Foreign Abuse of U.S. Courts

Chairman Darrell Issa (R-CA)SPEAKER_02

The committee will come to order. I want to thank the witness— whoops. I want to thank the witnesses today for joining us and to to deal with a number of important issues. I apologize. I'm having a Ronald Reagan teleprompter moment here.

SPEAKER_UNKNOWN

Let

Chairman Darrell Issa (R-CA)SPEAKER_02

get the script. Nope. One page one page off. The difference between being here too long and not being too long is I still recognize when the opening statement and the script have been reversed. For now, the subcommittee will come to order. Without objection, the chair is authorized to declare a recess at any time. We welcome everyone here today on a hearing on Foreign Abuse of U.S. Courts. I want to include that this is the title, but not by any means the limitation, and there are a multitude of bills which have been made available to everyone here that we believe are open and available for discussion. So, we have a distinguished panel, and I recognize that you're able to go into areas beyond any one piece of legislation. I'll now recognize myself for that opening statement. Again, I want to thank the witnesses, and make it clear that the Chinese Communist Party is waging what they call legal warfare using the U.S. courts. Although this is not new, the previous administration elevated it by covering repeatedly a number of the areas in which the CCP has been, in fact, using our system against us. This is over and above the 10,000 attacks a day that occur on the internet. This is over and above their spying. This is over and above the abuses that occur on companies in China. This is, in fact, using our patent system, our trademark system, and our courts to their advantage. We take this seriously, that we will not be abused any longer. Legislation and rule changes by the administration need to happen and happen now. Let's make it clear: There are legal actions that Chinese businessmen and others do, and we want to make sure they're protected, just as we want to make sure that American companies, European companies, and individuals all over the world have access to our courts, to our patent and trademark system, and to our economy. In fact, some of our own laws have made it easier for the Chinese to take advantage of us. Our courts are the backbone of our Constitution, and we will protect it. Legislation that sanctions the PRC alone cannot be enough. We also have to strengthen the system itself from this type of activity. One of them is, in fact, open and transparent disclosure of who is truly behind a litigant. That includes third-party funding of litigation. It also includes, and should include, a thorough recognition that often there are a series of shell companies, even U.S. subsidiaries, that in fact have little to do with anything except covering their true source. All of that is not new. We see it in criminal operations, in human trafficking, in drug smuggling, in commercial fraud, and that is not limited to any one country. But the fact that it's backed by a powerful country who is using and weaponizing this is particularly disturbing. As we all are aware, often we are just a few weeks, a few months, or maybe a few hours in new technology ahead of China compromising it and using it. That includes a look-alike of the F-13. That includes a duplicate of the CERN supercollider new version. That one will be out before ours is built here in the United States. So we're not going to be able to fix it all here today, and it's not all within our jurisdiction. What is within our jurisdiction is to look at and to make available greater transparency, to empower our judges to order that transparency, and in fact to make it clear that a case should not go forward if, as is constitutional, a person accused of anything criminally is entitled to be faced by their accusers, their true accusers, which would include those who have people step forward. That is our law. But in civil matters, that often is a one-way street. Defendants under Rule 26 have to disclose if they are insured, have to disclose, quite frankly, their own financial condition, and even the financial condition of their principals. That is not always the case in the case of the plaintiff, and we need to have that. In preparation for this hearing, I have met with a great many companies and law firms who use third-party litigation funding, or who partner with other companies. None of them object to, in fact, the transparency of disclosing that. Many of them have cautioned that the discretion by the judge as to admissibility to the jury is a different story, and I want to make that clear because it is not the intention of this chair, or of any legislation I have yet seen, to interfere with a judge's decision on admissibility. But when it comes to the right to know, whether in camera or otherwise, this information is critical in making the decision about protective orders and the conduct of the case. The subcommittee has broad jurisdiction as to the courts, but we want to use it wisely. And in this case, recognizing that transparency is one of the most important tools that we have, we want to make sure that it is brought to the attention of everyone. As I said earlier, this hearing does include a number of other pieces of legislation that I believe our panel is able to answer, and we appreciate your indulgence when those questions are asked. And with that, I recognize the ranking member for his opening statement.

Ranking Member Hank Johnson (D-GA)SPEAKER_08

Thank you, Mr. Chairman, and thank you to the witnesses for being here today. This subcommittee has held a series of bipartisan hearings over the last few years on the threat from the government of China. As a strategic competitor, China is seeking to develop cutting-edge technology to win the so-called AI arms race with the United States. It also competes for soft power around the world, competes for economic predominance, and competes for strategic resources. There is nothing wrong with competition. There is a problem with breaking the rules to get ahead, and that is what China has sought to do. Over our hearings, we have examined cases of economic espionage, threats to American intellectual property, cybersecurity risks, and the different ways these actions by China threaten U.S. national security. Today, we're here to examine the use of our court system by Chinese actors. We absolutely agree that China is seeking to gain ground in our strategic competition by encouraging Chinese businesses to harm American companies, and that can include through our court system. I've enjoyed working with Chairman Issa and my colleagues on these bipartisan hearings, and I sincerely hope we can continue to examine the threat from the government of China to our national security, our economy, and our power abroad on a consensus basis. But there are areas where we have disagreed. Last Congress, this committee slated a partisan bill for markup that would have prevented companies on certain sanctions lists from obtaining new U.S. patents or enforcing the ones they already own, devaluing U.S. patents and violating international agreements. While the Preventing Adversarial Patents Act was removed before it could be considered by the committee, the bill was a reminder that there are significant disagreements between the two parties on this issue. So, I worry that this hearing on China's, quote, abuse of the U.S. courts may be a Trojan horse to disguise a different, a very different agenda. I fear that as a so-called solution to the China threat, I will hear proposals like: you can only file a case if you disclose all of the funders of your cause; or you can only file a suit if you are rich enough to pay a huge bond in case you lose; or let's start limiting discovery rules and make them more restrictive; or we'll flip the presumption of enforcing foreign judgments wholesale and adopt China's restrictive approach. The answer to a threat cannot be Republicans' tort reform wish list, and our constituents deserve better than a system where only the well-connected and the rich survive, because that's exactly what we would get from that list. This world I just outlined would mean that the big guys, the oligarchs, get their day in court, but the little guys, the Davids to those Goliaths, would be shut out. America's justice system has for so long been a shining light of equality in the world. And we must safeguard this impartial justice system now more than ever. Becoming more like China won't stop China. It won't work in our court system, and it won't work in our trade practices. But it's a reasonable concern. Our democracy has been under fire by wannabe authoritarian Donald Trump and his White House cronies, the very big guys who could benefit from all the proposals I just mentioned, who do not care about justice and the rule of law. These folks are the ones who let Democratic senators get tackled to the ground at news conferences and who block members of Congress from federal facilities. These are the leaders who tell the DOJ to investigate members of Congress who dare criticize the president and who nominate far-right MAGA loyalists like Emil Bove to federal judgeships, knowing that these sycophants will put Trump's whims above the Constitution. And if we start chipping away at our impartial justice system and make it harder to access, Americans will lose their ability to challenge these assaults on our rights against these rich, connected oligarchs. We cannot let our system become the playground for the big guys, the oligarchs like Donald Trump and his cronies. That's not justice, and we must protect the system where, no matter their status, anyone can walk into a U.S. courtroom and be treated as an equal. So again, I thank the chairman and our witnesses, and I look forward to exploring this important issue. And with that, I yield back.

Chairman Darrell Issa (R-CA)SPEAKER_02

The gentleman yields back. I now am pleased to recognize the ranking member of the full committee for his opening statement.

Full Committee Ranking Member Jamie Raskin (D-MD)SPEAKER_13

Thank you very much, Mr. Chairman, and thanks to the witnesses for joining us today. Like its ally, the authoritarian government of Russia, the authoritarian government of China presents a serious threat to American democracy, our economy, and our national security. And China's intensifying economic and technological competition with the U.S. has at times led to pitched battles in courtrooms across America. We've seen cases affecting our national security, intellectual property, and the safety of Chinese dissidents living here in the United States. It'd be great if we had a partner in the White House to help us respond to the threat of these repressive autocratic regimes. But Donald Trump has consistently bragged about his marvelous personal relationships with Vladimir Putin, who he has called a genius for invading Ukraine and has consistently praised, and President Xi, who Trump calls a brilliant guy who controls 1.4 billion people with an iron fist, and whom he has praised for sending Uyghurs to labor camps, saying this was exactly the right thing to do. Trump's been systematically dismantling the programs that protect America against espionage, propaganda, and malign political and electoral interference by Russia and China, while simultaneously dismantling the domestic programs that make us strong. His administration has been deleting the programs designed to combat malign foreign power interference in our elections, including the Foreign Influence Task Force at the FBI, the Global Engagement Center at the Department of State, the Critical Infrastructure Partnership Advisory Council at the Department of Homeland Security, while simultaneously cutting billions of dollars in critical foreign aid to poorer countries for development and democracy assistance and for humanitarian programs, which China is now gladly taking up in our place. They are filling the void left by Donald Trump's abandonment of the space of foreign assistance. Trump, meantime, has been systematically destroying Radio Liberty, Radio Free Europe, Radio Free Asia, and other broadcast vehicles that we use to counter Chinese and Russian propaganda and disinformation all over the world. Trump has put Kari Lake in charge of world communications, an election denier, a January 6th denier, and all-around mindless repeater of garbage conspiracy theories and lies, totally consistent with the Chinese and Russian agendas for the destruction of American democracy. This hearing is important, but it ignores the structural shift in our government in favor of the autocracies and kleptocracies who are Donald Trump's political soul brothers. It is also, of course, a distraction from the mounting failures, scandals, and embarrassments of this administration. Republicans this month passed a bill to throw 17 million Americans off of their Medicaid health insurance. The rescissions package Congress passed last week cuts $1 billion from public broadcasting and billions more from foreign aid, all of which is nothing but music to the ears of propagandists and foreign recruiters for China and Russia. Meantime, Trump is refusing to release the Epstein files, more than 100,000 documents which he was demanding for years in order to blow the lid off of what he and Pam Bondi and Kash Patel and Dan Bongino and the MAGA media were describing as a massive global child sex abuse and human trafficking ring for the rich and powerful. Bondi, acting under the direct supervision of Donald Trump, ordered more than 1,000 FBI agents to work as part of continuing 24-hour shifts, poring over more than 100,000 documents in the Epstein file—photographs, videos, emails, and texts. They were instructed to immediately flag all references to Donald Trump, all appearances of Donald Trump, and all images, likenesses, pictures, and videos of Donald Trump. At the same time, Kash Patel has been administering loyalty tests and lie detector tests to FBI agents. So this is a profoundly troubling and suspicious turn of events as Donald Trump seeks to sweep the whole thing under the rug, and our colleagues in the majority have now canceled all bills because they don't want to go before the Rules Committee to have to face more votes on whether or not to release the Epstein files. So we're examining the threat from China as though Donald Trump is not ceding more global power to China every single day. But he is. During his first term, he received millions of dollars personally from the Chinese government and state-owned companies, to say nothing of the valuable trademarks Chinese authorities rushed to grant him and Trump family members. In exchange, he opposed sanctions against Chinese telecom companies and banks, even when they threatened our national security. He even tried to cancel military exercises with Japan and South Korea because Russia and China voiced objections to it. His second term has seen more catering and appeasement to the autocrats. Over the last 6 months, the administration has weakened America's soft power abroad by defunding foreign aid programs systematically and closing embassies. It's hurt America's economy with illegal and arbitrary tariffs that leave us isolated and hapless in the world. In his second administration, Trump appears to be hell-bent on remaking his administration in the image of Xi's regime: cracking down on media outlets he disapproves of; destroying academic freedom with attempted hostile takeovers of colleges and universities, including America's oldest university, Harvard; attacking attorneys for representing clients or causes he disfavors; purging libraries and censoring books; sending masked agents in unmarked vans to arrest foreign students without arrest warrants for voicing opinions he disagrees with; shipping people to El Salvador's notorious prison of torture; and using AI to surveil individual social media posts and to create a mega database of all Americans' information. Look, in America, everyone is allowed to petition the court for relief regardless of the depth of their pockets or their country of origin. Making it harder for litigants to access the courthouse doors, even in the name of strategic competition with a foreign power, would make us less like America. That's not acceptable, obviously. Yet that's exactly what some have suggested instead of actually developing government policies that make us strong versus China and prevent illegal subversion and interference from China and Russia. In the context of our competition with China, we should never forget that those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety. That's Ben Franklin. This has been a matter on which there's been strong bipartisan agreement in the past. I hope Republicans and Democrats on this committee can continue to uphold this basic yet vital framework, as difficult as Donald Trump has made it. I yield back the balance of my time.

Chairman Darrell Issa (R-CA)SPEAKER_02

I thank the gentleman for his opening statement, and I will note that in September we have both the FBI director and the the AG coming. So we are not ignoring any of your concerns, and I thank the ranking member. Without objection, all other opening statements will be included in the record. It's now my privilege to introduce our witnesses. And if you don't mind, I'd like to go out of order a little bit. We have the gentleman from North Carolina, Mr. Moore, here to introduce his witness. You could use your wit. You don't You don't get that in this committee, but we will we would like you to introduce your your witness.

Rep. Tim Moore (R-NC)SPEAKER_12

Well, thank you and good morning. It's an honor to introduce a constituent of mine, Brad Muller, who's going to be testifying before the committee. And I'll read briefly about his bio and then I'll just talk like we do from North Carolina about him. Brad is a marketing communications strategist with more than 35 years of experience, and he works presently for Charlotte Pipe and Foundry. If you like pipes, if you've ever drank water, then you probably drank out of one of their pipes. They're the leading producer of pipes in the United States. They're a fifth-generation company based in Charlotte. They were founded, I believe, in 1901. You weren't there then, though, I don't think so. Not quite But Brad's got a very a very distinguished background. He actually was in Washington for 10 years, where he worked for USAID in the Bush administration handling the—he was the desk officer and managing foreign aid programs for Afghanistan and later for Central and Eastern Europe after the 1989 fall of the of the Berlin Wall. He then later went to work for the late Michael Deaver, who was the former deputy chief of staff to President Reagan, on a variety of public affairs, international relations, and trade issues. And he is extremely active in in in the community. He is known internationally really as an expert on trade issues, and I can tell you I consider it a real a real honor to have Brad in our, back home, to be one of my constituents. And this company has such an amazing reputation. But if you want to know, if you want to find out information about how trade is affecting businesses right here, how unfair trade is hurting businesses and causing job loss, you have an amazing expert to testify today. So I'm proud to have a fellow Tar Heel from the great state of North Carolina here with you today and appreciate the committee hearing from him. So treat him nice, if you don't mind. Thank you, Mr. Chairman.

Chairman Darrell Issa (R-CA)SPEAKER_02

Thank you. And I promise to treat him nice. As a matter of fact, I consulted with JM Eagle of California, and they believe that you are a superb witness since you're the two competing top two. And with that, I'd like to introduce Ms. de La Bruyère—hopefully I got that close to right—who is a senior fellow at the Foundation for Defense of Democracies, a think tank focusing on national security, foreign policy. Her work at FDD focuses on China policy. Ms. de La Bruyère also is the co-founder of Horizon Advisory, a consulting firm focused on the implications of China's approach to geopolitics. Welcome. Mr. Julian Ku is the faculty director of the international program and the Maurice A. Deane Distinguished Professor of Constitutional Law at the the university's Maurice D. Deane School of Law. Professor Ku's research is focused on the relationship of international law, the U.S. Constitution, and China's relationship with international law. I think Mr. Bradford Muller has been well introduced, and we're thrilled to have you here today. And lastly, we go to Mr. uh, de LaSalle de Lisle. Thank you. de Lisle, who is the Stephen A. Cozen Professor of Law at the University of Pennsylvania. Professor de Lisle is also holds appointments as a professor of political science and director of the Center for the Study of Contemporary China at Penn. His research focuses on China's engagement in international order, law, and legal institutions and their relationship to the politics and policies of China and the U.S.-China relationship. We welcome all of our distinguished witnesses, and pursuant to committee rules, I would ask that you rise to take the oath. Customarily, raise your right hand. Do you swear or affirm, under penalty of perjury, that the testimony you are about to give is true and correct to the best of your knowledge, information, and belief, so help you God? Thank you. Please be seated. Let the record reflect that all witnesses answered in the affirmative. For all the witnesses, please be aware that although we ask that you stay within 5 minutes, your entire opening statement, along with additional material that you either have today or that you can supplement, will be made in order and a permanent part of the record. I thank you. And Ms. de La Bruyère, it is not Brierre— it's your 5 minutes.

Ms. Emily de La BruyèreSPEAKER_00

Thank you for the opportunity to testify today. It's an honor to be speaking before you and the committee and alongside my distinguished co-witnesses. Beijing competes with co-option, not confrontation. The Chinese Communist Party does not directly attack its adversaries' systems. Instead, Beijing seeks to supplant them, subvert them from the inside, such that they advance Beijing's agenda rather than obstructing it. In the military domain, for example, China positions to control critical information systems, value chains, even political stakeholders, such that it can decide where missiles are positioned and how they're perceived rather than having to launch them itself. In trade, China has not sought to supplant the World Trade Organization, for example. Instead, Beijing has sought to manipulate it by holding others to its rules without following them itself, such that China can weaponize international free trade. And inside the United States, the Chinese Communist Party uses the American legal system to advance Beijing's agenda, punish its opponents, and neutralize U.S. defenses, benefiting from the reality that China's centralized, opaque system allows it to out-resource competitors in courts, to co-opt key stakeholders, and to manipulate information. This poses a threat to American security and prosperity. Offensively, Beijing works to shape U.S. laws and regulations and their implementation, in many cases via U.S. entities that have been co-opted by dependence on or resources from the PRC. Beijing has also proven its willingness to use the U.S. legal system to punish those who stand in its way. Beijing does so, for instance, with SLAPP lawsuits that are intended to censor and intimidate critics by burdening them with costly legal defenses. Beijing also does so with IP lawsuits that through the discovery process granted access to valuable technology. And on the flip side, China provides IP litigation funding for its companies in order to protect them from facing the consequences for their tech theft. Beijing also defensively games U.S. laws and regulations, circumventing and neutering American efforts to defend against Chinese bad practices. In response to U.S. tariffs and other trade restrictions, for instance, China transships through third-party countries, often obscuring country of origin. China also localizes in countries that have preferential trade relationships with the United States. And China localizes in the United States. Doing so allows Beijing not only to avoid U.S. trade restrictions, it also allows China to benefit from preferential policies that are intended to support U.S. domestic and partner industry. Moreover, localization in the United States allows Beijing to maintain and to expand its united front, the network of co-opted stakeholders through which it undermines the U.S. system from the inside. This entire program, offensive and defensive, benefits from Chinese government resourcing. Directly and indirectly, the Chinese state provides the resources necessary for its agents to outlast and outspend their competitors and their targets in U.S. courts. The Chinese state also provides subsidies and guidance for go-out companies such that they can expand their presence abroad. And the Chinese state provides policy insurance mechanisms that are intended to de-risk investments that might be vulnerable to regulatory hurdles, as well as instructions for navigating U.S. procurement and policy. Because Chinese abuse of the U.S. legal system is systemic, it demands a systemic response. Tactical measures like anti-SLAPP legislation and protections to defend American companies from exposing their IP to China via discovery are important, but the U.S. response cannot end there. Chinese and Chinese-backed entities should have increased information-sharing and transparency requirements when bringing cases. Those receiving direct or indirect funding from the Chinese government should face a higher pleading standard in the U.S. So should American entities that work with them. U.S.-based actors that engage with Chinese state-backed and government-linked players operating in or importing into the U.S. market should have to disclose as much. Law firms and lobbyists that work with those entities should not be eligible for U.S. federal government funding or defense industrial base procurement. More generally, sovereign immunity should not be extended to PRC entities. Foreign entity of concern provisions should be expanded to apply to all government authorities and support programs, and strengthened with presumptions of denial. Across the board, the definition of a Chinese entity should be tightened such that Beijing cannot circumvent through shell companies, joint ventures, or localization. China is an adversary. This has been internalized in the United States, if belatedly. So has the strategic imperative of decoupling from China economically and industrially. But to do that, the United States also has to decouple its legal system. Thank you.

Chairman Darrell Issa (R-CA)SPEAKER_02

Thank you, Professor Ku.

Mr. Julian KuSPEAKER_07

Thank you, Mr. Chairman, Ranking Member Johnson, and distinguished members of this committee. Thank you for this opportunity to address what I call China's asymmetric lawfare challenge to the United States judicial system. I just want to define lawfare as a term for us to understand here. Lawfare is the systematic use of judicial proceedings to accomplish strategic or military goals, political goals. This involves manipulating legal processes to undermine, discredit, or impose substantial financial burdens on adversaries through judicial mechanisms. The Chinese party-state lawfare demonstrates consistent patterns. Initiating entities maintain ostensible independence from the Chinese government. Chinese plaintiffs often retain the most prestigious, the best U.S. law firms to represent them. And even if their litigation is often in the preliminary phase and doesn't, it will impose substantial costs on defendants. I call these tactics asymmetric lawfare because China is exploiting the weaknesses in its own legal system to gain advantages in U.S. courts, while the U.S. and U.S. plaintiffs cannot reciprocally use China's legal system for its own strategic goals. These tactics that we're going to discuss here can only really be employed by China and never by the United States. And China's lawfare raises particular concern because China's unique control over its private sector through state-owned banks, Communist Party cells, and United Front partnerships means ostensibly private Chinese companies are vulnerable to being co-opted to serve the party-state's political goals. I want to give two examples of what I call Chinese party-state lawfare to illustrate the problem. The first case is from Long Island, where I'm from. It involves Ma Ju, a Hui Muslim activist who has testified before Congress and the UN against China's repression of his ethnic minority within China. He was served papers in Nassau County Court in New York State seeking enforcement of a $12.5 million judgment that was issued in China. Ma claims that this judgment was fraudulently obtained and that he couldn't defend himself before fleeing China. Despite this, the court in Nassau County ordered Ma to pay the full $12.5 million court judgment based on the Chinese court's ruling. This is not isolated. U.S. authorities have identified at least seven similar lawsuits filed by Chinese entities over six years, with three under FBI investigation, that's reported. And more broadly, Chinese companies have increasingly pursued commercial litigation in U.S. courts as plaintiffs, not as defendants, and often against Chinese nationals who happen to also be wanted by the Chinese party-state for either claims of corruption or maybe for political opposition to the party. So that's one example, I think, of the kind of lawfare that we're up against. Another case, from California, Mao Zedong's—the former chairman of the Communist Party—his secretary, Li Rui, became a prominent critic of the Communist Party at the end of his life. And Mr. Lieu agreed with his daughter, through his daughter, to donate his personal diaries to Stanford's Hoover Institution. And after his death in 2019, though, the widow of Mr. Lieu in China filed suit in Beijing claiming ownership of the diaries. The Beijing court ruled in Ms. Zhang's favor, ordering Stanford to return the original diaries despite Stanford's attempt to defend itself. And Stanford argues that it received inadequate notice in Chinese courts and was denied an opportunity to contest when it tried to appear. Ms. Zhang, who has recently passed away, sued in U.S. court alleging copyright infringement and seeking title based on the Beijing court judgment. The U.S. trial court allowed some of her claims to proceed, and the case has dragged on for over six years, five to six years. And it demonstrates, even if it doesn't result in a positive judgment or successful judgment for Ms. Zhang, it demonstrates some of the ways in which the Chinese party-state uses lawfare for ideological purposes beyond just harassing opponents. Furthermore, it raises a different problem, which is Ms. Zhang, it was very unclear the sources of her funding. She was a widow without any sort of obvious means of wealth, and she funded a six-year massive lawsuit in California courts, which went on for years, which Stanford has the resources to defend itself, but not all U.S. defendants would necessarily be able to do so. So I want to close by discussing some possible legislative solutions. One would be taking on the American Law Institute's proposal to change the rules in the United States for enforcing foreign court judgments to require reciprocity before enforcing a foreign judgment, or at least change the rules to require foreign—essentially allow defendants a better chance to defend against Chinese court judgment enforcement. And finally, I think there are things we can do to bolster disclosure of foreign funding of litigation through third-party litigation or through amendments to the Foreign Agents Registration Act to address litigation funding. These reforms will protect American courts' integrity from manipulation by the Chinese party-state while preserving what makes our legal system exceptional and valuable. Thank you for your attention.

Chairman Darrell Issa (R-CA)SPEAKER_02

Thank you, Mr. Muller.

Mr. Bradford MullerSPEAKER_05

Chairman Issa, Ranking Member Johnson, and members of the committee, thank you for inviting me to testify today. Charlotte Pipe and Foundry is the nation's leading maker of cast iron and plastic pipe and fittings for plumbing. We're a fifth-generation family-owned business. We've been in continuous operation in the United States for 124 years. We employ 1,800 associates, and through our wholly owned subsidiary, Neenah Foundry, we have another 1,000 employees spread across 11 plants across the United States. In 2017, we filed AD/CVD petitions through our trade association against imports of cast iron pipe and fittings. The Department of Commerce determined that Chinese exporters had undersold and subsidized cast iron pipe in the United States up to 345% less than fair value. For cast iron fittings, Commerce determined the Chinese had undersold those products up to 494%. Duties to counteract these unfair trade practices have been in place since August of 2018. Over the last seven years, unscrupulous foreign entities have turned to transshipping pipe and fittings through third countries and deploying other forms of evasion and customs fraud to obscure the true origin of their products to avoid paying these duties. The Enforce and Protect Act, or EAPA, grants U.S. Customs and Border Protection tools to combat customs fraud. In the seven years since our orders were issued, we have received 10 positive EAPA determinations of transshipping against producers of our products, primarily in Malaysia and Cambodia. When Customs investigated the locations of these alleged producers, they found an empty warehouse, a bus stop, even a massage parlor, but no foundries. Despite Customs' good-faith efforts, they have been unable to stop the illegal flow of imports. These entities have no intention of ever paying the duties. When caught transshipping, these companies simply dissolve, and the bad actors reconstitute under a new shell company and resume their unlawful activity. Chinese shippers have been so successfully evading U.S. trade enforcement that they freely advertise their capabilities to, quote, "avoid high duties by exporting goods from China to Southeast Asian countries where we change containers and then re-export to the destination country." Multiple news outlets are reporting on the many ways Chinese companies exploit gaps in domestic enforcement to bypass tariffs, duties, and other trade restrictions. I was quoted in the front-page story of The New York Times on May 27th lamenting the whack-a-mole nature of the process of tracking down these fraudulent shell companies and shutting them down, only to see them right back in business under a new name. CNBC uncovered a, quote, "web of illicit activity that's propping up these shipments from China." Reuters wrote about, quote, "Chinese exporters offering sweet deals to U.S. businesses that come wrapped in fraud." The Financial Times reported on how, quote, "Chinese exporters are stepping up efforts to avoid tariffs by shipping goods via third countries to conceal their true origin." Evasion and transshipment have been so successful that Customs' effort to collect duties has become futile. Based on our calculations, Chinese producers of our products have successfully evaded more than $44 million of dumping duties, money that they have robbed of the U.S. Treasury, and we have spent $7 million of our own money filing trade cases and EAPA petitions in an unsuccessful attempt to enforce U.S. trade law. Customs simply does not have the tools to overcome this determined fraud, and current penalties for such behavior are woefully inadequate. To address this, Representative Bost and Representative Sewell have referred to the House Ways and Means Committee the Fighting Trade Cheats Act to strengthen enforcement against trade fraud. This bill attacks evasion of AD/CVD orders by increasing penalties, denying a person and their affiliates engaged in fraud an importer of record number, and allowing private enforcement action to gain immediate injunctive relief against illegal trade flows. To put it bluntly, the AD/CVD process is broken. Without far stronger remedies, industries will be reluctant to undertake these cases. The costs to file and win these cases are exceedingly high, and the promise of relief has become nonexistent in the face of lax trade enforcement. I'd like to thank Chairman Issa and Ranking Member Johnson and the committee again for investigating these threats to American economic security and for allowing me to testify today.

Chairman Darrell Issa (R-CA)SPEAKER_02

Thank you, Professor deLisle.

Mr. Jacques deLisleSPEAKER_10

Thank you, Chairman Issa, Ranking Member Johnson, members of the committee. Thank you for the opportunity to testify. I'm going to address two types of concerns that I think arise in the context of what would be described as problematic uses of U.S. courts and legal processes more broadly by entities linked to the PRC or the Chinese Communist Party. The first category is essentially what one might call abuse, targeting individuals and entities in lawsuits brought against— brought in the U.S. in U.S. courts, for example, against exiled dissidents or U.S. companies that are rivals of favored Chinese companies, or that attempt to deny U.S. parties access to U.S. courts, or to the application or the attempted application of Chinese law or enforcement of Chinese judgments in ways that harm such U.S. parties' interests. The second kind of problem is what one could call avoidance of accountability. That is, Chinese parties seek to avoid the application or challenge the validity of U.S. laws, either through keeping cases or evidence out of U.S. courts or by avoiding the application and enforcement of U.S. law. So how to address these problems? Well, it's challenging, and the challenge stems in part from the fact that the problematic cases, and they do exist, are not facially or easily distinguishable, certainly not at a wholesale level, from many ordinary claims that should be allowed to proceed in the U.S. under principles of applicable U.S. law and fair access to justice. These are things that should be heard in our courts and often align with the interests of U.S. parties, indeed of U.S. non-parties to cases that have similar interests. U.S. courts have a number of tools available to deal with these problems. Some of them might be sharpened. Some of them might be used better, but they exist and they have been used often quite well and are better than many of the alternative, more broad-brush or wholesale tools that might be contemplated. So, in terms of vexatious litigation targeting dissidents in exile or disfavored companies for the benefit of Chinese companies, U.S. courts can and have evaluated the claims in individual cases, sometimes finding them credible, sometimes finding them not. U.S. courts can dismiss cases and impose Rule 11 sanctions, something which perhaps they should do more often. They can deny abusive or burdensome discovery requests, easy enough to do under the usual rules of U.S. discovery in proceedings in the U.S. And requests for production of evidence for use in Chinese proceedings, especially when they come from parties or individuals rather than courts in China, could be scrutinized more closely, tightening in effect the 28 U.S.C. 1782 process. The U.S. can and is increasingly going to have to deal— U.S. courts are going to have to deal with the question of recognizing or not recognizing anti-suit injunctions. China has started to issue these, particularly in the FRAND/SEP cases for technology. Forum non conveniens motions, which are often attempted by Chinese parties to get cases out of U.S. courts, can be denied and are often denied on the grounds of the public interest in the U.S. in having U.S. parties bring their cases and applying U.S. law, or on the basis of the burdensome effect on U.S.-based parties of litigating in China, or on a judgment in the particular context in which a case would be litigated in China, given the parties, the courts, and the nature of the claims, can decide that this would not be an adequate and available alternative forum in a Chinese court. U.S. courts can also use choice of law rules to deny the application of Chinese law where it is inappropriate or where such law would offend U.S. public policy. We see this going on with respect to blocking statutes, where U.S. courts have been unwilling to allow Chinese parties to plead state secrets law, data or cybersecurity laws, or personal information protection laws as reasons for not to comply with discovery requirements. U.S. courts can decline to enforce problematic Chinese court judgment rules and can invoke notions of reciprocity and comity to restrict such enforcement, either retail or wholesale, given the lack of Chinese enforcement of U.S. judgments in many cases. And U.S. courts have and do uphold relevant U.S. regulatory laws and their application against Chinese parties' challenges. Think of CFIUS decisions, PCAOB disclosure requirements, Huawei's exclusion from markets for national security reasons, the TikTok ban, and so on. Here I would note the U.S. sovereign and official immunity doctrines and limits to the extraterritorial reach of U.S. statutes have taken away some methods that might be available for dealing with problematic Chinese behavior. But the point here in all of this is the problem of abuse and avoidance of accountability, the tools are there. And the legal tools we have or could readily imagine being available are quite suited to the kind of granular, fact-specific, and case-specific analysis that courts are suited to do. More broad-brush approaches, I think, have challenges and problems. They risk embedding in U.S. law the idea that because abuses by Chinese actors can and sometimes do occur, U.S. law and courts must assume that they do occur. That is at odds with notions of due process and fair access to justice and harms the interests of U.S. parties. Things disclosure requirements or other measures that would impede access to U.S. courts would create quite messy mini-trials on collateral issues of the degree of entanglement with the Chinese state. This is a very complicated issue that could be overexpensive and chill the bringing of legitimate claims even by U.S. parties that happen to have some limited connection to China. Measures explicitly or clearly targeting China risk accelerating a spiral of tit-for-tat moves by China that would indeed adversely affect the interests of the U.S. and U.S. parties. Those may be costs worth bearing, but they are costs that need to be calculated. They also risk making more credible China's narrative that U.S. law and courts are political tools wielded to keep China down and serve U.S. geopolitical—

Chairman Darrell Issa (R-CA)SPEAKER_02

thank the gentleman.

Mr. Jacques deLisleSPEAKER_10

Thank

Chairman Darrell Issa (R-CA)SPEAKER_02

The remainder of your opening statement will be placed in the record. Without objection, Mr. Knott will be permitted to participate in today's hearing for the purpose of questioning the witnesses if a member yields him time for that purpose, and we welcome the gentleman.

Rep. Brad Knott (R-NC)SPEAKER_11

Thank you.

Chairman Darrell Issa (R-CA)SPEAKER_02

I now recognize the chairman of the full committee, Mr. Jordan. Pursuant to the rules, the gentleman is recognized.

Rep. Brad Knott (R-NC)SPEAKER_11

Thank you, Mr. Chairman. It's my privilege to be here. I'm familiar with one of the witnesses and the company that he comes from, Charlotte Pipe and Foundry. I've had the privilege of touring their facilities. I know them well. And this is a company that does it the right way. They put their heads down. They do great work. They deliver world-class products that will compete against anybody. But what any company cannot compete against is fraud, manipulation, unfair markets, lack of free markets. And, Mr. Muller, thank you for coming to come and testify today. And I want to be quick and to the point. What legislative proposals are you familiar with that could protect industries like yours that benefit not only just North Carolina, but the entire country and then the world by extension?

Mr. Bradford MullerSPEAKER_05

Thank you, Congressman. In addition to the Fighting Trade Cheats Act, which I mentioned, which would impose stiffer penalties on these bad actors, take import licenses away, and allow us a private right of action to enforce U.S. trade law, there's also the Protecting American Industry and Labor from International Trade Crimes Act. And I urge the Congress to pass and fund that, which would stand up a trade fraud crime unit at the Department of Justice. The bill calls for $20 million in funding. As I mentioned in my testimony, on our two products alone, we believe more than $40 million has been uncollected in duties by Customs. So if they just had been able to collect on our products, we could double the funding of this trade crime unit to $40 million. We believe that in order to stop this behavior, we have to start prosecuting some of these bad actors because they continue to set up these shell companies. When confronted, they dissolve them and they're right back in business with a new shell company.

Rep. Brad Knott (R-NC)SPEAKER_11

And in your experience, sir, how do these foreign entities gain entry into the United States? Do they have participants in the United States? Are there— are they blind actors? Are they willing and knowing? What's your experience?

Mr. Bradford MullerSPEAKER_05

There are US-based importers that engage in this fraud, and we know some of those. Glendale Fire in California is one. Wells in Chicago, Wells Plumbing is another. These are US-based importers that are engaged in this illicit activity. And those are the companies that we should be targeting with something like the PAEL Act.

Rep. Brad Knott (R-NC)SPEAKER_11

And in regards with your experience, sir, given the amount of fraud and sort of the suppressed pricing that the Chinese Communist Party engages in, how responsive have the United States authorities been fielding your complaints in this area?

Mr. Bradford MullerSPEAKER_05

Well, we tip our hat to the to Customs. In fact, we met with them last week, our trade association, and we have engaged very cooperatively with Customs, and they do their best to enforce the law. We try to educate them on our products, how to spot the fraud, fraudulent products coming in. And so we are very pleased with Customs. They just don't have enough tools to stop this behavior,

Rep. Brad Knott (R-NC)SPEAKER_11

right? Professor Ku, let me let me transition to you quickly. What are ways that we can disincentivize the Chinese Communist Party on a macro level from continuing to engage in this? Because it's not just Charlotte Pipe and Foundry, obviously. It's everything from biopharma to engines to computing. The the theft and obstruction is real and across every sector. How do we dissuade them from continuing this?

Mr. Julian KuSPEAKER_07

Thanks. There is no easy answers here. I wish there was a silver bullet. I think passing the legislation could certainly help. I do think that making clear that the, first and foremost, that we take these things seriously and that we force bad actors to disclose the network of funding. The problems in transshipment is some of the bigger problems we see is the way the Chinese party-state is intertwined with each other. We have to assume, unfortunately, that a lot of what look like normal private companies we want to welcome here to the United States have to, unfortunately, play by different rules because we can't trust them, because they're intertwined with the party-state at home. And I think it's just unfortunate. That's the way it We have to be tougher. We have to demand greater disclosure of connections between Chinese companies and the party sort of or partnership groups that they're involved with.

Rep. Brad Knott (R-NC)SPEAKER_11

Is there a way to separate doing business with Chinese companies from the Chinese Communist Party?

Mr. Julian KuSPEAKER_07

I think there is. I think we should do business with whoever, but I think we have to assume that those companies, which are private much of the time, can be co-opted very quickly in a way that we can't in the United States, force a private company to do something that the government wants us to do, wants it to do. So we have to—you have to proceed cautiously. It's not the United States government's fault, it's China's government's fault for creating this weird web of influence and control that makes, unfortunately, even honest Chinese companies suspect.

Rep. Brad Knott (R-NC)SPEAKER_11

Yep. To the witnesses, thank you. Mr. Chairman, I yield back.

Chairman Darrell Issa (R-CA)SPEAKER_02

I thank the gentleman. I would note for everyone in attendance the reference to H.R. 1284, which is a bipartisan bill for the private right of action, just to make sure everyone can look that up. I thank you, Mr. Muller, for mentioning it. With that, we go to the ranking member, Mr. Johnson, for 5 minutes.

Ranking Member Hank Johnson (D-GA)SPEAKER_08

Thank you, Mr. Chairman. For many years, the American judicial system has been a shining light of fairness and impartiality to the world, a system independent from undue influences or of the other branches, with checks and balances that promote accountability. Professor deLisle, can you please walk me through some of the specific attributes in the U.S. judicial system that, broadly speaking, make it a fairer venue to resolve disputes compared to the Chinese court system?

Chairman Darrell Issa (R-CA)SPEAKER_02

Could you turn your mic on, please? I'm

Mr. Jacques deLisleSPEAKER_10

Sorry. There are the contrasts are quite strong. The U.S. judicial system is, of course, open to pretty much anyone who has a cognizable claim, who has a claim that is covered by U.S. civil law, regardless of national origin, regardless of perhaps the motives behind the lawsuit. And U.S. courts have historically been quite insulated from political pressure. Of course, in every system, there is some link between politics and courts. Courts apply the laws adopted by political bodies, Congress in our case, and judges, of course, are selected even in our system by political processes. But the contrasts remain profound. One of the unfortunate developments in China in recent years has been a ratcheting up of the position that courts should take into account party policy and national interests and should be accountable to the party, should be subject to various forms of toeing the line, as it were.

Ranking Member Hank Johnson (D-GA)SPEAKER_08

Well, let me stop you right there, because now we're starting to see some blending. Unfortunately, many of our judges have been under vicious attack from our executive branch and MAGA-loving members of Congress. When judges make a ruling Donald Trump doesn't like, our felon in chief takes to social media and he bashes and slanders that judge in a way that often leads to threats of violence from Trump's base. At the same time, his cronies in Congress race to file articles of impeachment against that judge, without a legitimate shred of evidence of a crime, a high crime, or a misdemeanor. Professor deLisle, you were speaking about the unique qualities of the judicial system of the United States that make it among the fairest systems in the world. But if we keep politicizing our courts, like threatening to punish or fanning the flames of violence against judges who dare rule against President Trump or his interest, how could this impact the impartiality and dependability of our courts in the long term?

Mr. Jacques deLisleSPEAKER_10

That obviously is a concern. I've spent a great deal of time watching Chinese courts for the last 30 or 40 years, and I have seen progress and backward motion on this issue, and the form in which the erosion of the shoots of judicial independence and fair-mindedness of Chinese courts—and here the accomplishments were quite impressive for several decades—have been under threat because of the demand that courts take political concerns more directly into account. At one point, the president of the Supreme People's Court in China several years ago said that party policy was one of the principles, along with law, that should decide cases. We've seen judges face lifetime responsibility for so-called erroneous decisions, and we've also seen populist pressures on courts, people in the streets expressing opposition to the way courts are ruling. Those are the hallmarks of threats to court independence and judicial independence. Stepping outside my lane as a Chinese law expert here, there are things that look to me disturbingly familiar going on in the United States.

Ranking Member Hank Johnson (D-GA)SPEAKER_08

Thank you. Uh, some proposals I've heard from my colleagues during my tenure on this committee would diminish access to the U.S. court system, putting logistical and huge financial barriers in place for folks for trying to bring a lawsuit. This would mean effectively that only the wealthy or the well-connected could fully take advantage of our judicial system to resolve their disputes, and the little guys would be left behind. Professor deLisle, you are an expert in the civil justice system. Is it a good— is it a good idea to make this system harder or exponentially more expensive to access? And if we start mandating that anyone who wants to bring a suit has to pay exorbitant fees to get in the door, uh, how could that impact our impartial system of justice in this country?

Mr. Jacques deLisleSPEAKER_10

Um, I see my, my time's expired. May I answer?

Chairman Darrell Issa (R-CA)SPEAKER_02

Of course.

Mr. Jacques deLisleSPEAKER_10

I think a cornerstone of the U.S. judicial system is fair access to justice. You should be able to go to court if you have a legitimate claim, and that applies to Chinese parties as well as U.S. parties. We've talked about how to screen that out, and I think there are many things, either in the form of fees or in the form of creating barriers where you must prove the legitimacy of your claim—we talked about some of the disclosure requirements—which could chill and impede access. One of the things I think that U.S. courts, as I mentioned earlier, could do to deal with problematic issues from China is to is to take measures to dismiss claims before they proceed to a point of being highly burdensome to parties. I would advocate that we look at that stage rather than closing off litigants wherever they're from before they can get through the courthouse door.

Ranking Member Hank Johnson (D-GA)SPEAKER_08

Thank you. And I yield back.

Chairman Darrell Issa (R-CA)SPEAKER_02

Thank you, gentlemen. If I could ask your indulgence for just one clarification. Uh, Professor, you, you mentioned political pressures in and the nature in both countries. Briefly, can you simply say, is there any real comparison between our lifetime appointment federal judges and their likelihood to rule against the politics that may have gotten them the job and the Chinese government broadly?

Mr. Jacques deLisleSPEAKER_10

I'm not sure there's a simple answer to that question. These are obviously matters of degree. I don't think either system exists at a complete pole. As I suggested earlier, there had been welcome signs of progress in China, and there's been some, but not complete, backsliding. And I don't think, in my personal opinion, the U.S. is where it has been or should be. And I think judges are human beings, and they worry about the way they are addressed and discussed by the politically powerful. I think that's probably something of a universal. I've certainly seen it in China.

Chairman Darrell Issa (R-CA)SPEAKER_02

Thank you. We now go to the gentleman from Wisconsin, Mr. Fitzgerald, for his questioning.

Rep. Scott Fitzgerald (R-WI)SPEAKER_06

Thank you, Chairman. Professor Ku, the United States maintains a number of sanctions, export controls, or other measures to prevent certain individuals or entities affiliated with an adversarial nation from gaining access to strategic technologies or preventing equipment produced by such persons from being utilized in sensitive U.S. industries. A lot of times, the sanctions include restrictions on certain property rights. Generally, however, these do not apply to a sanctioned entity's patent portfolio, meaning a sanctioned entity can continue to license its patents to U.S.-based companies or assert them in court. Some see the circumvention of sanctions and the subsidization of the activities of a sanctioned entity. So, let me ask you: Why have IP rights generally been excluded from other property rights restrictions under U.S. sanctions? And how could adversarial nations like China, which I know we've been talking about, take advantage of that loophole to the detriment of U.S. innovation or, obviously, the other thing discussed is our national security?

Mr. Julian KuSPEAKER_07

Look, this is a complicated question. I agree with you that it's a strange thing. Obviously, it depends on how we design our sanctions regime, which this body, Congress, has designed, but also which is implemented by the Commerce Department. You could have sanctions that are much stricter and that are completely across the board, which, in some cases, would prevent even intellectual property licensing from occurring. I think that what's going on here is that the Commerce Department or other entities essentially try to make compromises to account for different interests, right? The licensing is very valuable, right? It's very valuable for US companies in many cases. To lose that revenue is a substantial and significant cost. So, that's I think there's no legal reason why we cannot impose such rules across the board. I think it's more of a practical problem of balancing the different economic and political interests that we have here in the United States.

Rep. Scott Fitzgerald (R-WI)SPEAKER_06

Thank you. Ms. de La Bruyère, you've written extensively on China's military-civil fusion, I guess you'd call it. And China has utilized companies like Huawei and ZTE to advance its Made in China 2025 initiative, or plan, I guess you'd call it. So Huawei held over 3,300 active U.S. patents in 2024, which is unbelievable to me, and it's generating the company hundreds of millions of dollars in annual licensing revenue. So when we allow some of these state-sponsored companies like Huawei to profit off the U.S. patent system, either through licensing agreements or injunctions, obviously we're subsidizing the continued theft of American intellectual property, and certainly helping to advance China's industrial agenda. What should Congress do about this, if anything, considering the limiting and licensing of asserting the U.S. patents while on certain national security-related sanctions lists?

Ms. Emily de La BruyèreSPEAKER_00

I think one big challenge about fighting back against China's military-civil fusion strategy and general tech offensive is that we haven't as a system quite caught up to how advanced Beijing is, and therefore the leverage it acquires, and the risks of not only China stealing technology, but also the US becoming increasingly dependent on Chinese technology. And the way that that, alongside, say, US investment into the Chinese tech program and more concrete US tech partnerships with China, end up fueling our adversary. And because we haven't recognized that as a system, we haven't imposed restrictions on things like tech licensing from Chinese entities that are very real threats. And one potential avenue that the US could take is that where we, through FIAC restrictions, for example, impose barriers on US tech partnerships with China, those could also cover tech licensing, patent partnerships, and other IP agreements beyond simply formal joint ventures, formal export of technology, et cetera.

Rep. Scott Fitzgerald (R-WI)SPEAKER_06

Thank you. So right now I'm chairing the Subcommittee on Antitrust, and we've been investigating kind of this cartel-like behavior in a number of US industries where there's collusion. However, with foreign companies, you can have an American corporation working with someone in China, and it kind of falls into a different category. I was wondering if you had any thoughts on that.

Ms. Emily de La BruyèreSPEAKER_00

China's entire industrial— and we'll call it private sector, but it's not not a private sector— is a cartel, because fundamentally Beijing and the Chinese Communist Party control them through incentive shaping and through direct directives, for lack of a better word. And that means that we should think of Chinese companies, including their outposts in the United States, as being arms of the Chinese system and colluding.

Rep. Scott Fitzgerald (R-WI)SPEAKER_06

Thank you, Chairman. I'm out of time. I yield back.

Chairman Darrell Issa (R-CA)SPEAKER_02

I thank the gentleman. We now go to the ranking member of the full committee, the gentleman from Maryland, for 5 minutes.

Full Committee Ranking Member Jamie Raskin (D-MD)SPEAKER_13

Professor deLisle, you said that in China, the courts are supposed to decide according to party policy as well as the law, which is kind of amusing. I just finished reading Alexei Navalny's book Patriot, where he said in Russia they talk about telephone justice to describe either the literal or metaphorical coercion that the government plays in the decision of particular cases. I'm wondering, is this the same thing happening in academia in China where scholars and deans are intimidated or coerced into deciding things according to official government edict? I ask, of course, because we're in a situation now where Donald Trump is trying to coerce colleges and universities, including Harvard, to accept his dictates with respect to student admissions, faculty hiring, and curricular and academic content. And I'm wondering if that's something you find in China too.

Mr. Jacques deLisleSPEAKER_10

The short answer is yes. Before turning to that, I want to stress that in many cases in Chinese courts, and many Chinese judges and lawyers admirably apply the law fairly and play their roles the way one would hope they would play them, and sometimes do so against the kinds of pressures that have been long present in China and that seem increasingly present in the United States. I've been dealing with Chinese counterparts in academia, in law, political science, and other fields for many years. There have always been restrictions. The restrictions have gotten tighter. The ability to publish one's work, to express one's views, are definitely under pressure. The reach of the party and state into universities have shrunk what was once more capacious academic space. There have also been restrictions on Chinese scholars coming to the US, which has been a place where they are able to express ideas more freely and gather information. So all of those pressures are there. And as with courts, although this gets a little closer and more personal, What we are feeling now on American university campuses resonates in uncomfortable ways with what I've seen in China. That is, the pressure, not only the concern about whether you will harm your university by saying certain things, or the concern about the loss of the resources necessary to do research are real, as well as the interventions in what we hire and what we teach.

Full Committee Ranking Member Jamie Raskin (D-MD)SPEAKER_13

And are there attempts to impose government edicts and dictates on lawyers and on law firms? Firms

Mr. Jacques deLisleSPEAKER_10

in the United States or in China?

Full Committee Ranking Member Jamie Raskin (D-MD)SPEAKER_13

In China.

Mr. Jacques deLisleSPEAKER_10

In China, yes. There are always restrictions on law firms and lawyers. Those who have represented dissidents or targets of repressive policies have faced threats to their law licenses. Chinese courts do have significant discretion not to take cases that people might bring that are politically disfavored. So while this is not Soviet-style justice, and many, many cases are handled in perfectly ordinary ways, the more politically sensitive the case, the more party and state officials take interest in the case, the less likely it is to get to court or to be handled fairly once there.

Full Committee Ranking Member Jamie Raskin (D-MD)SPEAKER_13

I see. So I had the impression that there was very little judicial independence, but you're saying that, in a lot of cases in China, the courts operate relatively free from direct governmental coercion or control.

Mr. Jacques deLisleSPEAKER_10

It depends on the type of case, the type of court, and the type of parties, but the kinds of things that your question points to, the politically sensitive areas, things which would be deemed adverse to the interests or preferences, are ones where that is—

Full Committee Ranking Member Jamie Raskin (D-MD)SPEAKER_13

So, we could very easily in America slide into that kind of system where the vast majority of contract, tort, property disputes are handled without any direct political interference, but when it comes to constitutional cases, interpretation, interpretation of executive powers or legislative powers, there could be much more political interference.

Mr. Jacques deLisleSPEAKER_10

That kind of bifurcation is a hallmark of systems which have only made limited progress toward rule of or rule by law or that have backslid from robust democratic rule of law. It's one of the things that can be quite insidious. Ernst Fraenkel, a German scholar from many years ago, described the idea of a dual system, a dual state where some cases are channeled through the ordinary legal process with fair process and other cases, politically sensitive ones, face a very different regime wherein the preferences of those in power determine the outcome.

Full Committee Ranking Member Jamie Raskin (D-MD)SPEAKER_13

Can you explain the doctrine of true conflict, where American courts will sometimes not impose a U.S. law against a foreign entity if that entity's country has a law that's in true conflict with our laws?

Mr. Jacques deLisleSPEAKER_10

Sure. A true conflict situation is where a party subject to the laws of two countries, and that often happens with entities or individuals who work in China and here, have some some border-straddling activity. A true conflict is where you cannot comply with one state's laws without violating another. So to take one example from from U.S. litigation, the vitamin C antitrust litigation, where the claim was that Chinese law required price collusion, and U.S. antitrust laws, of course, prohibited it. We're seeing more of this, and I think one of the areas where it may become quite serious is in China's anti-foreign sanctions law, where they will prohibit companies subject to Chinese jurisdiction from complying with U.S. sanctions, whereas those companies are obliged to provide to comply with U.S. sanctions. Courts are going to have to face this, and they have to decide what to do. And the ordinary international legal principles rooted ultimately in comity are to decide which state has the stronger interest and to apply its law, or to refuse to apply foreign law that is repugnant to the public policy of the host jurisdiction, the forum jurisdiction.

Full Committee Ranking Member Jamie Raskin (D-MD)SPEAKER_13

Thank you. Yield back, Mr. Chairman.

Chairman Darrell Issa (R-CA)SPEAKER_02

I thank the gentleman. We now go to the gentleman from Virginia, Mr. Cline, for five

Rep. Ben Cline (R-VA)SPEAKER_09

Thank you, Chairman. I want to thank our witnesses for being here. As was stated, foreign entities invest substantial sums in litigation financing, potentially influencing court decisions to align with their interests. There's no greater actor than China engaged in this activity. Additionally, adversarial governments or corporations linked to them may use this strategy to shape legal outcomes in federal courts, advancing their geopolitical agendas. This practice raises national security concerns, particularly when it involves targeting sensitive military and commercial technologies or leveraging U.S. disclosure laws for strategic gain. I introduced the Protecting Our Courts from Foreign Manipulation Act, which would require disclosure from any foreign person or entity participating in civil litigation as a third-party funder, litigation funder in U.S. federal courts, and ban sovereign wealth funds and foreign governments from participating in litigation finance as a third-party litigation funder, either directly or indirectly. Ms. de La Bruyère, your work has exposed how the CCP uses non-military, non-traditional tactics to gain advantage. Do you see strategic use of U.S. litigation as part of the CCP's toolkit, and would a bill like the one I explained help address that risk?

Ms. Emily de La BruyèreSPEAKER_00

Use of litigation is absolutely a part of the CCP's toolkit. Beijing uses litigation to censor and intimidate its opponents. And there cases of this abound. And they not only harm the direct opponents, but they also create a general silencing across the U.S. where it's simply too dangerous to speak about even known risks about Chinese entities because of litigation concerns. Beijing also uses targeted litigation to acquire intellectual property, including through the discovery process. And importantly, these efforts are in many cases funded by the Chinese government, both directly and indirectly, including through, for example, targeted subsidy programs that support Chinese companies dragging out these cases in U.S. courts.

Rep. Ben Cline (R-VA)SPEAKER_09

Now, some would argue that adding transparency requirements to civil litigation, like identifying foreign state interests behind a party, might chill access to courts or create an administrative burden. From a national security and economic standpoint, is there a real cost to doing nothing, uh, in instead of, uh— and how would you respond to critics who say greater transparency in litigation is unnecessary or even harmful?

Ms. Emily de La BruyèreSPEAKER_00

I believe there's absolutely an economic and a security cost to doing nothing. I also think that the U.S. has proven out a system, evident in, for example, the FARA regime, of having transparency requirements for foreign adversaries and foreign entities that allow the U.S. to protect its security in that direction without undermining the integrity of the U.S. legal system. And that's by having a targeted campaign that seeks just generally information on the activities of foreign agents and is again targeted at foreign adversaries.

Rep. Ben Cline (R-VA)SPEAKER_09

Professor Ku, I introduced the bill to address how foreign adversaries, especially the Chinese Communist Party, may be using U.S. courts as a strategic tool. In your view, how real is the threat of foreign abuse of U.S. courts, and how might Congress strike the right balance between maintaining judicial openness and protecting national security?

Mr. Julian KuSPEAKER_07

Yeah, thank you. I think the answer is kind of boring but obvious, is disclosure. I think disclosure may create some administrative obstacles, but it doesn't prevent people from bringing cases. We want to allow foreign companies to feel like the U.S. judicial system is open to them. But there's really no reason why a foreign government really needs its rights protected in the same way. And so disclosing or maybe restricting foreign government involvement in these litigations, which they're not actually directly involved in or through third-party litigation, or at least forcing disclosure, I think would go a long way and I don't think would burden people from bringing cases. And one last thing, I'll just note that it's very unclear that this could happen the other way, that U.S. companies could get involved in third-party litigation within China. So it puts U.S. companies at a disadvantage.

Rep. Ben Cline (R-VA)SPEAKER_09

According to Westfleet Advisors' most recent report, third-party financing is behind over 30% of U.S. patent litigation. According to Bloomberg, more than one-half of U.S. patents are issued to foreign entities, and our country has no record of when or to whom they are transferred. Isn't this a national security and economic security risk?

Mr. Julian KuSPEAKER_07

I just know for me, anyways, I think it is. And I think that we, as we point out, we require people to register as foreign agents in other contexts if you have a blog or something and you're promoting the views of the Chinese Communist Party. But actually, if you're funding a lawsuit, it's not required to be disclosed. It's an odd, strange— we can distinguish between bad actors, or at least potentially bad actors, and just the average person who's involved in a lawsuit. I think our system has proven we can do that, and we can do that here as well.

Rep. Ben Cline (R-VA)SPEAKER_09

Would we reduce— well, I have 5 seconds left, so with that, I'll just yield back. Thank you, Mr. Chairman.

Chairman Darrell Issa (R-CA)SPEAKER_02

Oh, there's a— there's a first. We're getting our time back. Thank— I thank the gentleman from Virginia, and I go to the gentlelady from North Carolina for her 5 minutes. Miss Ross.

Rep. Deborah Ross (D-NC)SPEAKER_01

Thank you, Mr. Chairman and the ranking member, for holding this hearing, and thank you to all of our witnesses for testifying today. I am going to focus most of my questions for Mr. Muller because we are bipartisan cheerleaders for North Carolina and our businesses. I also want to thank, Mr. Muller, for your testimony, your ideas about what Congress can do better, but also for your service to this country, and in particular at the beginning of your service working for USAID. We know how important foreign relations are. So, you told us that Charlotte Pipe has filed multiple claims against Chinese litigants at the International Trade Commission, and that Chinese companies clearly have been dumping products at anticompetitive low prices. I participated with our North Carolina Secretary of State at a North Carolina Chamber event, and it can actually just devastate a small company that doesn't have the resources that you do. How much time and money has your company invested in filing these multiple antidumping suits at the ITC?

Mr. Bradford MullerSPEAKER_05

I mentioned previously in my testimony, it's almost $7 million of our own money. And another way to answer your question, I was hired by Charlotte Pipe and Foundry 23 years ago to run the marketing department, to be the vice president of marketing, which I did for a number of years. But in 2006, I took on a government affairs role and kind of wore two hats at Charlotte Pipe. In the last five years, I've been working exclusively on government affairs, so my time and salary has been dedicated to trying to work through these issues both at the state level and at the federal level. And it continues to occupy— I joke that I shed half my job, and I'm twice as busy.

Rep. Deborah Ross (D-NC)SPEAKER_01

And small businesses simply couldn't afford to have that kind of advocacy.

Mr. Bradford MullerSPEAKER_05

No, and in fact, I also have represented the American Foundry Society. They have 1,000 corporate members, foundries throughout the United States, steel, aluminum, and cast iron. 80% of those foundries are small businesses, 100 people or less. They don't have the resources to fight like we do, and many of them are going out of business. 20 years ago, there were 2,000 foundries in America, and we're down to about 1,700. And these are vital for national security. You can't make tanks or planes or ships without foundries.

Rep. Deborah Ross (D-NC)SPEAKER_01

also those small businesses, by extension. In 2017, Charlotte Pipe discovered that a Chinese manufacturer had stolen your name, trademark, and logo and was using it to sell unaffiliated products in East Asia. Since then, you filed trademark infringement claims in both China and Singapore. Can you tell us the status of those claims?

Mr. Bradford MullerSPEAKER_05

Yes. Thank you for that question. I did testify on the Senate side before Senator Tillis and his intellectual property subcommittee on this topic. We only discovered by accident that China had stolen our brand identity and was going to market in Southeast Asia as Charlotte Pipe and Foundry. There's a building in Shanghai with our logo on the side, and a gentleman was passing out Charlotte Pipe business cards at a trade show in Singapore. That's how we discovered the theft. We filed to get our IP back in Singapore. We lost, but then won on appeal. We also had to hire a Chinese law firm at great expense to fight for our IP to get it back in China. And that has stalled in the courts of Beijing. No decision has been made, but the case has basically gone cold. We can't get any information from the Chinese government, from our Chinese law firm as to the status of that case. And so we're—and we know they're still going to market on Chinese websites. You can still see that they're going to market as Charlotte Pipe.

Rep. Deborah Ross (D-NC)SPEAKER_01

Yeah. And just not to be too repetitive, but when I went to this North Carolina Chamber event, they brought in two small businesses that have experienced similar kinds of appropriation of their intellectual property. And those small businesses simply do not have anybody who can stand up for them. So they either have to move on, or they have to find some other way. And so I want to thank you for suggesting some very concrete bipartisan steps we can take to help right these wrongs. Thank you for your testimony. I yield back.

Chairman Darrell Issa (R-CA)SPEAKER_02

Thank the gentlelady. We now go to the gentleman from California, Mr. Kiley, for his questions.

Rep. Kevin Kiley (I-CA)SPEAKER_03

Thank you, Mr. Chair, and thank you to our witnesses for this important discussion, which I think really covers two main areas, one being the CCP's evasion of policy and law and international rules in order to press its own advantage, and the second being its manipulation of our legal system in conjunction with its political control over its own, to likewise benefit itself at the expense of the United States. I wanted to ask, first of all, Miss Ms. de La Bruyère, did I get it right? Close. All right. If you could comment on how this discussion relates to what's probably the most important issue when it comes to our competition with China, and that is the CCP's efforts to evade export controls when it comes to leading-edge semiconductors/how they're trying to steal technology in order to advance their own foundry.

Ms. Emily de La BruyèreSPEAKER_00

Absolutely. And generally, this falls within the category—this first category I think you listed—of China abusing the U.S. legal system in order to evade and to neuter our defenses. There are offensive things, though, China also does to this end, including, for instance, using litigation to obtain tech through discovery. But the other important thing is that as the U.S. has become increasingly serious about imposing restrictions on China from tech to trade, Beijing has also become increasingly serious and adept at, first, at the point of framing, making sure that there are loopholes or weaknesses within those restrictions, and then, at the point of enforcement, evading them. So, across export controls and other means to restrict tech access, Beijing consistently lobbies and influences in order to make sure that it will continue to maintain tech access. And then, of course, there's the network of shell companies, of localization efforts, of backdoor activity that China engages in in order to directly evade U.S. restrictions that have already been levied.

Rep. Kevin Kiley (I-CA)SPEAKER_03

Thank you. And Professor Ku, there's this issue we've also discussed where the U.S. court system recognizes judgments in Chinese courts, but the opposite is not always true, even though judgments in our courts follow from a legal system that's developed over centuries to assure fairness through things like due process and discovery, access to counsel, whereas that's far from the case in the Chinese legal system. So why is it that we continue to allow that lack of reciprocity, and how might we go about changing it?

Mr. Julian KuSPEAKER_07

Well, this is a big issue. The United States courts have always been more deferential to foreign courts than foreign courts have been to the United States court judgments. And so, it's not just Chinese courts. I think that the United States courts tend to enforce foreign judgments of—we just generally—US courts generally do this. The other complication is that it's often left to state law. So different states might enforce some slightly different standards, and it often is in state courts, not federal courts. And so state court judges might not be as attuned or worried about or concerned about the issues that we're discussing here, which I think might have happened in the case I mentioned in Long Island. So I do think that's part of the problem. But there have been efforts, and the American Law Institute years ago did propose that Congress adopt federal legislation to require reciprocity for US courts before we enforce foreign court judgments, and that would apply to China as well. China itself does have a reciprocity requirement before they will enforce a US court judgment. So there have been proposals, but it's been complicated. It creates a lot of effort. And so, but I think that would be the way that I think Congress could get involved here to create a fairer system for, especially now that I think we see Chinese companies taking advantage of the way US courts give deference to Chinese courts.

Rep. Kevin Kiley (I-CA)SPEAKER_03

How do you think, uh, China would respond if we passed a law along those lines?

Mr. Julian KuSPEAKER_07

I mean, I don't, I don't know that this is the top of their agenda for the— I think they actually wouldn't worry too much about, because we would adopt essentially their rule, reciprocity, right? So I don't think they would have any basis to object to that. Interesting.

Rep. Kevin Kiley (I-CA)SPEAKER_03

Thanks very much. I yield back.

Chairman Darrell Issa (R-CA)SPEAKER_02

Would the gentleman yield?

Rep. Kevin Kiley (I-CA)SPEAKER_03

Happy to.

Chairman Darrell Issa (R-CA)SPEAKER_02

So what, what you're saying is they might not be too concerned if we actually had our reciprocity match their reciprocity, or they would be outraged, as they often are?

Mr. Julian KuSPEAKER_07

No, I— well, I mean, never they could be outraged, but they wouldn't have any reasonable basis to be outraged. I think the rule would be not just the United States, but other— not just China, most countries in the world have a reciprocity requirement.

Chairman Darrell Issa (R-CA)SPEAKER_02

Yeah, we we use Rule 26 for disclosure by the defendants of their third-party funding, if you will, of their defense and/or payment. In China, do they have a similar rule, and does it require the plaintiff to also disclose?

Mr. Julian KuSPEAKER_07

I'm not familiar with that specific rule in China. I do know that there have been disputes, and it's uncertain. Court judgments have— some Chinese courts have disallowed third-party litigation funding for that— agreements that have been disclosed, but I'm not sure that disclosure is required under the Chinese court system. But I do know that Chinese courts, some Chinese courts, have refused to allow people to proceed if they had a third-party litigation agreement.

Chairman Darrell Issa (R-CA)SPEAKER_02

Okay, so they're just outright prohibited?

Mr. Julian KuSPEAKER_07

Well, they not there's no general rule, but I know courts in China have ruled that it is inappropriate or not allowed or prohibited in this case.

Chairman Darrell Issa (R-CA)SPEAKER_02

Thank you. And seeing no one else on your side for now, we now go to the gentleman from South Carolina. Hopefully you'll deal with your North Carolina friend as well as everyone else has. It's been pretty good so far.

Rep. Russell Fry (R-SC)SPEAKER_04

Mr. Chairman, I couldn't agree more. He's outside the district, but we're in the footprint of Charlotte. I think most of the United States is actually in the footprint of Charlotte, so

Chairman Darrell Issa (R-CA)SPEAKER_02

the gentleman's recognized then.

Rep. Russell Fry (R-SC)SPEAKER_04

Thank you, Mr. Chairman. Professor, you were talking earlier with Mr. Kiley about enforcement of judgments, and I'm just curious, what would be the prudent way in which Congress or the courts could review these judgments in foreign countries to ensure that substantive and procedural due process were honored?

Mr. Julian KuSPEAKER_07

So, I think, as Professor deLisle mentioned, there are already standards. So, courts are already empowered to review. The problem is that the standard, I think, is too deferential. And so, I think the courts should be given a different standard where the presumption is reversed. It could be with respect to certain countries that Congress identifies, like foreign adversaries. Congress has identified foreign adversaries: Okay, these standards should not be given for courts in these countries. That might be one way to do it, right, which I think would be kind of a scalpel, right? It would focus without sort of creating problems with other countries.

Rep. Russell Fry (R-SC)SPEAKER_04

So if you took countries of concern, right?

Mr. Julian KuSPEAKER_07

Countries of concern.

Rep. Russell Fry (R-SC)SPEAKER_04

These countries, and, and you— would it be like a de novo, almost de novo review of their procedural and substantive, uh, processes to make sure that the, the hearing was fair in the, in the foreign country?

Mr. Julian KuSPEAKER_07

Right. We do have a standard where they do have to meet a standard of fundamental fairness. I think what I'm worried about is a lot of courts just don't do that. And so maybe the way to give litigants even more is a presumption that the the party seeking to enforce the foreign judgment has the burden to prove that the prior judgment was adopted fairly. One of the problems I'll just mention is that it's hard to get access to information on the original court judgment in China, for instance. It'd be hard to travel there. As Mr. Muller discovered, he can't travel there because he's worried about being arrested. So creating a presumption of putting the burden on the party seeking to enforce the foreign court judgment or the Chinese court judgment would, I think, solve a lot of these problems.

Rep. Russell Fry (R-SC)SPEAKER_04

In your experience, Professor, do you believe that when, uh, domestic courts are enforcing foreign judgments that it's almost a rubber stamp exercise?

Mr. Julian KuSPEAKER_07

I wouldn't go so far as call it rubber stamp, but it isn't as, uh, I'll just put it this way, it's, it's not as rigorous as other countries. Now, the other countries are much more skeptical of foreign court judgments than on average U.S. courts are, especially I'll include state courts. And part of it is there's no federal standard.

Rep. Russell Fry (R-SC)SPEAKER_04

Thank you for that. And to briefly shift a little bit, what do you suggest just overall that Congress, the executive branch, or even domestic companies can do to stop China from evading trade controls, as an example?

Mr. Julian KuSPEAKER_07

Yeah, this is a real problem. I think the first problem is identifying, admitting that the problem exists. And I think educating folks to realize that the party-state, as I call it, is intertwined with Chinese businesses. And so, even if Chinese businesses don't really want to, they are essentially manipulated often or forced to participate in a Chinese strategic plan, which can be nefarious. And I think that is the first step in sort of getting everyone to be aware of what you can do. And then we have tools which we can do to harden our system. What I like to use the term hard, we just have to—we shouldn't change our system, but we need to make it tougher for—make it harder to manipulate by bad foreign actors. I think disclosure, education, awareness would go a long way to solving some of our problems. For the transshipment problem, I think the solution might be empowering the people who know best, the parties that are being injured by the bad actors to go to court, bring their evidence to court, because I think we just don't have necessarily enough enforcement resources in the United States.

Rep. Russell Fry (R-SC)SPEAKER_04

Right. So in the instance of the piping company, they're much more equipped to recognize the problems in the industry as it pertains to, uh, these shipments into the United States,

Mr. Julian KuSPEAKER_07

right? We've adopted this in other mechanisms as a way—False Claims Act and other ways to enforce. So giving private actors who already have the incentives might be a good way to do that, to make it tougher for transshipment and other types of evasion.

Rep. Russell Fry (R-SC)SPEAKER_04

Ms. de La Bruyère, what should US companies and law firms with a presence or operational nexus with China be doing to insulate themselves from risks associated with engaging in this space?

Ms. Emily de La BruyèreSPEAKER_00

First of all, I think that they should limit their engagement with China to the greatest extent possible, and that's a role Washington can play too. If the U.S. government imposes costs and, in the same way that China does to its entities, calls for a choice to be made between the U.S. and the Chinese markets, that will create an incentive both for U.S. companies to invest at home and to protect themselves from the risks of exposure to the Chinese market. Because China is adept at leveraging short-term incentives, to which our market entities are very vulnerable, in exchange for long-term strategic advantage that will destroy our market entities and our system. So I think there is a role for Washington simply to restrict that exposure or to put costs in it, and at the same time to create greater incentives for investment at home, so that it's not just surrendering things for U.S. entities, it's also gaining a new opportunity.

Rep. Russell Fry (R-SC)SPEAKER_04

Thank you for that, Mr. Chairman. I see my time has expired and I yield back.

Chairman Darrell Issa (R-CA)SPEAKER_02

I thank the gentleman. We now recognize the ranking member for unanimous consent.

Ranking Member Hank Johnson (D-GA)SPEAKER_08

Yes, two articles, Mr. Chairman, I'd like to offer for the record, one Bloomberg Law that is entitled Litigation Finance Doesn't Pose a Security Risk, and the second one is a Law360 article entitled A Bogeyman National Security Threat in Litigation Funding.

Chairman Darrell Issa (R-CA)SPEAKER_02

Thank you. And I will now—without objection, so ordered. And I now will offer unanimous consent that a statement by the American Property Casualty Insurance Association concerning this same litigation or legislation be placed in the record. And another one. Okay. From the Alliance for American Manufacturing, a statement submitted for this hearing in support of the hearing, without objection, all these will be placed in the record. I'll now recognize myself for some closing questions. This has been a very good hearing, and I appreciate all of your input. There were a couple of things that came out during this that I'd like to touch on. First of all, it's a broad question. The Rule 11 sanctions, which sanction parties basically for wrongful actions, that's currently a may at the discretion of the judge, and it has no requirement that it equal the damages. It can be $10,000, even if it cost you $50,000 just to file the motion. Do you believe Congress has a role and should continue to consider legislation that would effectively strengthen the may and make it much more of a shall requirement when there has been the findings normally found in Rule 11 sanctions? Just briefly, does anyone disagree with that as an area that would help stop wrongful legislation when it is onerous and deliberately deceiving? Good. My next one is Rule 26, which was alluded to. Under Rule 26, defense has a requirement to make available, including documentation under Rule 34, that you have to produce any insurance or other third-party defense funding that pays for the defense and/or could pay all or part of the settlement. If that is the case, my question to each of you—and I'll start from left to right with the professor here: Has that requirement in some way diminished the ability of defendants to protect themselves, or to be able to get that protection, such as insurance for defense? Has Has the requirement to disclose it ever reduced the availability?

Mr. Jacques deLisleSPEAKER_10

Uh, that's beyond my scope of expertise about what's happened to, uh, parties in U.S. courts that have had to disclose that.

Chairman Darrell Issa (R-CA)SPEAKER_02

Well, wait a second. Wait a second. You came here as an expert. I want to hold you a little accountable. You basically, and from the dais, it's been said that if we have to disclose the plaintiff's funding, that it's going to somehow diminish their ability to have access to the court. Do you have any knowledge, and you should have knowledge, I would think, of whether there's been some sort of an adverse effect because of Rule 26?

Mr. Jacques deLisleSPEAKER_10

As I said, I'm not an expert on what happened with Rule 26 with U.S. insurance claims. My concern about the issue of foreign disclosure, particularly as the what I take to be the proposal to require disclosure of foreign government- or party-linked funding, perhaps targeting China, perhaps more generally, is that's much messier than asking someone to disclose an insurance policy. It does it would

Chairman Darrell Issa (R-CA)SPEAKER_02

Okay, well, I think I've got your opinion now solidly on one side, but not the other. Let me go—well, Mr. Muller, when you've been involved in your litigation, would, if you brought in a partner to help in that litigation to share in the losses, the profits, the payments, would that discourage you if you had to disclose it?

Mr. Bradford MullerSPEAKER_05

No. In fact, through our trade association, we partnered with our competitor, McWane, out of Birmingham, in our trade cases.

Chairman Darrell Issa (R-CA)SPEAKER_02

So it's an open disclosure. Professor Ku, uh, you're right. You're— and both of the next 2 witnesses are— when it's been disclosed either that you're insured, has that somehow made it unavailable or hindered, uh, even though it's often something the plaintiff is prepared to settle for if they want damages, they look at how much you have and that affects it. But even with that, has it actually, has it done any harm? Because one of the things we're hearing is that somehow if you disclose, you by definition will take away someone's ability to get that. And so your opinions on that based on the history of those

Mr. Julian KuSPEAKER_07

Right, so I'll be a little professorial and say I haven't studied it very carefully, but I don't think that it would— there's— I'm not aware of any studies that show that it does discourage plaintiffs or disincentivize these lawsuits.

Chairman Darrell Issa (R-CA)SPEAKER_02

And of course, we're talking the defendant that's currently the only one having to close. Right,

Mr. Julian KuSPEAKER_07

of course. Well, and defendants as well, right, that they're unwilling to go to court to defend themselves.

Ms. Emily de La BruyèreSPEAKER_00

Know of any cases where that has disincentivized participation.

Chairman Darrell Issa (R-CA)SPEAKER_02

Okay Now, I just want to try to understand if if there were three parties and they're suing or— Mr. Muller, I'm going to go back to you since you do seem the one that doesn't have to study. You've lived it. If if when you go and you partner with somebody, you don't have a problem disclosing because those are those are co-plaintiffs, or even if they're hidden plaintiffs, you don't have a problem disclosing them?

Mr. Bradford MullerSPEAKER_05

No, no. And we have no hidden plaintiffs in our trade cases.

Chairman Darrell Issa (R-CA)SPEAKER_02

And in that case, they also are subject to being subpoenaed and deposed, right?

Mr. Bradford MullerSPEAKER_05

Certainly they would. Yeah.

Chairman Darrell Issa (R-CA)SPEAKER_02

Okay, so what I'm trying to understand here in closing is this whole question of the goose or the gander. If it's fair for the defendant to have their finances known, to have their source of funding for possible payment if they lose, or their defense, and it doesn't have a chilling effect, and it's been in place for years, even though Rule 26 doesn't work both ways, the question is, why would it be bad at all if there had to be an open recognition? Professor, I'm going to go back to you briefly. I asked you if you knew, and you said you hadn't studied. Okay, but I'm going to take you at one thing that you said earlier, and I don't want to be personal, but you are at Penn, correct?

Mr. Jacques deLisleSPEAKER_10

Yes.

Chairman Darrell Issa (R-CA)SPEAKER_02

And your university took $105 million between 2018 and 2022 from Chinese government-related business entities alone. You opined considerably on political, and the influence, and the difference, and you were unwilling to differentiate between Chinese Communist judges, who serve at the pleasure of the Chinese government, and lifetime appointment federal judges. And then you even talked about the universities in China. Isn't there, and hasn't there been, a concerted effort by the Chinese Communist government, through their proxies, to in fact influence universities in America through very generous gifts, the tip of the iceberg being the $105 million to Penn?

Mr. Jacques deLisleSPEAKER_10

So I don't think I was unwilling to distinguish between Chinese judges and U.S. judges.

Chairman Darrell Issa (R-CA)SPEAKER_02

Well, you said they were, they were more similar than not, and—

Mr. Jacques deLisleSPEAKER_10

I'm not sure that I said that either. What I said is I don't think either side is at the polar end of the spectrum. There is many times fair justice, fair judges, and good lawyering in China, and I have the concerns I expressed about trends in the United States. There still is a very significant gap. I don't want to be misunderstood as suggesting that there is not.

Chairman Darrell Issa (R-CA)SPEAKER_02

Would that gap be considered pretty much night and day, not absolute, but considerably different, so much so that the level of justice is inherently different?

Mr. Jacques deLisleSPEAKER_10

At this point, yes, although I'd say there are worrisome signs about the direction in both places. As to your question of funding, universities and others receive funding from a great many sources. The degree to which those come with influence and strings attached varies hugely. The amount you refer to is obviously a drop in the bucket of an institution the size of Penn, much smaller than the cuts Penn has suffered from U.S. sources, for instance. I have never knowingly had any contact with Chinese money coming into Penn. I know there is a wariness of accepting it, and I think in some cases for good reason.

Chairman Darrell Issa (R-CA)SPEAKER_02

Thank you. I'd like to allow the ranking member to have some of these minutes I've taken. Gentleman's yield recognized.

Ranking Member Hank Johnson (D-GA)SPEAKER_08

Well, I think so long as we can adhere to our rule as much as possible that each of us gets 5 minutes of questions, I think I'm happy with whatever the content of any questions might be from from the chair. However, I would just take the opportunity to point out, Professor deLisle, that you are the Stephen A. Cozen Professor of Law and Professor of Political Science and the Director of the Center for Study of Contemporary China, correct?

Mr. Jacques deLisleSPEAKER_10

Yes, sir.

Ranking Member Hank Johnson (D-GA)SPEAKER_08

And you are not the president of the university?

Mr. Jacques deLisleSPEAKER_10

Fortunately not.

Ranking Member Hank Johnson (D-GA)SPEAKER_08

And you're not deciding campus-wide policies on admission, school finances, or speech, correct?

Mr. Jacques deLisleSPEAKER_10

I am not. I try to shake some money loose from the central administration, but that's a rather different undertaking.

Ranking Member Hank Johnson (D-GA)SPEAKER_08

All right. So with that, I will yield back, and I thank the chair for the time for rebuttal.

Chairman Darrell Issa (R-CA)SPEAKER_02

Thank you. Clarification is always what we seek, and I want to make sure this committee always stands for that. I want to thank our witnesses. Today's hearing is expansive but not complete. For that reason, I would ask that, uh, would you all be willing to supplement answers to questions that are given to you in writing in the next few days? Thank you. And with that, this concludes today's hearing. I want to again thank our witnesses, and without objection, this committee stands adjourned.