts had been compromised for folks who were affiliated with human rights groups in china or working on chinese issues. so that was very disturbing to us. and i think that's part of why we felt it was so important to make a change in our policy. but this was really part of an ongoing process over the course of a year. >> do you believe the chinese government was behind the attacks? >> we have no evidence and we have not said that we believe this -- that we have no evidence this is a state sponsored attack. we may never know. google may never know who ultimately was behind this attack. but that's partly why this is

about a totality of circumstances over the course of a year, where google was blocked. youtube has been blocked in china since march. the green dam activities over the course of a summer. public attacks on google and the media. this cyberattack in december. and i think taken altogether, we felt it was time for a change in our policies. >> i can see your legal training in your response to that question. >> i am a fallen engineer, if that counts for anything. >> senator, on that point, the statement that was put out by google, we have january 12th, talks about the theft of intellectual property. >> right. >> it was not just google, but a couple dozen other companies. but also part of the investigation, if i can quote, the attack on google, quote, we have discovered the accounts of

dozens of gmail users who are advocates of human rights appear to have been routinely accessed by third parties and so on. when you ask whou who might have been responsible, the obvious question is, who would have had an interest in this sort of thing. it appears to the outsider, at least, that only the chinese government would have this kind of interest. >> i am not asking you to answer that because i'm sure you don't want to. >> let me ask ms. jones if -- and you described there were cyberattacks on go daddy as well? >> yeah, our attacks -- the december attack, of course, we were involved in that. as i said, we've had a couple of dozen since the first of the year as well. what stood out to us about the december attack again was the sophistication, the level of organization, the way the traffic was routed to us. we don't know who did it, but we

will go so far as to say it was quite sophisticated and there were resources behind it from somewhere. the difference between the attack on our system and the attack on google's system appears to be the google attack was aimed at infiltrating e-mail accounts. the attack on our system is designed to disable websites that somebody doesn't like. >> yes, sir. >> i don't want to be too cute with my answer, sir, and i would just say, it is actually a very complex environment there. there are lots of different groups that operate. nationalist groups, groups that do things. and so i really -- it really was the -- it is the case that we don't know. and it is also the case that i think there were a whole set of circumstances, starting with the fact that in 2006 we would be continually evaluating these circumstances and doing business. that led to our decision. but i'll leave it to others to draw their own conclusions.

>> let me ask that question of miss hom if she has an opinion as to where these attacks are coming from. >> i think it's important not to get fixed on the question of whether it's the chinese government behind the attacks. it is true that in a number of these attacks, particularly against human rights groups, including tibetan groups and some falun gong groups, the attack control server has been traced back to control servers located inside china. so, therefore, the real issue is, what is the responsibility of a government in terms of these cross-border crimes so that i would say that it's important that the issue is that china, the government, has an obligation to investigate and to ensure that these attacks are fully responsible. mr. davidson said the complex environment. i think it's also true that when we say the chinese government we have to keep in mind it's not monolithic. in the i.t., internet area, there's a lot of turf battles between the ministries, the miit

and the ministry of foreign -- and the ministry of public security and the ministry of state security. so that in the negotiations, it's not even clear at the negotiating table, i would guess any amount of money, that it is a complex negotiation because there's not really seriously one voice on the other side of the table. so i think that that means that it's extremely important, this discussion about the cyberattacks is that the technical solutions that have to be developed are not only access, not only anti-circumvention tools. we need safe, secure and an anonymous access. access that ensures our identity is not compromised. therefore iwould add to ambassador palmer's call for the need for more development of the technology, which we do for a suite of technology tools. i don't think any one of these tools is going to work.

and drl and the state department has issued and has closed an rfp for the development of new mobile technologies. it is very limited pot. a lot of folks who have applied are going through the process. and i would urge that there needs to be a lot more resource put into the development of the technology solutions. and it is extremely that jordan was asking, it is not just governments trying to put the deer are in the headlights. the donor community is doing the same thing. they are trying to maintain their presence in china. moving out of supporting anything that would be perceived as sensitive or directly supporting human-rights in a way they think is sensitive. i think it is an important role and a need for support of that technology development, with the government coming in, as well as the private sector.

>> ambassador, would you care to take a shot at that? >> [inaudible] >> [ inaudible ]. we think to the extent you cannot -- you can't have technological assets to bring to bear in this battle, that's great. and i think it's important and valuable. it is -- nevertheless, going to be a difficult fight when you are fighting a government with the tools available. so we again do think it's important to engage at the governmental level. what i would suggest, without -- and we all recognize, i think, china has the most sophisticated firewall and technological assets that they bring to bear in this area and make it more difficult. therefore, they are the one we want to focus on. i would suggest, while not defocusing on china, that we also focus on some other countries where we may have the greater opportunity to use leverage and create some

precedence that then can be turned back and used on others. we have burma, tunisia, thailand, uzbekistan, vietnam, egypt, turkey, iran and i have a longer list of countries who are doing very clear things which we think are violations of not just internet freedom conceptually but could be actionable under trade agreements. i understand the u.s. government is reluctant to pick a big fight, maybe bring a trade case against china or do other things. but some of these countries we may well have some influence with. they are members of the wto. those rules can work for us at times, and i would urge, and i think if we create a pattern of precedence and create in essence a climate that makes china even more clearly the outrider, the outliar on this, i think in the long run, that may well be more effective. confrontation may work sometimes. we also know -- we all know

confrontation sometimes makes it harder to do things. but coming in from the side and from other places globally, i think it's an avenue that really can actually begin to make some progress. >> ambassador? >> on the question of who is doing this, it seems to me, clearly, obviously, the chinese government. if you look at the history of censorship and of this kind of intervention in many countries, dictatorships, it's always the government. who else is, as you said, senator, who's got the interest? this is a sophisticated large scale effort. it's clear that beijing is doing this as a matter of government policy. on the question that ms. hom touched on, and that is, is there sort of a solution, a technological solution. i think the answer to that is, no, there isn't a single. but the state department now, which i find really quite wonderful is saying that they want to do venture capital. i am a venture capitalist.

i have been running and own a venture capitalist firm for the last 20 years. there is a role for venture capital in this field. i mean, it is true that in order to keep up with the engineering skills in beijing, the chinese skill in this, that the communists are abusing, we are going to have to keep innovating ourselves. but it's also true in the investment world that there are products that already exist that you want to get behind with large-scale investments because they are proven and beyond the r&d phase. they are beyond the venture capital phase. and that's the case with the global internet freedom consortium which is already serving altogether several million people on a daily basis. and if they only had the servers, they could serve 50 million to $100 million people on a daily basis. it would be criminal in my judgment, to wait to find some brand new sexy little thing out there that you know, may take

five more years to develop and not go ahead right now. we should not devote 100% to the existing, i would be opposed to that. but spend serious money to scale up an existing proven system or the only other potential competitor is tore which was partially developed by the united states government. tor has about one-tenth as many users. that's not insignificant either. there may be two build-up possibilities that exist today along with the r&d stuff. >> thank you ambassador. thank you for your candor. it seems to me that it's hard to imagine, mr. chairman, there could be an entity inside of china that was not controlled by the chinese government that would be sophisticated enough to bring these attacks forward. i have one last question, if i may, that i wanted to direct to our friends from google. and that is you have a lot of employees, as i understand it, in china. and i want to know if -- because i saw how this announcement was

made on the blog and there seems to be reference to your employees. do you have a concern about their safety? >> of course we have a concern. and that's why -- >> beyond the normal concern you have for employees. >> sure. that was important to us. that's why we made this announcement in january but we only -- we took action this week. it was important for us to do this in an orderly fashion that was really sensitive to the employees we have on the ground. we made it clear in our announcement that these decisions have been made entirely by google executives in the united states without the involvement of our employees in china. and i think, you know, going forward, our hope is that they'll continue to be there and that they'll continue to be able to contribute. we have some fantastic engineers. we have an r&d center and a sales force there. and we'd like to continue to grow that great group of employees. but we oar we will be watching the situation on the ground very

carefully. >> mr. chairman, i want to thank you again. i think you've brought a lot of light and attention to this issue by chairing this hearing today. i want to thank all the witnesses for being here. as i said in my opening statement, with great power comes great responsibility. and we need for the chinese government to stand up and not have the censorship anymore. i believe that the internet is going to be the greatest tool of the modern time to promote communication and eventually democracy throughout the world. and i applaud both of your companies again for the good work that you are doing. >> senator, thank you very much. mr. ambassador, when you began today, you said some encouraging things about china. and most, however, the rest of this hearing has been rather discouraging when we're talking about internet freedom, censorship, people going to prison. so tell me again, what do you see -- you've watched diplomatic issues and worked in the state

department 26 years. what do you see going forward here? i mean, it's pretty clear, it seems to me nerve the room, however critical one might be of china, and i'm plenty critical of china, all of us understand that things in china are marginally better. things have improved over the last 25 years, in a number of areas. however there are many other areas where you still have the authoritarian fist of a regime that wants to protect itself. and as you answer this, let me ask you, looking at the regimes in eastern europe that prevented their citizens from hearing and seeing what was happening in the rest of the world, that changed my understanding is, it changed with the video cassette recorder when the vcrs came in and video cassettes could be moved around the world. people in their living rooms in eastern europe could run a cassette and watch a movie or so

programming. and it was very -- it was impossible, not very difficult, and possible for those governments to prevent information from getting to people. the internet, of course, is, you know, the video cassette recorder on supersteroids, right? so it seems to me that as effective as the chinese government is, and we're talking about, you know, the concerns about that effectiveness and shutting down free expression, free speech and so on, it seems to me that it is not logical to assume that they can continue to be successful at this. so give me your impression of that. i'm sorry for the lengthy question. >> no, i think that's absolutely right. they will not succeed. it is simply impossible in a modern society, which china increasingly is a modern society, an extraordinary society, which has been transformed in the last generation. it's a totally different country. it is impossible. we learned, and i was -- i spent much of my foreign service career living in eastern europe. we learned the power of rock 'n' roll, not only video cassettes,

but rock 'n' roll. kids are kids. and they don't want this nonsense. they are skeptical of the political leaders. and they are the children of the leaders. and the nephews and nieces. and over the dinner table, they tell some homely truths to the people who live in the leadership of china. so i see so much evidence that we're basically winning. i mean, when you have 11,000 people with their own names sign charter 08, which is the most important written document in modern chinese history, not since they founded modern china has there been a piece of paper more explicit, clearer and more powerful. 11,000 of the leading people in the country. what we learned in eastern europe is among elites, when things look so dark, among elites there is a whole lot of firment going on. i just reading jao jong's book when he was the commerce secretary of the communist party at tiananmen. he dictated in secret his

memoirs before he died. it's called "prisoner of the state." and i would recommend everybody to read it because he and his predecessor, who was the previous general secretary of the communist party, after all. i mean, the top party official in the country. both of them wanted ultimately complete democracy in china with everything that we call a democracy. so when you got really senior people now, you know, you can see what their thinking was. i am certain that today you have all kinds of people who recognize that this oppression of google is a mistake. and they don't want it. and eventually they will be the rulers of the country. >> let me, in conclusion, ask a question of both google and go daddy. the decisions you have now made, are these decisions for the moment, interim decisions? are there things that chinese government can do that would convince you that that decision should be modified or changed?

give me your assessment of where you are now relative to conditions in china and what the chinese government might or might not do that would change these decisions. >> well, i would say, our hope is what it's always been which is to be able to offer our services and access to information to our users in china. and if we were able to -- if tomorrow we were able to offer an uncensored verse yoc eed ver search engine in china, we would welcome that. but throughout our conversations, the chinese government has indicated that's not a negotiable point. so we are where we are. our hope is that the way we've done -- the solution that we've put forward, operating out of hong kong, will be a way that will give people access to information and over time they will. if i could actually just to amplify the point that the ambassador just made, just to be a little -- to just say that i think we do have a little bit of a hard road ahead.

in the mid'90s there was this great saying that the internet interprets censorship as damage and routes around it. that was john gillmore, who is an engineer, not a lawyer. and it was this great idea that the internet was this unstoppable force for freedom. if you have the internet you can't stop people from getting information. we've discovered, and i think part of the point of my testimony was that in the last 15 years, governments have started to learn how to exert more control. and it's going to take a lot of work to combat that censorship. but we are -- i am an optimist as well. i think we are optimists. that the -- that human nature demands information that wiem will seek information regardless of frontiers, to paraphrase the human declaration of human rights and that ultimately that internet freedom will be something that we'll be able to achieve but it's going to take a lot of work, and we need your help. >> ms. jones, what do you believe is go daddy's future relationship with business in

china? >> we would say something similar. we've been doing this for six years. we see no reason why we shouldn't continue to do it for six more and six more after that. but, again, we have to have a reasonable expectation from officials in china as to what level of information is going to be required. and if they want to go ahead and repeal the new rules, we'll probably open up the dotcn name the next day. it's just a flip of the switch for us. but it's really discouraging to us that we've been able to help people in china get their messageyears, and then suddenly, you know, in the snap of a finger, the service has to become service has to become unavailable because we need to operate as an agent of the chinese government, which we are not interested in doing. we exist for people to share their thoughts openly. we agree that the internet demands the open exchange of

ideas. some of them are good, some of them are not, but they all deserve to be shared. we strongly urge this commission to work with the authorities in china to repeal that rule. if you could accomplish that, i would be happy to flip the switch and turn it back on. >> thank you very much. let me thank all the witnesses. i am just looking at this information that the executive commission is putting in the record today. political prisoners in china, photographs and data. these people have gone to the internet and published articles, journals, and for that are sitting in a dark prison sell somewhere in china. china. so this -- and it demonstrates this issue is not just some theoretical issue over which we should just have an interesting

discussion or debate. it is, in some cases, life and death. and especially freedom. and this commission wanted to have a hearing to try to understand and develop much more information on what is happening in china, especially as a result of the google decision. and, again, i compliment google and compliment go daddy for making decisions that i'm sure are difficult to make, but yet companies that are willing to make the right decisions. and it is our hope and that things in china will improve. it's not our lot in life to decide that we should just beat up on china every time we have a hearing. but china is going to be a big part of our future. a significant, important part of the world. it's going to be a significant, important part of future of the united states. and it has always been our intention, especially through trade and travel and also through information to pursue what is called constructive

engagement with china, and similar countries, believing that constructive engagement would move them towards greater human rights. and yet we find ourselves in 2010, march of 2010, still talking about a country that sensors the internet, and throws people in the dark cells of its prisons, because of what they think or what they publish. it seems so out of touch with the modern world. and what we wanted to do is see if we could put all of the spot lights on one spot and have a discussion about internet this hearing is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

>> tonight on c-span, the head of the san francisco federal reserve discusses the san francisco economy. chris dodd and barney frank talk to reporters. later, hillary clinton meets with the pakistani foreign minister. a couple of hearings we are covering tomorrow to tell you about, at 10:00 a.m. the house oversight committee looks at treasury department programs intended to prevent home foreclosures. at 2:00 p.m. eastern senate appropriation holds a hearing on the war supplemental bill. they will hear from secretary of state clinton and defense secretary robert gates. you can hear both of these live on c-span 3 and on c-span.org.

>> our commitment to israeli security and the future of his re of -- future of israel is rock-solid, unwavering, and forever. >> secretary of state, senator, first lady, or attorney hillary clinton, you can search for it, share it, and more online at the c-span video library with over 160,000 hours of video and 115,000 people, every c-span program since 1987. cables latest gift to america. >> tuesday, the president of the san francisco federal reserve bank talked about the u.s. economy and the potential for future interest rate hikes. reportedly being considered for the post of federal reserve chairman.

>> hello and thank you for coming. i'm very grateful to town hall los angeles for organizing this event. it gives me an opportunity to explain to you how i see the economy shaping up in the months ahead. i will also use the occasion to talk about several issues that are high on the public policy

agenda now: federal budget deficits and the proper place of the federal reserve in our system of government. specifically, i want to address a concern that i hear people express more and more often: that massive fiscal deficits could lead to high inflation. i will lay out my reasons for believing that such fears are misguided. my comments reflect my own views, and not necessarily those of my federal reserve colleagues. to give you an executive summary, the u.s. economy has bounced back remarkably over the past year, but we still have a long way to go. at the end of 2008, the entire financial system was on life support, the housing market had collapsed, consumers and businesses were at the edge of panic, and the nightmare of a depression seemed like a real possibility. just a little over a year later, the financial system has stabilized, panic has subsided, and the economy is growing again.

but we face important threats to the recovery. in particular, the job market is turning around only slowly, prolonging hardship for millions of americans. the unemployment rate was 9.7% in february, down from its recessionary high, but still in very painful territory. my forecast is that moderate growth will continue, inflation will remain subdued, and unemployment will inch down. the past few years have been extraordinarily difficult for many americans. for a while, it felt as though every morning, we at the fed woke up to a new crisis. by late 2008, financial markets had seized up and incoming data showed the economy spiraling downward.

around the middle of last year though, the tide began to turn. in the second half of 2009, production picked up, home and auto sales revived, and businesses and households started spending again. now, in especially welcome news, the labor market too is showing signs of stabilizing. our economy has a natural dynamism and it tends to bounce back after periods of contraction. but the downward spiral we faced a year ago was extraordinarily dangerous, resulting in the most severe global recession since the great depression. in response, the u.s. government and the federal reserve, like their counterparts

around the world, acted decisively to rescue the financial system, bring down interest rates, and provide a range of emergency support. these policies played a key role in breaking the downward momentum, thereby allowing the economy's natural dynamism to reassert itself. on the monetary policy side, the fed has pushed its traditional interest rate lever- the overnight federal funds interest rate at which banks lend to each other-close to zero. and, in order to provide further stimulus, we put in place an array of unconventional programs to speed the flow of credit to households and businesses.

i'll say more about those monetary actions, as well as the contribution of tax cuts and spending increases, later. in many past recessions, such as the very deep one in the beginning of the 1980s, a sharp downturn was followed by a surge in growth and rapidly falling unemployment, a classic v-shaped recovery. this time around though, i don't think we can count on such a robust v-shaped recovery. a number of factors underlie this outlook. in a nutshell though, it reflects the financial backdrop to the recession.

growth in the past decade- especially in the overheated housing market-was fueled by easy access to credit. now credit is harder to come by, which is restraining consumption and the overall economy. the current quarter appears on course to post a moderate annualized growth rate of around 21/2 to 3%. the economy should gradually build up strength during the course of the year as households and businesses regain confidence, financial conditions improve, and banks increase the supply of credit. for the full year, my forecast calls for output to rise about 31/2%, accelerating to about 41/2% in 2011. surveying the economic

landscape, most recent data show consumers coming out of their hiding places. retail sales rose three-tenths of a percent in february, better than expected. recent gains in consumer spending have been notable in electronics goods, but have been spread widely across many types of goods and services. my business contacts tell me that consumers are clearly in a better mood. but they remain cautious and focused on bargains, which may reflect ongoing concerns about jobs, income, and household finances. before the onset of the recession, the household saving

rate was approaching zero as tens of millions of americans funded consumption by taking on debt. since the recession began, saving has picked up and households have been reducing their debt loads. it's not clear how much of this reflects the reluctance of banks to lend and how much of it may be due to a more conservative mindset among consumers themselves. but either way, i don't think that the uptick in consumer spending portends a return to the pace of consumption we saw during the go-go years in the middle of the past decade. it was housing of course that led the economy down. the great bust wiped out some $7 trillion in home values.

in the second half of 2009 though, housing showed signs of stabilizing and i became hopeful that the sector would provide a significant boost to the economy this year. now the market seems to have stalled. home prices have been more or less stable since the middle of last year, but new home sales have resumed a downward slide and are at very low levels. existing home sales spiked towards the end of last year in response to the homebuyer tax credit and have receded markedly since then. the credit expires this spring, removing an important prop. with sales still weak, builders have little incentive to ramp up home construction.

the continued high pace of foreclosures also creates risks to the recovery of the housing sector. mortgage delinquencies and foreclosures are still rising as a consequence of the plunge in house prices over the past few years combined with high levels of unemployment. despite the return to growth of the broader economy, we've seen no let-up in the pace at which borrowers are falling behind in their loans. further additions to the already swollen stockpile of vacant homes represent a threat to house prices and new home construction activity. it's not always easy to understand the dynamics of the

housing sector. last year, for example, the share of mortgages that was 30 to 89 days past due declined. on the face of it, that looked like a hopeful sign. unfortunately, when my staff examined the numbers more closely, it turned out that the drop actually represented a worsening of mortgage market conditions. what you want to see is delinquent borrowers becoming current. instead, what happened was that delinquent mortgages moved in the other direction to an even poorer performance status. many wound up in foreclosure. all in all, i expect that the share of loans that are seriously delinquent will continue to move higher. i am also concerned that we had a temporary reprieve in new foreclosures as the federal

government's trial modification program got under way. but not all of these modifications will stick, which means that some borrowers in the program could find themselves facing foreclosure again. at the end of this month, the fed will complete a large-scale program of purchases of mortgage-backed securities issued by fannie mae and freddie mac. lenders sell mortgages to these two agencies, which package them as securities sold to investors. last year, the fed began buying these securities as part of a series of extraordinary measures to promote recovery. at the time the program was announced, mortgage spreads over yields on treasury securities of comparable maturity were very high, reflecting in part the

disruptions that had occurred in financial markets. i believe that our program worked to narrow those spreads, bringing mortgage rates down and contributing to the stabilization of the housing market. financial markets have improved considerably over the last year, and i am hopeful that mortgages will remain highly affordable even after our purchases cease. any significant run-up in mortgage rates would create risks for a housing recovery. business investment also presents a mixed picture. we've begun to see a rebound in business spending on equipment and software, and recent

indicators point to solid growth. at the same time though, business confidence remains fragile. it's very positive that business leaders have shed their bunker mentality. but they remain wary and exceedingly cost conscious. especially for small businesses, uncertainty continues to weigh on them. access to credit has improved somewhat, but it's still a significant problem for many businesses. my contacts speak of a "new normal," in which companies open their checkbooks for necessities, but not for items considered discretionary. this of course is much better than a year ago, when many companies deferred spending even on essentials. but it's not a recipe for robust growth. so what does all this mean for the job market?

that's something all of us worry about greatly. the u.s. economy has lost 8.4 million jobs since december 2007, equal to a 6% drop in payrolls, the largest percentage-point decline in more than 60 years. we should never forget the people behind these numbers- friends, families, and neighbors who are struggling to make ends meet. i'm happy to see evidence that the job market is turning around. the pace of job losses has slowed dramatically. had it not been for blizzards back east, we might have seen payrolls expand in february. temporary jobs are growing, and

that's usually a signal that permanent hiring is poised to rebound. i was heartened when the unemployment rate dropped in january to 9.7% from 10% the month before. i was further encouraged when the rate remained at 9.7% in february, suggesting it was not just a flash in the pan. in the months ahead, we could get a bump in employment from census hiring. but that, of course, would be temporary. given my moderate growth forecast, i fear that unemployment will stay high for years. the rate should edge down from its current level to about 91/4% by the end of this year and still be about 8% by the end of 2011, a very disappointing prospect.

in light of these continuing headwinds in the financial system, the housing market, and the job market, i expect that the economy will be operating well below its potential for several years. economists use the term "output gap" to refer to an economy that is operating below its potential. we define potential as the level where gdp would be if the economy were operating at full employment, meaning the highest level of employment we could sustain without triggering a rise in inflation. obviously, with the unemployment rate so high, we are very far from that full employment level. in fact, the output gap was

around negative 6% in the fourth quarter of 2009, based on estimates from the nonpartisan congressional budget office, or cbo. that's an enormous number and it means the u.s. economy was producing 6% fewer goods and services than it could have had we been at full employment. in view of my forecast of moderate growth and high unemployment, i don't expect the output gap to completely disappear until sometime in 2013. this idea of an output gap has important implications for

inflation. we have a tremendous amount of slack in our economy. when unemployment is so high, wages and incomes tend to rise slowly, and producers and retailers have a hard time raising prices. that's the situation we're into today, and, as a result, underlying inflation pressures are already very low and trending downward. one simple gauge of these trends comes from looking at the u.s. commerce department's price index for core personal consumption expenditures, which excludes the prices of volatile food and energy products. these prices have risen a modest 1.4% over the past 12 months, below the 2% rate that i and most of my fellow fed

policymakers consider an appropriate long-term price stability objective. i just predicted that the output gap might not disappear until 2013. if the economy continues to operate below its potential, then core inflation could move lower this year and next. i'd like to switch gears now and talk about federal spending, fiscal stimulus, deficits, and inflation. recent federal budget deficit numbers have been startling. the cbo estimates that in both the past fiscal year and this one, the deficit will amount to almost $1.4 trillion. for 2010, that equals about 9%

of gdp. i've been a critic of large and persistent federal budget deficits throughout my career. i've worried, in particular, about the growing federal deficits that are projected after the baby boomers leave the workforce. if health-care costs keep rising at the pace we've seen in years past, the federal debt could rise relative to gdp in a fashion that would eventually become unsustainable. such long-term deficits pose a clear threat to our economic well-being. when the federal government borrows on such a massive scale over a long time period, it drives up interest rates and

sucks up savings that would otherwise finance productive private investments, potentially eroding living standards. but it's important to keep these concerns in perspective. in times of recession, when private-sector demand is insufficient to keep unemployment from rising too high and inflation from trending too low, it's appropriate for the federal government's deficit to increase. at such times, reduced taxes and increased expenditures provide crucial support for the economy. that was certainly the case in 2008 and 2009. indeed, during economic downturns, much of this support occurs automatically. recessions always bring lower

tax receipts and extra spending for unemployment insurance and other social insurance programs. the cbo estimates that in 2009 such automatic stabilizers added about $300 billion to the federal deficit.3 but, in a severe and protracted downturn such as the one we just went through, these automatic stabilizers were judged to be insufficient. in both 2008 and 2009, congress enacted major stimulus packages that have added hundreds of billions more to deficits. the 2009 stimulus, for example, directly added about $200 billion, or just under 11/2% of gdp, to last year's deficit.

stimulus programs took a variety of forms. so far, most of the anti- recession stimulus has come as individual and corporate tax cuts. there have also been sizeable temporary increases in transfer payments, such as expanded unemployment insurance, and grants to state and local governments, as well as increases in direct federal spending programs. assessing the effects of this fiscal stimulus on the economy is, of course, challenging, since we need to figure out what the economy would have looked like if we had not had the legislation. economists use a range of approaches to do these calculations. for example, they look at previous examples of fiscal stimulus, or analyze other variations in spending and taxation.