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09 March 2000

Text: Deputy USTR Fisher Mar. 8 on Permanent NTR for China

(China offers trade opportunities if granted permanent NTR) (3020)
The United States as a whole, and the New England states in
particular, will benefit from granting China permanent Normal Trade
Relations (NTR) status and supporting that country's accession to the
World Trade Organization (WTO), according to Deputy U.S. Trade
Representative (USTR) Richard Fisher.
The trade official cited sales of lobster, a staple of the New England
economy, as an example of how permanent NTR status for China and
China's accession to the WTO would benefit American businesses.
"You may not know it but China was our largest foreign market for
frozen lobster in 1998," Fisher said to the New England Council March
8. "With the China deal, we will do even better."
"First, we open China's market for lobsters directly. We cut China's
tariff on frozen and fresh lobster from 30% to 15%. We bar China from
imposing any new quotas. And we ensure that China's border inspections
will rest on scientific judgments rather than attempts to exclude our
products," Fisher said.
The benefits accruing to people in the seafood industry, he said,
would likewise flow to other industries as the large China market is
opened to increased American exports.
Fisher urged support for the Clinton Administration's effort to
convince Congress to grant permanent NTR to China.
"Your New England Senators and Representatives will make history when
they vote on permanent NTR," he said.
"To make the wrong choice," he warned, "is not only to put at risk a
remarkable and one-way set of trade commitments; it is to turn away
from support for reform in China, and to the possibility of creating a
stable, mutually beneficial relationship with the world's largest
nation."
China's accession to the WTO, together with permanent NTR, Fisher
stressed, "has the potential to create a new and fundamentally
reformed trade relationship with the world's fastest-growing major
economy."
More importantly, Fisher said, "it can offer the prospect of a
relationship with China which, despite moments of tension, will lead
us to common ground and strengthened hopes for peace."
The stakes and the opportunity are enormous, he told his New England
audience.
Following is the text of Fisher's remarks:
(begin text)
New England and China's WTO Accession
Ambassador Richard Fisher
Deputy U.S. Trade Representative
The New England Council
Washington, DC
March 8, 2000
Thank you all very much for coming, and special thanks to Jay Dunn for
bringing us together this afternoon. Let me begin with a brief
introduction of my agency, and then turn to our central issue priority
for the coming year.
USTR INTRODUCTION
At the Office of the U.S. Trade Representative, we have one of the
smallest agencies in government. As Daniel Webster once said of
Dartmouth College, it is a small place but I love it anyway. We have
178 full-time employees and a budget of $26 million; which is in fact
not much more than the Defense Department spends on stationery every
year. With this we address $2 trillion in U.S. trade with the world;
we monitor and enforce hundreds of agreements; and with help and
advice from Congress, we develop the American trade agenda for the
future.
We believe in open and fair competition, together with strong
standards to ensure protection for our consumers, workers and
environment. At home we are committed to an open market which
increases competition and choice. Overseas, we create opportunity for
American businesses, working people and farmers as we remove trade
barriers, cut foreign subsidies and fight unfair trade practices.
Under President Clinton, these principles have helped us negotiate
nearly 300 separate trade agreements, including the North American
Free Trade Agreement, which cemented our strategic relationship with
Canada and Mexico; the Uruguay Round, which created the World Trade
Organization; and three agreements on Information Technology, Basic
Telecommunications and Financial Services, which in totality make up a
larger agreement than the Uruguay Round; a commitment by all WTO
members to preserve the Internet as a duty-free zone; and most
recently, our agreement on WTO accession with China.
In part because of this, American exports reached nearly a trillion
dollars in goods and services last year -- 55% more than in 1992. We
have a well-diversified trade portfolio: 1/4 of what we sell goes
north to Canada; 1/5 to the South (2/3 of which goes to Mexico); the
remainder is split between trans-Atlantic sales and trans-Pacific
sales. New England has benefitted as much as any region in America by
our explosive trade growth. Its exports are up nearly $10 billion
since 1992; New Hampshire, in fact, has seen its exports double.
Opening the world trading markets has helped our country develop a
remarkable record.
Growth: Our economy has grown from $7.0 trillion to $9.2 trillion in
real terms, during the longest expansion in American history. Only two
nations in the world other than the United States, by the way --
Germany and Japan -- have economies larger than $2 trillion.
Jobs: We have created nearly 21 million new jobs nationwide since
1992, whereas Germany lost 700,000 jobs and Japan gained only 830,000.
New England, in fact, gained as many jobs during the past seven years
as all of Japan -- with over 800,000 more New Englanders on the job
today. Unemployment in the region has fallen from 8.6% to 3.2% in
Massachusetts, 9.0% to 3.7% in Rhode Island, and 6.7% to 2.9% in
Vermont and nationwide, we have the lowest unemployment since January
of 1970, at 4%.
Rising Living Standards: Not only is the economic climate as a whole
better than ever before, its benefits are broadly shared: hourly wages
for non-supervisory workers are up, poverty rates have fallen to the
lowest levels in 30 years, and unemployment for African-Americans and
Hispanics is at a historic low.
Industrial Expansion: Since 1992, U.S. industrial production has risen
by 40.5% -- the highest rate of growth in the industrial world.
Stock Market: The stock market over this period has tripled, which is
important to the 80 million Americans who now invest in stock, many
through mutual funds. Not only do more people have jobs, but more are
financially secure.
Social Dividend: At the same time, the percentage of our rivers and
streams fit for fishing and swimming doubled; the number of citizens
living in cities with unhealthy air fell by half; many endangered or
threatened species, including the bald eagle, are recovering; and the
number of workplace deaths fell 60%. We wrote a stronger Safe Drinking
Water Act, strengthened clean air standards and protection of wild
lands; passed the Family and Medical Leave Act; and raised the minimum
wage. All this happened as America's share of world foreign direct
investment rose sharply, with foreign countries investing well over
$500 billion in America the past four years, despite fears that a more
open world would reward countries with lower wages or weaker labor and
environmental standards.
In sum, our economy has been transformed. Trade is not the sole cause
of this success, but it is a vital component. I mentioned that our
unemployment rate has fallen to its lowest level since 1970, when we
last had 4% unemployment. Consider this: in 1970, trade as a fraction
of GDP -- the sum of exports and imports of goods and services divided
by our nation's total output -- was 13%. Today it is 31%. Then, at the
height of the hot war in Vietnam and the Cold War with the Soviet
Union, defense spending accounted for 8% of GDP. Today it accounts for
3%. We have accomplished since 1970 a shift from creating employment
and structuring our economy through conducting and preparing for war
to an economy driven by the more peaceful challenge of competing
internationally on the economic front.
CHINA WTO ACCESSION
Where do we go from here? Let me give you a look at our top priority
for this year, something the President is addressing up the street as
we speak: China's accession to the World Trade Organization.
Last November, after many years of negotiation, we completed a
bilateral agreement on the terms under which China will join the WTO.
We will be asking for help and support from each member of the New
England Congressional delegations on it. This is a big deal for you
and for America.
We already buy a lot from China -- almost $82 billion last year. Go to
any story where real people shop -- go to any Mall -- and you'll see
lots of clothing or tools or everyday goods made in China. But we sell
little to China -- only $13 billion, so that we run a $69 billion
deficit with them.
Our bilateral agreement secures broad-ranging, comprehensive, one-way
trade concessions on China's part, granting the United States
substantially greater market access across the spectrum of services,
industrial goods and agriculture. It strengthens our guarantees of
fair trade. It gives us far greater ability to enforce Chinese trade
commitments. And yet, for our part, 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.
THE BILATERAL AGREEMENT
If approved, China's WTO accession, together with permanent NTR, will
create a remarkable set of opportunities for Americans.
First, there is the pure trade element. Just as New England began our
trade relationship with China, with the departure of the Empress of
China from Boston Harbor in 1785, so New England will be among the
regions of the United States best placed to benefit from the new trade
relationship this agreement can create.
For those of you in manufacturing, China's industrial tariffs will
fall from an average of 25% in 1997 to an average of 9.4% by 2005.
These cuts come across the board:
For the high-tech community along Route 128 or in southern New
Hampshire, tariffs on information technology -- computers, computer
equipment, semiconductors and others -- will fall from an average of
13% to zero by 2005.
For sawmills in Vermont and Maine, tariffs drop from 10.6% to 3.8%.
China, incidentally, is already the world's third-largest importer of
wood products.
In agriculture, tariffs on U.S. priority products including Maine's
potato flour and french fries will drop from an average of 31% to 14%
in January 2004.
And essential for both agriculture and manufacturing, in virtually all
products China will allow both foreign and Chinese businesses to
market, distribute and service their products; and to import the parts
and products they choose, free of requirements to go through
government middlemen.
In services, the agreement will open the market for distribution
services, for financial services, for telecommunications, for
professional, business and computer services, motion pictures,
environmental services, and other industries. These are especially
interesting fields, because of their inherent economic importance, but
also because they are fields in which China's market has been almost
entirely closed since the communist revolution in 1949.
Finally, as we open these markets, we also strengthen guarantees of
fair trade for our companies and working people. We secured a ban on
forced technology transfer, together with a broader reform of
investment policies intended to draw jobs and technology to China,
such as local content, offsets and export performance requirements. In
addition, we strengthen protections for Americans against import
surges from China, and we ensure that we retain strong measures to
fight unfair export practices like dumping.
CASE STUDY: LOBSTER
I will leave behind the entire text of the speech my staff prepared
for me on the particulars of the agreement, as it is summarized in
trade speak -- the language of trade wonks. Long ago, my wife was a
waitress at Friendly's in Wellesley, Massachusetts. She is always
telling me to "talk Friendly -- speak the language of people that came
in for a frappe or a lobster roll at the Friendly's counter. If you
can't explain it on their terms, you'll never make the sale." So let
me summarize the trade agreement with China this way: let's talk
lobsters. You may not know it but China was our largest foreign market
for frozen lobster in 1998. With the China deal, we will do even
better:
First, we open China's market for lobsters directly. We cut China's
tariff on frozen and fresh lobster from 30% to 15%. We bar China from
imposing any new quotas. And we ensure that China's border inspections
will rest on scientific judgments rather than attempts to exclude our
products.
Second, we guarantee trading rights: that is, we allow Chinese buyers
to purchase lobster directly, without special government middlemen or
licenses. For the first time in fifty years, Chinese hotels and
restaurants can import fresh or frozen lobster foods directly from the
United States.
Third, we open China's distribution markets. For example, we enable
American express delivery firms to fly live produce directly to China;
and we let fishery companies advertise their products.
Thus, one part of this agreement, in essence, is a comprehensive
agreement on lobster trade. And we match it, although specific
features differ, in every industry of significant concern to New
England and to the U.S. economy.
PERMANENT NTR
All of these, again, are one-way concessions. By contrast, we do very
little. As China enters the WTO, we make no changes in our tariff
rates. We change no laws controlling the export of sensitive
technology. We amend none of our trade laws. We do have one
obligation: the United States 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.
Permanent NTR, in terms of our policy toward China, is no real change.
NTR is simply the tariff status we have given China since the Carter
Administration; and which every Administration and every Congress for
20 years, Democratic and Republican has reviewed and found, even at
the periods of greatest strain in our relationship, to be in our
fundamental national interest.
Thus permanent NTR represents little real change in practice. But the
legislative grant of permanent NTR is critical. All WTO members,
including ourselves, pledge to give one another permanent NTR to enjoy
the benefits available in one another's markets. If China were to
accede to the WTO and Congress were to refuse to grant permanent NTR,
our Asian, Latin American, Canadian and European competitors would
reap these benefits but American farmers, factory workers and service
providers and lobster fishermen might well be left behind.
THE FUTURE OF US-CHINA RELATIONS
The President, today, is sending to Congress a bill to grant permanent
Normal Trade Relations and complete the work. Right now at the John
Hopkins' School for Advanced International Studies, President Clinton
is putting this in the context of our broader strategic and security
goals.
Let me cite someone closer to your New England home, the late Senator
John Chafee of Rhode Island. Besides being one of the nicest men God
ever created, John -- as a veteran of the Korean War, as Secretary of
the Navy, as one of the Senate's leading experts on trade policy for
many years -- was one of the Americans most uniquely qualified by
personal and professional experience to comment on our relationship
with China.
He was also the author of the first bill on permanent NTR for China,
whose purpose he put in these terms:
"Many important challenges facing us require a steady, stable United
States/China relationship -- whether it is nuclear non-proliferation,
adherence to human rights, security around the globe, protection of
intellectual property or the transition of Hong Kong. Thus the
permanent grant of NTR to China is in the best interests of the United
States and her citizens ... allowing the establishment of a stable
relationship that would bring prosperity and growth to both
countries."
That is, essentially, what is at stake today.
We do have serious disagreements with China, in some issues of
profound importance. We should never imagine that a trade agreement
will cure all our disagreements.
But we must recognize how important a stable and peaceful relationship
with China is -- for the Chinese, for the world, and for America. And
thus, as John Chafee recognized, we have a fundamental responsibility
to act in those areas in which we share interests and benefits, when
the opportunity presents itself. That time is now.
CONCLUSION
Your New England Senators and Representatives will make history when
they vote on permanent NTR. To make the wrong choice is not only to
put at risk a remarkable and one-way set of trade commitments; it is
to turn away from support for reform in China, and to the possibility
of creating a stable, mutually beneficial relationship with the
world's largest nation.
The WTO accession, together with permanent NTR, has the potential to
create a new and fundamentally reformed trade relationship with the
world's fastest-growing major economy.
It can promote 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 ultimately, it can offer the prospect of a relationship with China
which, despite moments of tension, will lead us to common ground and
strengthened hopes for peace.
That is the opportunity before us. These are the stakes. Both are
enormous. And that is why I have taken advantage of this time with you
to ask for your support as we pursue permanent Normal Trade Relations
status for China on the basis of this historic agreement.
Thank you very much.
(end text)
(Distributed by the Office of International Information Programs, U.S.
Department of State. Web site: usinfo.state.gov)