HOUSE FOREIGN AFFAIRS COMMITTEE
HEARING ON SUPPLY CHAIN DEPENDENCY
For questions on the note below, please contact the Delta Strategy Group team.
On July 15, the House Foreign Affairs Committee held a hearing entitled “Ending Supply Chain Dependency: Aligning Tools, Capital, and Partnerships.” Witnesses in the hearing were:
- Ben Black, Chief Executive Officer, U.S. International Development Finance Corporation
- Thomas Hardy, Deputy Director / Chief Operating Officer, U.S. Trade and Development Agency
- Dan Petrie, Acting Chief of Staff, Millennium Challenge Corporation
Below are several key takeaways from the hearing prepared by Delta Strategy Group.
KEY TAKEAWAYS
- Discussions framed the U.S. International Development Finance Corporation (DFC), U.S. Trade and Development Agency (USTDA), and Millennium Challenge Corporation (MCC) as complementary tools of economic statecraft that can be aligned to strengthen trusted supply chains and reduce strategic dependence on China as a matter of economic and national security.
- Rising risks to U.S. food security from China’s growing role in global agriculture, along with farmers’ exposure to fertilizer price volatility and supply disruptions, were flagged, with responses citing ongoing efforts to diversify and strengthen agricultural input supply chains.
- Comments outlined a range of efforts to expand U.S. energy exports and strengthen partner-country energy infrastructure, including recent financing successes in West Africa, alongside references to legislation to better align diplomatic, financing, and technical resources around energy investment.
- Witnesses highlighted efforts to build trusted infrastructure alternatives to Chinese-linked projects, including transportation corridor work in Africa and Southeast Asia, alongside proposed authority for DFC to invest in strategic ports to support U.S. shipbuilding capacity.
DISCUSSION
Economic Statecraft, Strategic Competition, & Derisking
- Chairman Mast (R-FL) highlighted the bipartisan Developing Overseas Mineral Investments and New Allied Networks for Critical Energies (DOMINANCE) Act as aligning U.S. diplomacy, financing, and partnerships around priorities within reducing U.S. dependence on China and other adversaries, calling on the agencies to work together more quickly, efficiently, and effectively.
- Representative Moskowitz (D-FL) stated that reducing dependence on China does not require manufacturing every product domestically but does require diversifying critical goods and national-security-related supply chains across trusted countries and identifying alternative manufacturing locations for use during national emergencies. Black said DFC is focused on specialty-input supply chains, including critical minerals.
- Black said that over the past six months, DFC has rebuilt its pipeline since reauthorization, shifting toward fewer, larger industrial deals focused on critical mineral supply chains and expanded energy exports, alongside cutting average investment timelines by ten weeks. He cited its $205 billion investment capacity now supporting more than 340 opportunities totaling $78 billion across agriculture, financial services, energy, technology, and critical minerals.
- Hardy outlined how USTDA invests in infrastructure connections that strengthen supply chains with allies, reducing reliance on China and addressing vulnerabilities exposed during the COVID pandemic.
- Representative Huizenga (R-MI) asked whether Congress should evaluate U.S. foreign-assistance agencies based on broader strategic outcomes, such as private capital mobilization, export growth, trusted supply chains, and reductions in strategic dependence on China, rather than dollars obligated or number of projects.
- Hardy outlined how USTDA measures performance by commercial outcomes, citing more than $200 in U.S. exports generated per appropriated dollar since 1982, totaling $127 billion. He stated that success is measured through market access and job creation rather than funding obligated. Petrie said MCC measures outcomes rather than outputs, with every project independently evaluated, including years after completion, and findings made public.
- Representative Davidson (R-OH) asked how MCC’s approach to de-risking supply chains has changed under President Trump, citing the reprioritization of $1.2 billion in projects. Petrie described it as a 360-degree view of supply chain risk. He emphasized that the operating and regulatory environment is central to attracting private investment and that MCC has realigned projects around partner-country interest and mutual economic benefit with the U.S.
- Representative Castro (D-TX) questioned whether DFC’s growing emphasis on economic statecraft is coming at the expense of its development mandate. Black reiterated that DFC’s dual mandate is to advance both U.S. strategic interests and development.
Project Pipeline & Statutory Eligibility
- Black cited the $150 million U.S.-Ukraine Reconstruction Investment Fund, which mobilizes private investment in Ukraine’s recovery, as a potential model for future DFC investment in other strategically important regions.
- Representative Issa (R-CA) asked whether Brazil is currently eligible for USTDA support and how its eligibility threshold has changed over time. Hardy said Brazil has long been a priority market for USTDA, with opportunities to expand U.S. exports varying based on work with the private sector and project developers.
- Representative Issa contrasted DFC’s authority to operate in certain high-income countries for development or strategic reasons with USTDA’s income-based eligibility limits, asserting that USTDA loses the ability to support countries once they exceed the income threshold even when significant U.S. strategic interests remain. Hardy agreed this is a significant hindrance, citing how Argentina is approaching high-income status despite significant critical mineral resources. He warned USTDA could lose the ability to support projects there once the threshold is crossed.
- In describing DFC’s pipeline, Black noted that among nearly 350 projects totaling more than $78 billion, the largest number of projects are in Argentina, Mexico, and Brazil, followed by India, Pakistan, Iraq, Morocco, Turkey, Papua New Guinea, and Ukraine. He added that the September and December Board pipelines are expected to include significantly more Latin American projects.
- Petrie referenced that MCC is not currently working in the Democratic Republic of the Congo (DRC) because the DRC does not meet the Corporation’s eligibility standards, but that the DRC is working to improve its MCC scorecard by changing laws and engaging with MCC to become eligible for future assistance.
- Representative Wilson (R-SC) encouraged DFC to begin operating in Syria, with a “trade-not-aid” model supported by technical assistance and cited recent U.S.-Syria engagement. Black said DFC has reestablished its investment agreement with Syria and is awaiting a determination from USTR regarding Syria’s investment and labor practices before DFC can begin investing.
Trade Promotion & Nearshoring
- Representative Davidson asked whether nearshoring is a priority across the agencies’ efforts to strengthen supply chains. Hardy said nearshoring is a major priority for USTDA, highlighting efforts to revitalize the agency’s Western Hemisphere program by increasing staffing and financial resources. Black agreed, stating that the Western Hemisphere is a major focus for DFC.
- Hardy stated that USTDA does not invest in projects unless they have a direct link to increased U.S. exports and job creation. He outlined how USTDA focuses on early-stage infrastructure projects where the U.S. has a competitive advantage, designs projects to support the sale of U.S. goods and services, and structures them to align with DFC and Export-Import Bank (EXIM) financing.
- Representative Stanton (D-AZ) highlighted the opportunity created by DFC’s reauthorization to increase investment in Latin America and the Caribbean, including the Dominican Republic and El Salvador, to support nearshoring, advanced manufacturing supply chains, and more resilient regional economies. Black said President Trump has redirected DFC’s focus toward the Western Hemisphere and that DFC has expanded its Western Hemisphere and Latin America teams accordingly.
Agriculture
- Representative Baird (R-IN) raised that geopolitical tensions and China’s growing role in agricultural research and acquisitions of global agricultural companies have increased risks to U.S. food security. He cited U.S. farmers’ exposure to volatile fertilizer prices, supply chain disruptions, and import restrictions. He asked what Congress can do to support emerging technologies, including biotechnology, to onshore supply chains critical to the U.S. food supply.
- Black stated that DFC is investing to secure key agricultural inputs, including phosphate fertilizer and urea, to help keep costs down for U.S. farmers.
- Hardy said USTDA is working to diversify fertilizer supply chains, citing an upcoming trip to Morocco to conclude an agreement on ammonium production.
- Petrie highlighted MCC’s work in Zambia, citing a recently passed law addressing constraints in the agricultural sector. He referenced how the reform addressed ad hoc grain export bans and reformed the Food Reserve Agency after firms such as Cargill had left the market, describing it as part of MCC’s broader effort to strengthen agricultural supply chains.
Energy
- Black cited the DFC Board’s $1.5 billion approval for energy infrastructure across South and Southeast Asia to expand access to U.S. liquefied natural gas (LNG) and U.S. equipment, framing reliable energy as a precondition for industrialization.
- Hardy highlighted Sierra Leone’s first natural gas-fired power project, where USTDA-funded preparation helped secure $412 million in DFC financing and insurance, complementing MCC’s investment to modernize Sierra Leone’s electricity grid.
- Representative Kim (R-CA) highlighted the recently passed bipartisan DOMINANCE Act, outlining how it authorizes the State Department to negotiate Energy Security Pacts with partner countries to establish country-specific objectives supporting critical mineral and energy investments. She described the Act as intended to create a “one-stop shop” that aligns the diplomatic, financing, and technical tools of the State Department, USTDA, DFC, EXIM, and the Department of Commerce. She asked what additional steps Congress can take to give DFC the long-term certainty needed to support allies and encourage investment in energy projects.
- Hardy stated that USTDA already coordinates closely with the State Department, noting that the agency’s statute requires it to follow the Secretary of State’s foreign policy guidance. He said that USTDA, DFC, MCC, and EXIM have complementary authorities that, paired with the DOMINANCE Act and Energy Security Pacts, would further strengthen interagency coordination against the Chinese Communist Party’s model of engagement.
- In describing DFC’s realigned pipeline, Black said DFC has shifted toward deals that include expanding exports of U.S. LNG and oil. He highlighted efforts to expand LNG terminals worldwide to increase exports of U.S. LNG, noting that the U.S. is the world’s largest producer.
- Representative Sherman (D-CA) questioned DFC’s decision to enter the oil tanker reinsurance business, arguing it fell outside the role Congress envisioned for the agency. He asked whether DFC sought congressional authorization rather than simply notifying Congress before pursuing the initiative. Black said the project complied with the requirements of DFC’s reauthorization and that DFC notified Congress as required by statute.
- Petrie discussed how MCC focuses on leveling the playing field by addressing policy and regulatory barriers, citing a recently approved $60 million threshold program for the Philippines targeting reforms at the Energy Regulatory Commission.
Infrastructure
- Hardy discussed how USTDA is applying its Lobito Corridor model in the Philippines through the Luzon Economic Corridor, supporting development of a 132-mile railway to Subic Bay and expanded port infrastructure to accommodate larger vessels and improve ship repair operations.
- Representative Kim discussed how the Facilitating Leadership and Expertise through Exchange and Training in Shipbuilding (FLEETS) Now Act would expand DFC’s authority to operate in Venezuela and invest in strategic ports and port infrastructure to support economic growth and strengthen the U.S.’s shipbuilding capacity with allies. Black emphasized the strategic importance of ports and welcomed congressional efforts to expand DFC’s authorities.
- Representative Zinke (R-MT) asked whether there are additional efforts to restore infrastructure at Subic Bay in the Philippines. Hardy said USTDA is not working on those specific facilities but is supporting projects at Subic Bay, including expanding the dry dock for ship repair and improving rail links to move critical minerals to market, coordinating closely with INDOPACOM.
- Black referenced DFC’s recent agreement to expand one of Kazakhstan’s largest telecommunications networks to U.S.-aligned trusted service providers as a model DFC intends to replicate, particularly in the Western Hemisphere, to counter China’s Digital Silk Road. He added that the Kazakhstan investment specifically replaces Huawei and ZTE equipment with Ericsson, and that DFC will invest in AI and technology only in countries that use trusted vendors.
- Representative Huizenga asked how DFC measures whether investments reduce reliance on high-risk vendors, citing Kazakhstan’s interest in working with the U.S. despite bordering China and Russia. Black said DFC assesses a country’s existing infrastructure and willingness to transition to trusted vendors. He noted that DFC has seen increased interest from partner countries in replacing Chinese telecom infrastructure.
- Representative Burchett (R-TN) asked if USTDA has a strategy to advance projects ahead of China. Hardy said USTDA’s purpose is to take on China directly, citing undersea fiber optic cable projects in Tuvalu and Indonesia as examples of competing with Huawei in the Indo-Pacific.
Critical Minerals
- Members and witnesses agreed that China’s dominance in critical minerals lies in processing rather than extraction, discussing China’s long-term efforts to build dominance across the supply chain and how it gives China leverage over the U.S.
- Ranking Member Meeks (D-NY) cited China’s rare earth export controls, which cut U.S. rare earth magnet shipments by 74 percent. Representative Amo (D-RI) noted China’s roughly 95 percent share of global cobalt processing capacity. Both highlighted that DFC, MCC, and USTDA need to prioritize the full supply chain, not just mining.
- Representatives Baird and Davidson both called for a more coordinated, strategic U.S. approach. Baird urged decoupling from adversarial nations, and Davidson asked how USTDA, DFC, EXIM, and the Defense Production Act fit together to de-risk processing specifically.
- Witnesses pointed to a series of U.S.-backed projects meant to build Western-aligned alternatives. Black highlighted DFC’s loan to restore the Lobito Atlantic Railway, connecting the DRC and Zambia to the Port of Lobito in Angola, alongside DFC’s critical minerals consortium with Orion Resource Partners and DFC’s rare earth investment in Brazil.
- Representative Zinke asked about the administration’s vision for a critical minerals exchange, noting ongoing discussions across the White House, the Department of Energy, and EXIM. Black said a key objective of such an exchange should be reducing the number of critical minerals priced in Chinese yuan, and that the value of the exchange lies in ensuring the U.S. dollar remains the dominant currency for critical mineral commodities. Hardy said USTDA’s role is to help bring more critical minerals to market, deferring to EXIM on the exchange itself.
- Representative Jackson (D-IL) raised how U.S. efforts to strengthen critical mineral supply chains must be matched by stronger diplomatic engagement in Africa, contrasting China’s sixty diplomatic posts on the continent with the U.S.’ s 56, and noting 41 vacancies across U.S. African diplomatic posts and 107 vacancies among 195 ambassadorial positions globally. He warned that the U.S. risks weakening its diplomatic presence while competing with China for critical minerals, emphasizing that strengthening supply chains requires both economic investment and robust diplomacy.