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04 February 2000

Text: USTR Barshefsky Feb. 4 Speech on China Trade Relations

(Bilateral agreement gives U.S. "one-way trade concessions") (2920)
U.S. Trade Representative Charlene Barshefsky urged state legislators
February 4 to help the Clinton Administration convince Congress that
the trade agreement reached between China and the United States last
November is in the national interest, and to persuade Congress to
grant China permanent Normal Trade Relations (NTR) status.
"I am here to ask your support for one of the most important American
trade policy goals in many years," Barshefsky told attendees at the
National Conference of State Legislators in Washington, D.C.
"We must grant China permanent NTR or risk losing the full benefits of
the agreement we negotiated, including special import protections, and
rights to enforce China's commitments through WTO dispute settlement,"
she said.
All WTO members "pledge to give one another permanent NTR," Barshefsky
explained. "If Congress were to refuse to grant permanent NTR, our
Asian and European competitors [would] reap these benefits but
American farmers and businesses [might] well be left behind."
The bilateral agreement with China on World Trade Organization (WTO)
accession, Barshefsky said, "secures broad-ranging, comprehensive and
one-way trade concessions on China's part," while the United States
agrees "only to maintain the market access policies we already apply
to China, and have for over twenty years" by making the current NTR
status permanent.
China's accession to the WTO, Barshefsky pointed out, means that China
"will sharply reduce trade barriers at the border." Furthermore, with
China in the WTO, the United States will be able to enforce China's
commitments to opening its markets "through impartial dispute
settlement when necessary," she said.
"From the perspective of reform and liberalization in China, the
choice is equally clear," Barshefsky said. "As it implements these
commitments, China will become more open to the world, and more
responsive to the rule of law than it is today."
According to Barshefsky, these commitments "are a remarkable victory"
for China's economic reformers.
The reforms "will give China's people more access to information, and
weaken the ability of hardliners in the Chinese government to isolate
China's public from outside influences and ideas," she said.
The commitment by China's leadership to the reforms, Barshefsky
continued, reflects "a judgment that prosperity, security and
international respect will come not from the static nationalism, state
power and state control China adopted after the war."
Instead, Barshefsky said, China's leaders now judge that prosperity
and security will come from "the greater economic freedom, engagement
with the world and ultimately development of the rule of law inherent"
in the 1948 initiative that created the General Agreement on Trade and
Tariffs (GATT), the forerunner of the WTO.
"That is why many Chinese activists for democracy and human rights see
the WTO accession as China's most important step toward reform in
twenty years," Barshefsky said.
Barshefsky said that the Clinton Administration's support of China's
WTO accession "rests on a broader long-term commitment to human rights
and freedoms," as well as securing trade opportunities and fairness
for American businesses.
The bilateral trade agreement reached between the two Pacific powers,
Barshefsky said, offers the possibilities of an improved relationship
with the world's largest country and of "new opportunities and hope
for a better life to hundreds of millions of Chinese."
It could also, Barshefsky said, help engender a relationship "which
may have moments of tension and volatility," but one in which "we also
act to find common ground and strengthen hopes for peace."
While a trade agreement will not "cure all our disagreements,"
Barshefsky said, "we must recognize how important a stable and
peaceful relationship with China is -- for the world, the Chinese, and
your friends and neighbors."
Following is the text of Barshefsky's remarks, as prepared for
delivery:
(begin text)
China's WTO Accession: Trade Interests, Values and Strategy
Ambassador Charlene Barshefsky
U.S. Trade Representative
National Conference of State Legislators
Washington, D.C.
February 4, 2000
Thank you very much. Let me thank Representative Paul Mannweiler of
Indiana, President of the NCSL. I am especially pleased to be here
with the National Conference of State Legislators, because you live
and work with the Americans, on the job and on the farm, shaping
today's international economy, and thus your advice on trade policy is
of great importance to our Administration.
I would like to acknowledge several state legislators who have made
especially important contributions to our work: the members of our
Intergovernmental Policy Advisory Committee, Representative John Dorso
of North Dakota, Hawaii Senator Carol Fukunaga, New York Senator James
Lack and Maryland Delegate Kenneth Montague. Oklahoma Representative
Clay Pope, recent chair of NCSL's Agriculture and International trade
Committee and one of America's leading experts on agricultural trade,
and South Dakota Representative Larry Dietrich, who chairs the Trade
Committee this year.
I am here to ask your support for one of the most important American
trade policy goals in many years: China's accession to the World Trade
Organization, together with support for permanent Normal Trade
Relations for China.
ONE-WAY CONCESSIONS
In one sense, this is a simple matter. Our bilateral agreement with
China on WTO accession last November secures broad-ranging,
comprehensive and one-way trade concessions on China's part. China
agreed to grant the United States substantially greater market access
in virtually all sectors, and stronger guarantees of fair trade. We
agree only to maintain the market access policies we already apply to
China, and have for over twenty years, by making China's current
Normal Trade Relations status permanent.
One might end a discussion of the WTO accession right there; from a
purely trade policy perspective, it would not be wrong to do so. But
we must also think about the wider implications - and to see these
clearly, we must begin at the very beginning.
AMERICA AND THE TRADING SYSTEM
The World Trade Organization China now seeks to join has its roots in
the General Agreement on Trade and Tariffs, or GATT. The leaders who
created it in 1948 - Truman, Churchill, Europe's democratic leaders -
acted with personal experience of Depression and war. They had seen
the Smoot-Hawley Act in America and similar protectionist policies
overseas deepen the Depression and contribute to the political
upheavals of the 1930s. And fifteen years later, they believed that by
reopening world markets they could promote growth and raise living
standards; and that as open markets gave nations greater stakes in
stability and prosperity beyond their borders, a fragile peace would
strengthen.
The work they began has continued for fifty years; and their faith in
freedom, open markets and the rule of law is abundantly vindicated.
Through eight Rounds of negotiations, and as 112 new members joined
the 23 founders, we abandoned the closed markets of the Depression era
and helped to foster a fifty-year economic boom. In these years, the
world economy grew six-fold. Per capita income nearly tripled.
Hundreds of millions of families escaped from poverty. America, as the
world's largest exporter, benefits perhaps most of all.
CHINA'S ROAD: FROM REVOLUTION TO REFORM
China took a very different road, With the Communist revolution, it
shut doors it had once opened to the world: among the first steps were
to expel foreign businesses from China, and bar direct economic
contact between Chinese citizens and the outside world. Inside China
were similar policies: destruction of private internal commerce;
abolition of private property and land ownership; suppression of the
right to object to these policies. In essence, one cannot separate
postwar China's deepening isolation from the outside world from the
steadily increasing repression and diminishing space for individual
life and freedom within China.
WTO accession thus means a profound and historic shift of attitudes.
As it joins the WTO, China will sharply reduce trade barriers at the
border. It will, for the first time since the 1940s, permit foreigners
and Chinese businesses to import and export freely from China. It will
reduce, and in some cases remove entirely, state control over internal
distribution of goods and the provision of services. It will enable,
again for the first time, foreign businesses to participate in
information industries such as telecommunications. And it will allow
us to enforce these commitments through impartial dispute settlement
when necessary.
These commitments are a remarkable victory for economic reformers.
They will give China's people more access to information, and weaken
the ability of hardliners in the Chinese government to isolate China's
public from outside influences and ideas. They reflect a judgment that
prosperity, security and international respect will come not from the
static nationalism, state power and state control China adopted after
the war; but the greater economic freedom, engagement with the world
and ultimately development of the rule of law inherent in the
initiative President Truman began in 1948.
That is why many Chinese activists for democracy and human rights -
Martin Lee, leader of Hong Kong's Democratic Party; Ren Wanding, a
dissident who has spent years of his life in prison - see the WTO
accession as China's most important step toward reform in twenty
years. And it is why our support for WTO accession rests on a broader
long-term commitment to human rights and freedoms, as well as new
opportunities and fairness for Americans.
WTO ACCESSION AND AMERICAN TRADE INTERESTS
It also, of course, represents concrete trade goals that will help
Americans on the farm and on the job. And let me offer you some
specifics on that.
1.  Overview
First, our bilateral agreement is comprehensive. China will reduce its
trade barriers to levels comparable to those of major trade partners,
including a number of developed industrial countries, and address all
our priority concerns:
-- Chinese industrial tariffs will fall from an average of 25% in 1997
to 9.4% by 2005. In information technology, tariffs on products such
as computers, semiconductors, and all Internet related equipment will
fall to zero by 2005.
-- In agriculture, on U.S. priority products such as beef, citrus,
specialty products and dairy, tariffs will drop from an average of 31%
to 14% in January 2004. China will also expand access for bulk
agricultural products like wheat, corn, cotton, soybeans and others;
permit for the first time private trade in these products; and
eliminate export subsidies.
-- In services, China will open markets for distribution,
telecommunications, insurance, express delivery, banking, law,
accounting, audiovisual, engineering, construction, environmental
services, and other industries.
-- And the agreement deals with the special characteristics of China's
economy. It addresses state trading; it bans forced technology
transfer; it eliminates investment policies intended to draw jobs and
technology to China, such as local content, offsets and export
performance requirements. And it provides protections for Americans
against import surges from China and unfair trade practices like
dumping.
Second, it is fully enforceable. China's commitments in all areas are
specific, measurable, and enforceable through our trade laws, WTO
dispute settlement and other special mechanisms.
And third, its results will be rapid. On accession to the WTO, China
will begin opening its market from day one in virtually every sector.
The phase-in of further concessions will be limited to five years in
almost all cases, and in many cases one to three years.
Thus, over a very short period of time, those of you who represent
university towns and high-tech centers will see new opportunities for
semiconductors, software, pharmaceuticals, chemicals and computers.
Those of you with friends and constituents on the factory floor will
see export opportunities and strengthened guarantees of fair trade for
manufacturing, from steel to autos, agricultural equipment, wood
products, and home appliances.
Representatives of rural districts will see new markets for your
neighbors on farms and ranches, in commodities from citrus -- where a
Chinese inspection team toured orchards in California, Arizona, Texas
and Florida last week -- to wheat, specialty products, beef, pork,
cotton, soybeans, rice, dairy and much more.
We also cover the artistic fields - books, music and film, as well as
other copyright industries like software and video games - and each of
the major services industries, from telecommunications to accounting,
audiovisual, banking, express delivery, accounting, law, engineering,
environmental and much more.
3.  The Work Ahead
China has yet to complete similar bilateral agreements with the EU,
India, Mexico arid others, and a multilateral negotiation at the WTO,
principally covering commitments on a range of WTO rules including
subsidies, technical standards, a mechanism to review implementation,
and many other issues. All of this should strengthen the already very
strong accession agreement we negotiated.
What is our part? We make no changes in our market access policies. We
change none of our fair trade or export control laws. But we have one
obligation: we must grant China permanent NTR or risk losing the full
benefits of the agreement we negotiated, including special import
protections, and rights to enforce China's commitments through WTO
dispute settlement.
This is, in terms of our policy toward China, no real change. NTR is
simply the tariff status we have given China for 20 years; which
Congress has reviewed every year and found to be in our fundamental
national interest; and which every country in the world, but for a
very few such as North Korea, Afghanistan and Serbia, already has. But
the legislative grant of permanent NTR is critical. All WTO members,
including ourselves, pledge to give one another permanent NTR. If
Congress were to refuse to grant permanent NTR, our Asian and European
competitors will reap these benefits but American farmers and
businesses may well be left behind.
WTO ACCESSION AND US-CHINA RELATIONS
From the perspective of trade policy, this choice is clear. China
offers a set of one-way trade concessions; in return, we simply
confirm the normal trade status China already has. From the
perspective of reform and liberalization in China, the choice is
equally clear. As it implements these commitments, China will become
more open to the world, and more responsive to the rule of law than it
is today.
But we must also look to a deeper issue. China is the world's largest
country, and over the past decade the world's fastest-growing major
economy. Our future relationship will have great bearing on American
security and strategy in the 21st strategy, and we should also judge
the WTO accession in this light.
Our relationship with China today is free neither of deep-seated
policy disagreement nor moments of tension. These are perhaps natural:
we are great Pacific powers, and our governments reflect vastly
different political systems and values. And to quote the classical
Chinese poet Qu Yuan, writing in the 4th century B.C., such a
relationship such poses profound questions for future peace and
stability across a vast section of the earth:
"Eagles do not flock together like birds of lesser wing;
thus it has been since ancient time.
How is the round to fit with the square?
How can different ways of life be reconciled?"
Where does WTO accession fit in this? We should not imagine that a
trade agreement will cure all our disagreements. And as the President
has said, when we disagree with China we must act with candor and firm
assertion of our interests and values. But as we do so, we must also
recognize how important a stable and peaceful relationship with China
is -- for the world, the Chinese, and your friends and neighbors. And
thus we have a fundamental responsibility to find and act upon areas
in which we share interests and benefits.
We saw this responsibility clearly, and acted upon it, in the Asian
financial crisis two years ago. We see it in the maintenance of peace
on the Korean peninsula; the search for stability in the Taiwan
Strait; the environmental problems of the Asia-Pacific. And we have
seen it in trade for a quarter century.
American trade initiatives in China stretch from the end of the trade
embargo in 1972 through our Commercial Agreement and mutual grants of
MFN status (now Normal Trade Relations) in 1979 and 1980; the renewal
of NTR ever since; and the market access, textile and intellectual
property rights agreements of the 1990s. Each step had a foundation in
concrete American interests; each also helped promote reform in China,
integrate China in the Pacific economy, and strengthen China's stake
in prosperity and stability throughout Asia. And China's WTO accession
will be the most significant step in this process for many years.
CONCLUSION
That is the fundamental meaning of this event. And if we approach it
in this spirit, we can see how extraordinary are the possibilities it
opens up.
A new and fundamentally improved trade relationship with the world's
largest country, which offers practical, concrete benefits to cities
and towns throughout America: stronger guarantees of fairness for our
working people and businesses; new export opportunities that mean jobs
and growth for Americans.
A decisive step toward deeper and swifter reform within China,
strengthening the rule of law, and offering new opportunities and hope
for a better life to hundreds of millions of Chinese.
And a relationship with the world's largest nation which may have
moments of tension and volatility, but in which we also act to find
common ground and strengthen hopes for peace.
That is the opportunity before us; that is why I am before you today.
And it is why I ask for your support and your help as we bring this
historic agreement to Congress, and seek, on its basis permanent
normal trade relations with China.
(end text)
(Distributed by the Office of International Information Programs, U.S.
Department of State - www.usinfo.state.gov)